by Calculated Risk on 10/01/2010 06:08:00 PM

Ten One Twenty Ten
Some day these failures will end
Today's not that day
by Soylent Green is People
From the FDIC: Centennial Bank, Conway, Arkansas, Assumes All of the Deposits of Wakulla Bank, Crawfordville, Florida

As of June 30, 2010, Wakulla Bank had approximately $424.1 million in total assets and $386.3 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $113.4 million. ... Wakulla Bank is the 128th FDIC-insured institution to fail in the nation this year, and the twenty-fifth in Florida.

Twenty five in Florida alone this year ...

by Calculated Risk on 10/01/2010 06:04:00 PM

From the WaPo: Connecticut halts all foreclosures for all banks

From Business Insider: Bank Of America Joins JPMorgan In Suspending Foreclosures

From MarketWatch: Title insurers dented by ‘robo-signer’ concern

by Calculated Risk on 10/01/2010 04:00:00 PM

Based on an estimate from Autodata Corp, light vehicle sales were at a 11.76 million SAAR in Setpember. That is up 25.8% from September 2009 (the dip following cash-for-clunkers), and up 2.8% from the August 2010 sales rate.

Click on graph for larger image in new window.

This graph shows the historical light vehicle sales (seasonally adjusted annual rate) from the BEA (blue) and an estimate for August (red, light vehicle sales of 11.76 million SAAR from Autodata Corp).

This is the high for the year - slightly higher than in March.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current month sales rate. The current sales rate is about at the bottom of the '90/'91 recession - when there were fewer registered drivers and a smaller population.

This was above most forecasts of around 11.6 million SAAR.

by Calculated Risk on 10/01/2010 01:50:00 PM

From New York Fed President William Dudley: The Outlook, Policy Choices and Our Mandate

Currently, my assessment is that both the current levels of unemployment and inflation and the timeframe over which they are likely to return to levels consistent with our mandate are unacceptable. In addition, the longer this situation prevails and the U.S. economy is stuck with the current level of slack and disinflationary pressure, the greater the likelihood that a further shock could push us still further from our dual mandate objectives and closer to outright deflation.

We have tools that can provide additional stimulus at costs that do not appear to be prohibitive. Thus, I conclude that further action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long.

And from Chicago Fed President Charles Evans: A Perspective on the Future of U.S. Monetary Policy

The modern economic theory of liquidity traps indicates that the optimal policy response at zero-bound is to lower the real interest rate, almost surely by employing unconventional policy tools. Theory also indicates that, in the absence of such policy stimulus, the factors that generate high risk aversion could very well stifle a meaningful recovery, keep unemployment high and reinforce disinflationary pressures – clearly an undesirable equilibrium.

So, in the coming weeks and months, as I assess the incoming data, update my forecast and deliberate on the best monetary policy approach, I will be pondering two key issues: How much more should monetary policy do to reduce the shortfalls in meeting our dual mandate responsibilities for employment and price stability; and what tools should we use?

Dudley is on the FOMC (NY is a permanent member) and Evans is an alternate member. The Fed presidents are signaling that barring an upside surprise - and the personal income report this morning suggests Q3 GDP will show sluggish growth - QE2 will arrive on November 3rd.

by Calculated Risk on 10/01/2010 12:30:00 PM

Catching up with all the data this morning ...

The Census Bureau reported overall construction spending increased slightly in August.

[C]onstruction spending during August 2010 was estimated at a seasonally adjusted annual rate of $811.8 billion, 0.4 percent (±1.8%)* above the revised July estimate of $808.6 billion.

However private construction spending declined again:

Spending on private construction was at a seasonally adjusted annual rate of $498.2 billion, 0.9 percent (±1.1%)* below the revised July estimate of $502.6 billion. Residential construction was at a seasonally adjusted annual rate of $238.5 billion in August, 0.3 percent (±1.3%)* below the revised July estimate of $239.1 billion. Nonresidential construction was at a seasonally adjusted annual rate of $259.7 billion in August, 1.4 percent (±1.1%) below the revised July estimate of $263.5 billion.

Click on graph for larger image in new window.

This graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Both residential and non-residential private construction spending declined in August. Residential spending is 64.7% below the peak early 2006, and 4.7% above the recent low in 2009.

Non-residential spending is 37.3% from the peak in January 2008.

On a year-over-year basis, residential spending has turned slightly negative after the tax credit expired - and this indicates residential investment (RI) will be a drag on Q3 GDP.

Non-residential spending is still off sharply from last year (down 24%), but the rate of decline might be slowing. As major projects are completed, I expect private non-residential spending to fall below residential spending later this year or in early 2011.