by Calculated Risk on 10/28/2010 02:31:00 PM

From Challenger, Gray & Christmas: Job Seeker Relocation Drops to Record Low

The percentage of unemployed managers and executives relocating for a new position fell to a record low in the third quarter of 2010, as a slightly improved job market and greatly depreciated home values combined to eliminate this option for most job seekers.

Just 6.9 percent of job seekers who found employment in the third quarter relocated for the new position. That was down from a relocation rate of 13.4 percent in the same quarter a year ago ...

“Continued weakness in the housing market is undoubtedly the biggest factor suppressing relocation. Job seekers who own a home – even if they are open to relocating for a new job – are basically stuck where they are if they are unable or unwilling to sell their homes without incurring a significant loss,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Click on graph for larger image in new window.

Here is the quarterly data from Challenger, Gray. Mobility has been trending down for some time, but really declined over the last year.

It is tough to move when you can't sell your home. Sometimes the new employer will pick up the short fall for key executives and managers, but it is probably too expensive in many cases now.

This is no surprise. Here is what I wrote in 2007:

Less worker mobility [due to negative equity] is kind of like arteriosclerosis of the economy. It lowers the overall growth potential.

Perhaps as many as 15 to 20 million households will be saddled with negative equity by 2009. Even if most of these homeowners don't "walk away", there might still be a negative impact on the economy due to less worker mobility.

One of the strengths of the U.S. labor market has been the flexibility associated with labor mobility at all levels of employment - households could easily move from one region to another for better employment. The sharp decline in house prices, leaving homeowners with significant negative equity, appears to be limiting this flexibility.

by Calculated Risk on 10/28/2010 01:42:00 PM

Yesterday I mentioned that Bill Gross was calling the end "of a great 30-year bull market in bonds". I thought he was changing his view, but this isn't the first time (ht Erik):

From Bloomberg on March 27, 2010: Pimco’s Bill Gross Says Bonds Have Seen Best Days

“Bonds have seen their best days,” Gross said in a Bloomberg Radio interview ... Yields on two-year U.S. Treasury notes are likely to rise to 1.25 percent to 1.5 percent from 1.08 percent in the next year as the economy strengthens and the Federal Reserve begins to increase interest rates, Gross said.

On March 26, 2010 the Ten Year Treasury yield was 3.86% (now 2.65%)

And from Reuters in June 2007: Pimco's Gross says he's now a "bear market manager"

Gross forecast that benchmark Treasury yields will range higher than previously thought, prompting him to acknowledge he is now a "bear market manager" after a quarter of a century as the global bond market's most powerful bull.

On June 7, 2007, the ten year Treasury yield was 5.1%.

So Gross has called the end of the bond rally before. Nevermind.

The end of the "bull market in bonds" really depends on if the economy strengthens, and I don't see a pickup in economic growth any time soon.

by Calculated Risk on 10/28/2010 11:00:00 AM

The Kansas City Fed released their October manufacturing survey this morning:

Tenth District manufacturing activity continued to expand moderately in October, and producers were increasingly optimistic about future activity.
...
The net percentage of firms reporting month-over-month increases in production in October was 10, down from 14 in September ... the new orders index jumped from 9 to 16, its highest level since early 2007, and the employment index also edged higher [to -1].

This was the last of the regional Fed surveys for October.

The following graph compares the regional Fed surveys with the ISM manufacturing survey, including the Kansas City survey released this morning:

Click on graph for larger image in new window.

For this graph I averaged the New York and Philly Fed surveys (dashed green, through October), and averaged five Fed surveys (blue) including New York, Philly, Richmond, Dallas and Kansas City.

The Institute for Supply Management (ISM) PMI (red) is through September (right axis).

Although the internals were mixed in the regional Fed surveys, this graph suggests the ISM index will still show expansion in October. The ISM Manufacturing index will be released on Monday November 1st.

by Calculated Risk on 10/28/2010 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Oct. 23, the advance figure for seasonally adjusted initial claims was 434,000, a decrease of 21,000 from the previous week's revised figure of 455,000. The 4-week moving average was 453,250, a decrease of 5,500 from the previous week's revised average of 458,750.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since January 2000.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week by 5,500 to 453,250.

This is the lowest level for weekly claims and the 4-week average since July, however the 4-week moving average has been moving sideways at an elevated level for almost a year - and that suggests a weak job market.

by Calculated Risk on 10/27/2010 10:28:00 PM

From Landon Thomas at the NY Times: Greece Said to Be Falling Short of Deficit-Cutting Goals

With economic conditions weaker than expected, tax revenue is coming up short of projections in parts of Europe.
...
Greece ... looks as if it will run a budget deficit for 2010 greater than the 8.1 percent of gross domestic product it agreed to as part of a rescue package from the International Monetary Fund and the European Union ...

In Ireland, which is expecting its third consecutive year of economic contraction this year, the government says it will need an additional 15 billion euros in budget cuts to reduce its deficit from 32 percent of gross domestic product to 3 percent by 2014.

According to Bloomberg, the yield on the Greece 10-year bond jumped to 10.39% from 9.36% on Tuesday, and the yield on the Ireland 10-year bond increased to a new crisis closing high of 6.77%.