Calculated Risk

Saturday, April 03, 2010

Housing Starts and the Unemployment Rate

by Calculated Risk on 4/03/2010 07:43:00 PM

Returning to a theme ...

Click on graph for larger image in new window.

This graph shows single family housing starts through February and the unemployment rate through March (inverted).

You can see both the correlation and the lag. The lag is usually about 12 to 18 months, with peak correlation at a lag of 16 months for single unit starts. The 2001 recession was a business investment led recession, and the pattern didn't hold.

Usually housing starts and residential construction employment lead the economy out of a recession, but not this time because of the huge overhang of existing housing units. Housing starts (blue) are moving sideways.

The second graph shows construction payroll employment. Unfortunately the BLS didn't start breaking out residential specialty trade construction employment until 2001 - so this graph shows total construction.

Usually residential leads both into and out of a recession, and non-residential lags a recession. But we can't see that here.

But this graph does show that there are 2.13 million fewer construction payroll jobs than at the peak. About 1.3 million of these are residential construction. Since non-residential construction is still declining - and residential is flat - this is a key area of employment that will see little recovery this year.

Of course this is only about 14% of the total unemployed and other sectors will probably do better, but this is usually a leading sector for the economy. Since I expect the housing recovery to be sluggish, I also expect unemployment to remain high throughout 2010.

Geithner: U.S. to Delay Currency Report

by Calculated Risk on 4/03/2010 04:10:00 PM

From Reuters: US Delays Decision on China Yuan Manipulation

U.S. Treasury Secretary Timothy Geithner said on Saturday he was delaying an April 15 report on whether China manipulates its currency but pledged to press for a more flexible Chinese currency policy.
...
Delaying the report -- something that happened regularly in prior administrations -- will push the decision to well after [Chinese President Hu Jintao]'s visit [to the U.S.].

This sure sounds like currency manipulation: "China's continued maintenance of a currency peg has required increasingly large volumes of currency intervention."
Treasury Secretary Timothy Geithner, April 3, 2010

Unofficial Problem Bank List at 683

by Calculated Risk on 4/03/2010 01:10:00 PM

This is an unofficial list of Problem Banks compiled only from public sources. Changes and comments from surferdude808:

With no failures this week and the OCC and FDIC not releasing any actions until the second half of the month, the Unofficial Problem Bank List did not undergo many changes this week.

There are 683 institutions on the list with aggregate assets of $361 billion. Four institutions were added this week including First Bank, Creve Coeur, MO ($10.5 billion); and Preferred Bank, Los Angeles, CA ($1.3 billion Ticker: PFBC).

Prompt Corrective Action Orders were issued this week against two institutions on the list -- Midwest Bank and Trust Company ($3.4 billion) and TierOne Bank ($2.9 billion).

Removals include New Resource Bank ($159 million) as its enforcement action was terminated according to a company press release and the Bank of Tacoma ($39 million), which was acquired by Northwest Bank via an unassisted acquisition back in February.

We also had two institutions that were listed twice; thanks to reader MS for noting this error.

The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay, and the Fed and OTC data is more timely. The OCC data is a little lagged. Credit: surferdude808.

See description below table for Class and Cert (and a link to FDIC ID system).

For a full screen version of the table click here.

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)

Class: from FDIC

The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state or federal government), its Federal Reserve membership status (member or nonmember), and its primary federal regulator (state-chartered institutions are subject to both federal and state supervision). These codes are:
N National chartered commercial bank supervised by the Office of the Comptroller of the Currency
SM State charter Fed member commercial bank supervised by the Federal Reserve
NM State charter Fed nonmember commercial bank supervised by the FDIC
SA State or federal charter savings association supervised by the Office of Thrift Supervision
SB State charter savings bank supervised by the FDIC

Cert: This is the certificate number assigned by the FDIC used to identify institutions and for the issuance of insurance certificates. Click on the number and the Institution Directory (ID) system "will provide the last demographic and financial data filed by the selected institution".

Unemployment Rates and Duration of Unemployment

by Calculated Risk on 4/03/2010 08:57:00 AM

Here is a graph of the unemployment rate seasonally adjusted and not seasonally adjusted - plus, by request, two more graphs of the duration of unemployment.

Click on graph for larger image in new window.

The first graph shows the calculated unemployment rate - both seasonally adjusted (SA) and not seasonally adjusted (NSA).

Some sites noted the NSA rate was "only" 9.5% when the SA moved above 10% last October. Other sites noted that the NSA rate had hit 10.6% in January. Both sites were correct - but there is a clear seasonal pattern for employment, so the SA unemployment rate is the one to use. Note: the SA rate will be above the NSA rate in April.

ALSO - the graph above uses the calculated unemployment rate (unrounded). For March, the calculated unemployment rate was 9.749% up from 9.687% in February. Both were rounded to 9.7% ...

And on duration of unemployment, by request:

This graph shows the duration of unemployment as a percent of the civilian labor force (line graph unstacked). The graph shows the number of unemployed in four categories as provided by the BLS: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

Note: The BLS reports 15+ weeks, so the 15 to 26 weeks number was calculated.

This really shows the change in turnover - there was more turnover in the '70s and '80s, since the 'less than 5 weeks' category was much higher as a percent of the civilian labor force than in recent years. This changed in the early '90s - perhaps as a result of more careful hiring practices or changes in demographics or maybe other reasons - but if the level of normal turnover was the same as in the '80s, the current unemployment rate would probably be the highest since WWII.

The last graph is a repeat, but the information is stacked in reverse order.

In March 2010, there were a record 6.55 million people unemployed for 27 weeks or more, or 4.3% of the labor force.

For more on duration (and possible causes) see my post yesterday: Duration of Unemployment

Earlier employment posts yesterday: