by Calculated Risk on 12/30/2010 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Dec. 25, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 34,000 from the previous week's revised figure of 422,000. The 4-week moving average was 414,000, a decrease of 12,500 from the previous week's revised average of 426,500.

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 12,500 to 414,000.

Even though weekly claims are seasonally adjusted, sometimes data for holiday weeks can be a little off.

In general the four-week moving average has been declining and that is good news. If weekly unemployment claims remain below 400,000 that would suggest a better labor market.

by Calculated Risk on 12/29/2010 08:41:00 PM

In the S&P/Case-Shiller report for October, S&P noted:

[S]ix markets – Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices started to fall in 2006 and 2007

S&P reports the data Not Seasonally Adjusted (NSA) because of concerns about foreclosures impacting the seasonal factor.

Using the Seasonally Adjusted (SA) series, eleven cities were at post bubble lows; the six cities listed above plus Phoenix, Chicago, Detroit, New York and Las Vegas.

The following graph shows the percent above the post bubble lows for the 20 Case-Shiller cities and the two composite indexes using both SA and NSA data.

Click on graph for larger image in graph gallery.

Las Vegas was slightly above the post bubble low NSA (it isn't apparent on the graph).

We can probably guess the cities that will set new post bubble lows in November. Using the NSA data, Las Vegas, New York and Detroit will all probably join the list above setting new lows.

Using the SA data, Dallas, Cleveland, Denver, and maybe the Composite 20 index will be at new lows.

Note: Earlier I posted A few for Graphs for 2010. Enjoy!

by Calculated Risk on 12/29/2010 04:25:00 PM

Earlier I posted A few for Graphs for 2010. Enjoy!

A 2011 forecast from economist Tom Lawler:

	2010 (estimate)	2011 (forecast)
Total Starts	588	665
.... Single Family	473	520
.... Multi Family	115	145
New Home Sales	320	365

Note: Tom already forecast completions would be at a record low next year, but he thinks starts will increase "with most of the increase coming in the second half of the year".

A special thanks to Tom Lawler for sharing his insights with me this year - and allowing me to share some of them!

by Calculated Risk on 12/29/2010 02:47:00 PM

To make this clear (since I mentioned this change earlier): This change will have no impact on the number of unemployed or the unemployment rate. This will only impact the average duration of unemployment.

From the BLS: Changes to data collected on unemployment duration

Effective with data for January 2011, the Current Population Survey (CPS) will be modified to allow respondents to report longer durations of unemployment. Presently, the CPS accepts unemployment durations of up to 2 years; any response of unemployment duration greater than this is entered as 2 years. Starting with data for January 2011, respondents will be able to report unemployment durations of up to 5 years. This change will likely affect estimates of average (mean) duration of unemployment. The change will not affect the estimate of the number of unemployed persons and will not affect other data series on the duration of unemployment.

Currently if someone says they have been unemployed longer than 2 years, they are listed at 2 years (the current maximum). This new change will allow for responses up to 5 years and will probably have a small impact on the average (mean) duration of unemployment, but will have no impact on the median duration - or on the number unemployed or the unemployment rate.

by Calculated Risk on 12/29/2010 11:36:00 AM

Click on graphs for a larger image in graph gallery.

The first graph shows the job losses from the start of the employment recession, in percentage terms aligned at maximum job losses.

As of November there were 7.4 million fewer payroll jobs in the U.S. compared to the peak of employment in 2007. If the U.S. economy adds 200,000 jobs per month, it will take 3 years to get back to the previous peak (2 years at 300,000 per month). And that doesn't include jobs needed to offset population growth (about 125,000 jobs per month).

The second graph shows the employment population ratio, the participation rate, and the unemployment rate.

Two of the key stories in 2010 were the unemployment rate (red line) stayed near 10% (at 9.8% in November), and the Labor Force Participation Rate declined to 64.5% in November (blue line). This is the percentage of the working age population in the labor force - and the decline suggests that a large number of people have just given up looking for work.

And now to housing ...

This graph shows existing home sales (left axis) and new home sales (right axis) through November.

A key story in 2010 was the collapse in home sales following the expiration of the homebuyer tax credit (Note: the tax credit is widely viewed as a failure).

Existing home sales are back to the levels of 1997 / 1998 and new home sales fell to record lows in the 2nd half of 2010.

As existing home sales declined, existing home inventory and months-of-supply increased.

This graph shows the year-over-year change in inventory and the months-of-supply. Inventory is not seasonally adjusted, so it really helps to look at the YoY change.

Inventory increased 5.4% YoY in November and the months-of-supply (9.5 months in November) is well above normal.

And the high level of inventory has pushed down house prices. This graph shows existing home months-of-supply (left axis), and the annualized change in the Case-Shiller composite 20 house price index (right axis, inverted).

With the increase in inventory (and months-of-supply), it was no surprise that house prices started declining again in the 2nd half of 2010.

The good news is housing starts stayed near record low levels. This is helping to reduce the excess inventory of housing units.

This graph shows the huge collapse following the housing bubble, and that housing starts have mostly been moving sideways for two years - with a slight up and down over the last six months due to the home buyer tax credit.

Another piece of "good news" is it appears that mortgage delinquencies might have peaked.

This graph based on quarterly data from the MBA shows the percent of loans delinquent by days past due.

Although delinquencies might have peaked, the level is still very high and there are many more foreclosures in the pipeline.

Note: With declining house prices, the number of homeowners with negative equity will increase - and the delinquency rate might start increasing again.

Some "bad news" for housing is that REO (Real Estate Owned) inventories at Fannie, Freddie and the FHA are at record levels.

This graph shows the REO inventory for Fannie, Freddie and FHA through Q3 2010.

The REO inventory for the "Fs" has increased sharply over the last year, from 153,007 at the end of Q3 2009 to a record 293,171 at the end of Q3 2010.

Remember this is just a portion of the total REO inventory. Private label securities and banks and thrifts also hold a substantial number of REOs, and the overall REO inventory is below the peak in 2008.

On manufacturing, there was a pickup in capacity utilization and industrial production, but there is still a large amount of excess capacity.

This graph shows Capacity Utilization. This series is up 10.3% from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 75.2% is still far below normal - and well below the pre-recession levels of 81.2% in November 2007.

Another key story in 2010 is that the consumer has started spending again.

This graph shows real Personal Consumption Expenditures (PCE) through November (2005 dollars).

The two-month method of estimating real PCE growth for Q4 (a fairly accurate method), suggests real PCE growth of 4.3% in Q4! So this looks like a pretty strong quarter for growth in personal consumption. The last time real PCE grew at more than 4% was in 2006.

And the final graph is a little bit of good news for commercial real estate.

In 2010, investment in non-residential structures was a drag on GDP growth. However, this graph of the Architecture Billings Index shows expansion in billings for the first time in almost 3 years. (above 50 is expansion).

This index usually leads investment in non-residential structures by about 6 to 9 months.

Best to all