by Calculated Risk on 5/09/2011 08:22:00 PM

• From MarketWatch: CME hikes oil, gasoline margin requirements (ht jb)

The requirement for a new position in benchmark New York Mercantile Exchange crude contracts rises to $8,438 from $6,750 previously, with margins also higher for contracts in benchmark Brent crude, gasoline and other products.

• From the FDIC: FDIC Announces Chairman Bair's Official Departure Date

The Federal Deposit Insurance Corporation (FDIC) today announced Chairman Sheila C. Bair's official departure will be effective July 8th, 2011.

• From the WSJ: Greek Woes Fuel Fresh Fears
• From the NY Times: Greece Pushes Plan to Raise Cash With Big Sales

No islands or beaches are up for sale, despite the persistent, usually snide suggestions from abroad that have riled many Greeks.

Earlier:
• New York Fed's Q1 Report on Household Debt and Credit "Shows Signs of Healing in Consumer Credit Markets Since Last Quarter"
• AAR: Rail Traffic "mixed" in April
• Zillow on Negative Equity: 28.4% of all single-family homes with mortgages are "underwater"

by Calculated Risk on 5/09/2011 06:02:00 PM

By request, here is an update to a graph I posted over a year ago on construction employment. Last year the outlook for construction employment was grim. This year will be a little better - but not much.

Click on graph for larger image in graph gallery.

This graph shows the number of construction payroll jobs (blue line), and the number of construction jobs as a percent of total non-farm payroll jobs (red line).

Construction employment is down 2.2 million jobs from the peak in April 2006, but up 26 thousand jobs so far this year.

Unfortunately this graph is a combination of both residential and non-residential construction employment. The BLS only started breaking out residential construction employment fairly recently (residential building employees in 1985, and residential specialty trade contractors in 2001). Usually residential investment (and residential construction) lead the economy out of recession, and non-residential construction usually lags the economy. Because this graph is a blend, it masks the usually pickup in residential construction for previous recessions. Of course residential investment didn't lead the economy this time because of the huge overhang of existing housing units.

This table below shows the annual change in construction jobs (total, residential and non-residential).

	Annual Change in Payroll jobs (000s)
Year	Total Construction Jobs	Residential Construction Jobs	Non-Residential
2002	-85	88	-173
2003	127	161	-34
2004	290	230	60
2005	416	268	148
2006	152	-62	214
2007	-198	-273	75
2008	-787	-510	-277
2009	-1053	-431	-622
2010	-149	-113	-36
Through April 2011	26	7	19

In 2011, for the first time since 2005, I expect residential construction employment to increase - mostly because of multi-family construction. I also expect residential investment to make a small positive contribution to GDP growth this year - also for the first time since 2005.

by Calculated Risk on 5/09/2011 02:25:00 PM

The Association of American Railroads (AAR) reports carload traffic in April 2011 decreased 0.2 percent compared with the same month last year, and intermodal traffic (using intermodal or shipping containers) increased 9 percent compared with April 2010.

“April’s carload decline is the first year-over-year monthly decline since February 2010,” said AAR Senior Vice President John Gray. “April 2010 was a relatively strong month and therefore a difficult comparison, and coal traffic was down for the first time since July 2010. April’s carload decline was offset by continued intermodal growth. Rail traffic deserves a close watch over the next several months because it’s a useful gauge of the strength of the economy.”

Click on graph for larger image in graph gallery.

This graph shows U.S. average weekly rail carloads (NSA).

From AAR:

On a seasonally adjusted basis, total U.S. rail carloads fell 2.5% in April 2011 from March 2011, continuing the up-down-up-down trend of the past couple of years. As the chart shows, since the recession ended in mid-2009, the trend for seasonally adjusted U.S. carload traffic has clearly been upward, but over the past six months it’s been flat and over the past four months it’s actually been down a bit. Time will tell if the upward trend reappears.

As the first graph shows, rail carload traffic collapsed in November 2008, and now, almost 2 years into the recovery, carload traffic has only recovered about half way.

The second graph is for intermodal traffic (using intermodal or shipping containers):

The news is much better on the intermodal side. In April 2011, U.S. railroads originated 914,518 intermodal trailers and containers, up 9.0% (75,706 units) over April 2010 and up 24.6% (180,417 units) over April 2009. April 2011’s weekly average was 228,630 units, up from 209,703 in April 2010 and the second highest average for any April in history (behind only April 2006).

Seasonally adjusted U.S. rail intermodal traffic was up 1.2% in April 2011 from March 2011, the fifth straight monthly increase.
excerpts with permission

Intermodal traffic is close to old highs, but carload traffic is only about half way back to pre-recession levels.

by Calculated Risk on 5/09/2011 12:35:00 PM

Note: The most recent Negative Equity report from CoreLogic showed 11.1 million, or 23.1 percent, of all residential properties with a mortgage were in negative equity at the end of the fourth quarter of 2010. With falling house prices, CoreLogic will probably show more homeowners have negative equity in Q1.

From Zillow: Negative equity reached a new high with 28.4 percent of all single-family homes with mortgages underwater

Negative equity reached a new high mark with 28.4 percent of single-family homeowners with mortgages underwater at the end of the first quarter, up from 27 percent in the fourth quarter of 2010. A homeowner is in negative equity when they owe more on their mortgage than their home is worth.
...
With substantial home value declines, as well as increasing negative equity and foreclosures, Zillow forecasts show it is unlikely that home values will reach a bottom in 2011. First quarter data has prompted Zillow to revise its forecast, now predicting a bottom in 2012, at the earliest.

