by Calculated Risk on 4/13/2011 04:22:00 PM

From economist Tom Lawler:

Based on the available data on home sales from local MLS, I estimate that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of around 5.08 million in March, up 4.1% from February but down 6.6% from last March’s pace.

Based on various data sources, including local MLS reports, I’d estimate that existing homes listed for sale increased by 1.5-2% from February to March. However, for some unknown reason the NAR’s methodology has tended to show bigger increases/smaller declines in February, and smaller increases/bigger declines in March, than available data on listings suggest. (That “trend” was evident again this February, when listings data suggested a small monthly decline but NAR “showed” a 3.5% increase). If past “NAR strangeness” holds, then the NAR will probably report inventories that are flat to maybe even down slightly from February to March – even though “they weren’t.” If the NAR’s inventory reading were flat then the NAR would show existing home inventories as being down 3.8% from last March – and any reasonably reading would show a YOY drop, as the VAST majority of local MLS have reported inventory declines from a year ago.

For those who forgot, the NAR doesn’t actually “add up” existing homes listed for sale across the country to derive its existing home inventory number. Rather, the NAR gets data on “months’ supply” from the 160+ MLS/associations in its sample, and then – after “grossing up” sample sales to a “national” estimate (based on decadal benchmarks, the last one being done a decade ago) – uses the reported “months’ supplies” to get a national inventory number. As noted before, the “definition” of “inventory” varies across MLS. In addition, not all MLS run reports exactly on the same time. Moreover, inventory numbers in an MLS at a given time may not always accurately reflect the listing status of a given property.

CR Note: The NAR needs to fix these data issues. Hopefully the new methodology will be announced this summer.

Existing home sales for March will be released next Wednesday, April 20th, at 10am ET.

by Calculated Risk on 4/13/2011 02:32:00 PM

• Fed's Beige Book:

Reports from the twelve Federal Reserve Districts indicated that economic activity generally continued to improve since the last report. While many Districts described the improvements as only moderate, most Districts stated that gains were widespread across sectors, and Kansas City described its economic gains as solid.

On Real Estate:

Real estate markets for single family homes for the most part either were little changed from low levels or continued to weaken across all Districts. ...

Commercial real estate activity remained weak across all Districts, although seven reported slight improvements since their last report.

• From the Fed: Federal Reserve issues enforcement actions related to deficient practices in residential mortgage loan servicing and foreclosure processing. This includes LPS and MERS.

by Calculated Risk on 4/13/2011 01:23:00 PM

As a reminder, we can divide the deficit into three components:
1) Structural deficit (General Fund ex-health care).
2) Cyclical deficit - a result of the severe recession and includes lower tax revenue, stimulus spending, and larger safety net costs.
3) Long term health care.

The structural deficit was introduced in 2001, and was based on some bad math and faulty projections. Back in 2001, the White House was projecting a budget surplus of $800 billion in 2010, and an "on-budget surplus under baseline assumptions well past 2030 despite the budgetary pressures from the aging of the baby-boom generation".

With those projections, it was natural to want to return the surpluses to the people. That policy was supported by Representatives Eric Cantor and Paul Ryan, and also Senator Mitch McConnell. I single those three out because they are always talking about the deficit, but no one in the media asks them about their role in creating the deficit!

Of course those projections a decade ago were faulty. Some people argue the shortfalls were because of recession and war, but there were recessions in the '60, '70, '80 and '90s ... so a recession should have been expected. And there were wars in the '60s, '70s, and '90s, and a huge defense buildup in the '80 because of the cold war. A war contingency should have been included too.

The cyclical deficit was a result of the housing bubble and bust, and the financial crisis that followed. When I was predicting a housing bust back in 2005, I was concerned that we would be piling a huge cyclical deficit on top the structural deficit.

So by 2005 - for those paying attention - we already knew there was a huge structural deficit, a cyclical deficit coming, and that healthcare would be a serious problem in the future because of demographics.

Still it is possible to make progress. As the economy recovers, the cyclical deficit will fade away. And since the forecasts were wrong in 2001, the baseline approach would be to reverse those policies. David Leonhardt at the NY Times suggests doing that: Do-Nothing Congress as a Cure.

That still leaves healthcare - and that isn't an easy problem, but I think that should be the focus of Obama's speech.

And from the White House:

by Calculated Risk on 4/13/2011 10:26:00 AM

From the BLS: Job Openings and Labor Turnover Summary

There were 3.1 million job openings on the last business day of February 2011, the U.S. Bureau of Labor Statistics reported today. The job openings rate (2.3 percent) increased over the month. The hires rate (3.0 percent) and total separations rate (2.9 percent) were little changed over the month.
...
The job openings level has trended up since the end of the recession in June 2009 (as designated by the National Bureau of Economic Research) but remains well below the 4.4 million openings when the recession began in December 2007.

The following graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Unfortunately this is a new series and only started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for February, the most recent employment report was for March.

Click on graph for larger image in graphics gallery.

Notice that hires (purple) and total separations (red and blue columns stacked) are pretty close each month. When the purple line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

In general job openings (yellow) has been trending up - and are up 23% from February 2010.

The overall turnover remains low.

by Calculated Risk on 4/13/2011 08:30:00 AM

On a monthly basis, retail sales increased 0.4% from February to March (seasonally adjusted, after revisions), and sales were up 7.1% from March 2010.

Click on graph for larger image in new window.

This graph shows retail sales since 1992. This is monthly retail sales, seasonally adjusted (total and ex-gasoline).

Retail sales are up 16.0% from the bottom, and now 2.5% above the pre-recession peak.


The second graph shows the year-over-year change in retail sales (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 5.8% on a YoY basis (7.1% for all retail sales).

Here is the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $389.3 billion, an increase of 0.4 percent (±0.5%)* from the previous month, and 7.1 percent (±0.7%) above March 2010.

This was below expectations for a 0.5% increase. Retail sales ex-autos were up 0.8%; slightly above expectations of a 0.7% increase.

Retail sales ex-gasoline were only up 0.1% in March - and this shows the impact of higher gasoline prices.