by Calculated Risk on 2/25/2010 11:49:00 AM

From HotelNewsNow.com: Seattle tops US hotel weekly results

Overall, the industry’s occupancy ended the week with a 2.4-percent increase to 55.4 percent, ADR dropped 4.4 percent to US$95.81, and RevPAR fell 2.2 percent to US$53.04.

The following graph shows the occupancy rate by week since 2000, and the rolling 52 week average occupancy rate.

Click on graph for larger image in new window.

Note: the scale doesn't start at zero to better show the change.

The graph shows the distinct seasonal pattern for the occupancy rate; higher in the summer because of leisure/vacation travel, and lower on certain holidays.

The second graph shows the year-over-year (YoY) change in occupancy (using a three week average).

This is a multi-year slump, and the YoY change suggests that occupancy rate may have bottomed, but at a very low level.

As Smith Travel noted, room rates are still falling (off 4.4%) because of the low occupancy rate. Business travel will be very important for the next few months, and right now it appears the weekday occupancy rate (mostly business travel) is at about the same levels as last year during the worst of the recession.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 2/25/2010 09:15:00 AM

From Cleveland Fed President Sandra Pianalto: When the Small Stuff Is Anything But Small. A few excerpts:

You know we have been through one of the most severe and longest recessions in our nation’s history. The recovery from the recession may also end up being one of the longest in our history. In fact, it may take years just to get back to the level of output we enjoyed in 2007, just before the economic crisis began.

Some of you may think I am being too pessimistic. After all, we saw a strong GDP growth estimate for the fourth quarter of last year--nearly 6 percent at an annual rate. But I think that figure overstates the underlying strength of our economy right now.

This is a case where paying attention to the small stuff--the details beneath that impressive number--reveals a more complicated story of what is shaping up to be a gradual recovery. Most of the thrust behind that impressive fourth-quarter GDP growth figure owes to a rebuilding of inventory stocks, which had been cut to the bone and could no longer support even a mild economic recovery. Over the course of this year, I expect overall growth in employment and output to be on the weak side for the early stages of an economic recovery.

For many American households and businesses, this is a recovery that just does not feel much like a recovery. Let me point to two reasons why this is so. The first is due to the large amount of excess capacity that has accumulated. As spending declined in the recession, firms of all sizes cut back, drastically in many cases.
...
Excess capacity is a dilemma for businesses of all sizes. They can maintain capacity for only so long without an uptick in sales, and they’re confronting a market where demand is only gradually recovering after having fallen off a cliff. In fact, according to the most recent survey of the National Federation of Independent Business, or NFIB (January 2010), members cited poor sales as their single most important problem. The latest American Express Open Pulse Survey also expresses a similar perspective. A very slow recovery in demand, which translates into low sales for most firms, makes it far tougher to maintain idle capacity over time. ...

One of the forces holding back demand is the continuing high level of unemployment. Indeed, poor labor market conditions pose another large challenge to the recovery. ...

The duration of unemployment is also a big concern. According to the Bureau of Labor Statistics, the share of workers who have been without jobs for 27 weeks or longer now stands at 41 percent--the highest number since this series began in 1948.

Clearly, massive layoffs contributed to these large unemployment numbers, and fortunately, layoffs slowed months ago. Our current problem is a lack of job openings. In fact, the job-finding rate now stands at a historic low. Businesses are not creating new jobs very quickly, and where labor utilization is picking up, employers are simply restoring hours that had been previously cut.
...
So, to sum up, while we are likely now in a period of recovery, it doesn't really feel much like one. All types of businesses are continuing to see weak levels of demand – in other words, they don't expect to see a bounce-back in sales for quite a while yet. This in turn creates excess capacity, which leaves businesses having to decide whether to maintain or shut idle plants and offices. In such an environment, firms are being cautious about new hiring and so unemployment persists at a high level, which in turn restrains spending. From any perspective this is not a pretty picture, but it is especially challenging for small business ...

Some of these bloggers Fed Presidents are pretty pessimistic!

by Calculated Risk on 2/25/2010 08:42:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Feb. 20, the advance figure for seasonally adjusted initial claims was 496,000, an increase of 22,000 from the previous week's revised figure of 474,000. The 4-week moving average was 473,750, an increase of 6,000 from the previous week's revised average of 467,750.
...
The advance number for seasonally adjusted insured unemployment during the week ending Feb. 13 was 4,617,000, an increase of 6,000 from the preceding week's revised level of 4,611,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims increased this week by 6,000 to 473,750.

The current level of 496,000 (and 4-week average of 473,750) are very high and suggest continuing job losses in February. This is the highest level since last November.

by Calculated Risk on 2/24/2010 11:59:00 PM

From the American Trucking Association: ATA Truck Tonnage Index Jumped 3.1 Percent in January

Click on graph for slightly larger image in new window.

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index jumped 3.1 percent in January, following a revised 1.3 percent increase in December 2009. The latest gain boosted the SA index from 107 (2000=100) in December to 110.4 in January, its highest level since September 2008.
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For all of 2009, the tonnage index was down 8.7 percent (slightly larger than the previously reported 8.3 percent drop), which was the largest annual decrease since a 12.3 percent plunge in 1982.
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ATA Chief Economist Bob Costello said that the latest tonnage reading, coupled with anecdotal reports from carriers, indicates that both the industry and the economy are clearly in a recovery mode. “While I don’t expect tonnage to continue growing as robustly as it did in January, the industry is finally moving in the right direction. Although there are still risks that could throw the rebound off track, the likelihood of that happening continues to diminish.”
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Trucking serves as a barometer of the U.S. economy, representing nearly 69 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods.

Trucking is a coincident indicator - and some of this increase is related to the inventory cycle - but this suggests growth in January.

by Calculated Risk on 2/24/2010 07:49:00 PM

Note: I've added a list of "Posts Today" and "Posts Yesterday" on the right sidebar so everyone can find posts on recent economic releases (this has been a busy day and week)!

On Monday I linked to an article by Floyd Norris at the NY Times: Horrid Job Number Coming. Norris wrote:

"a lot of people who had jobs may report they did not work during the week, and companies may say they had fewer people on the payroll than they would have cited a week earlier or later. If so, we may get a truly horrid job number."

Since then I've spoken to a BLS representative, and although they will not comment on upcoming releases, he told me the BLS would prominently disclose any possible impact of the recent snow storms on the employment report - similar to the disclosure after Hurricane Katrina. It is possible that the response rates will be lower than usual in certain areas (like Washington D.C.) - this will be disclosed and adjustments will be made.

Other contacts - with knowledge of how the BLS conducts the surveys - have told me the snow storms will have little or no impact on the employment report (other on data collection as will be disclosed by the BLS).

Heck, maybe the snow storm boosted employment because of all the people hired temporarily to shovel snow!