The following table from Zillow shows negative equity percentages for the 25 largests MSAs. In a number of MSAs, more than half of single-family homes with mortgages have negative equity: Phoneix, Tampa, Atlanta, Riverside (CA), and Sacramento. Chicago, Minneapolis and Miami are all close. Las Vegas isn't included on this list, but according to CoreLogic, Nevada has the highest percentage of homes with negative equity.

Largest 25 Metropolitan Statistical Areas Covered by Zillow	Zillow Home Value Index
	Q1 2011	QoQ Change	YoY Change	Change From Peak	Negative Equity*
United States	$169,600	-3.0%	-8.2%	-29.5%	28.4%
New York, N.Y.	$346,600	-1.6%	-5.3%	-24.2%	17.1%
Los Angeles, Calif.	$386,400	-3.0%	-7.6%	-36.1%	21.0%
Chicago, Ill.	$167,900	-4.8%	-13.8%	-38.1%	45.7%
Dallas, Tex.	$125,400	-1.2%	-6.9%	-13.2%	n/a
Philadelphia, Pa.	$187,600	-3.2%	-10.3%	-20.5%	22.1%
Miami-Fort Lauderdale, Fla.	$137,300	-1.8%	-12.8%	-55.4%	47.7%
Washington, D.C.	$305,900	-1.5%	-7.0%	-30.3%	29.5%
Atlanta, Ga.	$121,100	-4.4%	-17.3%	-33.7%	55.7%
Detroit, Mich.	$70,600	-5.2%	-17.3%	-55.5%	36.3%
Boston, Mass.	$305,800	-2.6%	-5.3%	-23.2%	16.9%
San Francisco, Calif.	$467,000	-3.8%	-10.2%	-33.9%	25.7%
Phoenix, Ariz.	$126,100	-2.3%	-11.2%	-55.3%	68.4%
Riverside, Calif.	$185,800	-1.8%	-3.2%	-53.8%	50.7%
Seattle, Wash.	$259,200	-1.7%	-11.7%	-32.1%	34.4%
Minneapolis-St. Paul, Minn.	$159,000	-4.8%	-15.1%	-35.6%	46.2%
San Diego, Calif.	$347,500	-2.1%	-5.5%	-35.3%	26.0%
St. Louis, Mo.	$127,900	-4.0%	-9.6%	-18.7%	31.2%
Tampa, Fla.	$107,200	-3.8%	-10.9%	-50.6%	59.8%
Baltimore, Md.	$218,300	-2.5%	-9.8%	-27.5%	29.6%
Denver, Colo.	$192,300	-2.7%	-9.6%	-17.2%	41.0%
Pittsburgh, Pa.	$105,800	-0.2%	-0.1%	-5.1%	6.8%
Portland, Ore.	$203,300	-3.0%	-12.1%	-30.6%	35.9%
Cleveland, Ohio	$108,500	-3.9%	-9.1%	-24.7%	41.4%
Sacramento, Calif.	$207,400	-4.2%	-11.0%	-50.1%	51.2%
Orlando, Fla.	$115,700	-2.9%	-7.8%	-55.2%	n/a
*Negative equity refers to the % of single-family homes with mortgages.

by Calculated Risk on 5/09/2011 10:00:00 AM

From the NY Fed: New York Fed's Quarterly Report on Household Debt and Credit Shows Signs of Healing in Consumer Credit Markets Since Last Quarter

The Federal Reserve Bank of New York released the Quarterly Household Debt and Credit Report for the first quarter of 2011 today, which showed signs of healing in the consumer credit markets. Evidence of improvement includes:

• an increase in credit limits, by about $30 billion or 1%, for the first time since the third quarter of 2008;
• a steady number of open mortgage accounts, following a period of decline beginning in early 2008;
• continued decline of new foreclosures and new bankruptcies, down 17.7% and 13.3% respectively in the last quarter;
• a 15% decline of total delinquent balances, compared to a year ago; and
• a broad flattening of overall consumer debt balances outstanding.

Non-housing related debt, including credit cards, student loans, and auto loans, declined slightly (less than 1%), driven by a noticeable 4.6% decline in credit card balances. Credit inquiries, an indicator of consumer demand for new credit, came off their recent peak in the fourth quarter of 2010.

“We are beginning to see signs of credit markets healing gradually and evidence of greater willingness of consumers to borrow and banks to lend,” said Andrew Haughwout, vice president and New York Fed research economist.

Here is the Q1 report: Quarterly Report on Household Debt and Credit. Here are a couple of graphs:

Click on graph for larger image in new window.

The first graph shows aggregate consumer debt increased slightly in Q1. From the NY Fed:

Aggregate consumer debt held essentially steady in the first quarter, ending a string of nine consecutive declining quarters. As of March 31, 2011, total consumer indebtedness was $11.5 trillion, a reduction of $1.03 trillion (8.2%) from its peak level at the close of 2008Q3, and $33 billion (0.3%) above its December 31, 2010 level.

The second graph shows the percent of debt in delinquency. What stands out is that the percent of delinquent debt is declining, but the percent of severely derogatory debt is remaining the same.

From the NY Fed:

Total household delinquency rates declined for the fifth consecutive quarter in 2011Q1. As of March 31, 10.5% of outstanding debt was in some stage of delinquency, compared to 10.8% on December 31, 2010 and 11.9% a year ago. About $1.2 trillion of consumer debt remains delinquent and $890 billion is seriously delinquent (at least 90 days late or “severely derogatory”). Compared to a year ago, both delinquent and seriously delinquent balances have fallen 15%.

There are a number of credit graphs at the NY Fed site.