by Calculated Risk on 6/09/2011 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending June 4, the advance figure for seasonally adjusted initial claims was 427,000, an increase of 1,000 from the previous week's revised figure of 426,000. The 4-week moving average was 424,000, a decrease of 2,750 from the previous week's revised average of 426,750.

The following graph shows the 4-week moving average of weekly claims for the last 40 years.

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week to 424,000.

This is the ninth straight week with initial claims above 400,000, and the 4-week average is at about the same the level as in January. This suggests the labor market weakness in May is continuing into early June.

by Calculated Risk on 6/08/2011 08:54:00 PM

From the WSJ: The Great Property Bubble of China May Be Popping

Already, in nine major cities tracked by Rosealea Yao, an analyst at market-research firm Dragonomics, real-estate prices fell 4.9% in April from a year earlier. Last year, prices in those nine cities rose 21.5%; in 2009, the increase was about 10%, as China started to recover from the global economic crisis, with much steeper increases toward the end of that year.
...
If the Chinese housing market slows faster than people had expected, the impact would be felt in a number of markets that export heavily to China.

It is hard to tell what is happening in China - as I've mentioned over the years, at least from what we can tell, the amount of leverage in China is significant less than what we saw in the U.S. during the bubble (residential lending wasn't as crazy). So even if house prices dropped significantly, there wouldn't be as many homeowners with negative equity. Hopefully Professor Pettis will comment on this story!

Earlier:
• CoreLogic House Price Graph, Real Prices, and Prices and Month-of-Supply

by Calculated Risk on 6/08/2011 06:30:00 PM

From Jim Hamilton: The significance of OPEC announcements. Professor Hamilton reviews the OPEC announcement today, and points out that quotas for OPEC have been routinely ignored. He concludes:

I think today's announcement that this "quota" will remain in effect is largely irrelevant. At best the statements issued from these meetings provide a noisy signal of the intentions of some OPEC members.

But if you're interested in what OPEC members really plan to produce, my view is that actions speak louder than words.

The announcement might be "largely irrelevant" as far as actual production, but there was a market impact with WTI crude futures up over $100 per barrel (and Brent crude close to $118).

The good news is gasoline prices are down about 24 cents per gallon from the recent peak (down over 30 cents where I live). And it looks like gasoline prices will probably fall some more ... but oil prices at $100 per barrel is still a significant drag on the economy.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

Earlier:
• CoreLogic House Price Graph, Real Prices, and Prices and Month-of-Supply

by Calculated Risk on 6/08/2011 02:00:00 PM

Fed's Beige Book:

Reports from the twelve Federal Reserve Districts indicated that economic activity generally continued to expand since the last report, though a few Districts indicated some deceleration. Some slowing in the pace of growth was noted in the New York, Philadelphia, Atlanta, and Chicago Districts. In contrast, Dallas characterized that region's economy as accelerating. Other Districts indicated that growth continued at a steady pace.
...
Consumer spending was mixed, with most Districts indicating steady to modestly increasing activity. Elevated food and energy prices, as well as unfavorable weather in some parts of the country, were said to be weighing on consumers' propensity to spend. ... Widespread supply disruptions--primarily related to the disaster in Japan--were reported to have substantially reduced the flow of new automobiles into dealers' inventories, which in turn held down sales in some Districts.
...
Manufacturing activity was reported as continuing to increase since the last report in all but two districts, although many noted that the pace of growth had slowed.
...
Labor market conditions continued to improve gradually across most of the nation, with a number of Districts noting a short supply of workers with specialized technical skills. Wage growth generally remained modest, though there were scattered reports of steeper increases for highly skilled workers in certain occupations.

And on real estate:

Residential real estate sales markets showed continued weakness in most Districts, while rental markets strengthened. Most Districts indicate that home prices have declined since the last report: Boston, Philadelphia, Richmond, Atlanta, Kansas City, and San Francisco all report some downward drift in selling prices, while reports from the New York and Cleveland Districts indicate that prices have been steady, on balance
...
Commercial and industrial real estate markets have generally been steady since the last report, though there have been scattered signs of a pickup. Commercial leasing markets showed modest signs of improvement in the Richmond and San Francisco Districts. Boston and Dallas noted some firming in property sales markets, but Kansas City reported declines in prices for office buildings.

This was based on data gathered before May 27th.

by Calculated Risk on 6/08/2011 11:32:00 AM

Updating some graphs ...

Last week CoreLogic their house price index for April: CoreLogic® Home Price Index Shows First Month-over-Month Increase since mid-2010. The CoreLogic HPI is a three month weighted average of February, March, and April (April weighted the most) and is not seasonally adjusted (NSA).

There was a change in how the data is released, so I didn't include a graph last week - here is the graph.

Note: Case-Shiller is the most followed house price index, but CoreLogic is used by the Federal Reserve and is followed by many analysts.

Click on graph for larger image in graph gallery.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was up 0.7% in April, and is down 7.5% over the last year, and off 33.8% from the peak.

This is the ninth straight month of year-over-year declines, and the index is now 4.0% below the March 2009 low.

Real House Prices

The second graph shows the quarterly Case-Shiller National Index SA (through Q1 2011), and the monthly Case-Shiller Composite 20 SA (through March) and CoreLogic House Price Indexes (through April) in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is back to Q4 1999 levels, the Composite 20 index is back to October 2000, and the CoreLogic index is back to January 2000.

House Prices and months-of-supply

Here is a look at house prices and existing home months-of-supply.

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).

House prices are through March using the composite 20 index. Months-of-supply is through April. Based on this general relationship, I expect Case Shiller house prices to fall further - although there are some questions about the NAR inventory data.

It now appears that inventory is declining year-over-year (something to watch carefully), but of course sales have been declining too.

Note: there have been periods with high months-of-supply and rising house prices (see: Lawler: Again on Existing Home Months’ Supply: What’s “Normal?” ) so this is just a guide.