by Calculated Risk on 5/04/2010 02:57:00 PM

More from the Q1 2010 GDP underlying detail tables ...

Note: Residential investment (RI), according to the Bureau of Economic Analysis (BEA), includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories.

Back in Q4 2008 - for the first time ever - investment in home improvements exceeded investment in new single family structures. This has continued through Q1 2010.

Click on graph for larger image in new window.

This graph shows the various components of RI as a percent of GDP for the last 50 years. The most important components are investment in single family structures followed by home improvement.

Investment in home improvement was at a $152.9 billion Seasonally Adjusted Annual Rate (SAAR) in Q1, significantly above the level of investment in single family structures of $115.2 billion (SAAR).

Home improvement spending, as a percent of GDP, is close to the long term median - although still declining. Brokers' commissions declined after the initial expiration of the tax credit - but will probably be boosted in Q2 by the extension of the homebuyer tax credit - and then will decline again in Q3.

Investment in single family structures is above the record low set in Q2 2009, and far below the normal level. And investment in multifamily structures is still collapsing. These two categories will not increase significantly until the number of excess housing units is reduced.

by Calculated Risk on 5/04/2010 11:24:00 AM

A couple of comments from German officials via the Guardian: Greece's €110bn bailout gets lukewarm reception from financial markets (ht Jonathan)

German economy minister Rainer Brüderle added to the uncertainty by telling Reuters that the €110bn package was not intended to cover Greece's entire financial requirements for the next three years. Instead, Brüderle suggested, Greece will need to return to the financial markets in perhaps 18 months to satisfy its borrowing needs.
...
Finance minister Wolfgang Schäuble said that Greece would be plunged into insolvency if it failed to meet its promises to raise taxes across the economy, increase the retirement age to 65, and cut the size of its public sector.

"If there are any violations, payments will be stopped. Then Athens will once again be threatened with bankruptcy," Schäuble told the Rheinische Post newspaper.

The yield on the two year Greek government debt was up 4.2% to 14.5% this morning. Investors still have no confidence ...

And there are still worries of contagion, from Bloomberg:

Spanish Prime Minister Jose Luis Rodriguez Zapatero said speculation of a bailout for Spain is “complete madness” and the nation has “strong solvency.” His remarks came as Greece’s 110 billion-euro ($146 billion) rescue package fails to ease concern that swelling European sovereign debt will derail the economic recovery.

by Calculated Risk on 5/04/2010 10:00:00 AM

From the NAR: Pending Home Sales on an Upswing

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, rose 5.3 percent to 102.9 from 97.7 in February, and is 21.1 percent above March 2009 when it was 85.0; this follows an 8.3 percent increase in February. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
...
"In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” [Lawrence Yun, NAR chief economist] said.

This is no surprise - the tax credit has pulled demand forward, and existing home sales will decline after June (existing home sales are counted when the contract closes).

by Calculated Risk on 5/04/2010 08:34:00 AM

From Bloomberg:

Filings totaled almost 146,000 in April, according to data compiled by Automated Access to Court Electronic Records, a service of Oklahoma City-based Jupiter ESources LLC. March filings were about 158,000.

The April filing total represented a 15 percent increase from April 2009 total. This is the 2nd highest month since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was enacted.

Click on graph for larger image in new window.

This graph shows the non-business bankruptcy filings by quarter using monthly data from the ABI and previous quarterly data from USCourts.gov.

The American Bankruptcy Institute (ABI) is forecasting over 1.5 million filings in 2010. This is an increase from the just over 1.4 million filings in 2004. I think the ABI forecast is low ...

by Calculated Risk on 5/03/2010 11:24:00 PM

Just an overview ...

Light Vehicle Sales in April were at a 11.2 Million Seasonally Adjusted Annual Rate (SAAR). This was up 21.8% from April 2009 (when sales were at the lowest level in 30 years), and down 4.6% from the March 2010 sales rate.

Personal Income was up 0.3% in March, but spending increased 0.6%. The increases in spending are coming from less saving and transfer payments instead of income growth. This is a solid increase in personal consumption expenditures (PCE), but PCE growth is not sustainable without jobs and income growth.

The ISM Manufacturing Index showed solid growth in April. The employment index increased to 58.5 percent in April (suggesting growth in manufacturing employment).

Private construction spending declined in March for both residential and non-residential. Public construction spending increased. Perhaps the good news is investment in offices, malls and hotels is at or near record lows, and is probably nearing the bottom (although spending will probably decline most of this year). This suggests the job losses related to construction employment will slow.

The Federal Reserve released the April Senior Loan Officer survey. The survey showed that banks are keeping lending standards unchanged (no longer tightening), but the survey also showed that loan demand weakened further.

And some more excerpts from Fed transcripts in 2004 (just released). These transcripts show that Fed researchers were aware that the increase in house prices (by early 2004) could not be explained by fundamentals, and that a Fed President was concerned about rampant speculation and loose lending standards.