by Calculated Risk on 8/14/2011 02:11:00 PM

From Professor Hamilton at Econbrowser: Economic consequences of recent oil price changes

Earlier this year, disruptions in Libya and the resurgence of demand from the emerging economies sent oil prices up sharply, a development that many economists believe contributed to the slow growth for 2011:H1. The chaotic markets of the last few weeks saw oil prices drop back down to where they had been in December. Will that be enough to revive the struggling U.S. economy? There is some evidence suggesting that it may be too late.

I recently completed a survey of a large number of academic studies that found a nonlinear economic response to oil price changes. One very well-established observation is that although oil price increases were often associated with economic recessions, oil price decreases did not bring about corresponding economic booms. ... An oil price increase that just reverses a recent price decrease does not seem to have the same economic effects as a price move that establishes new highs.
emphasis added

In his post, Hamilton notes that there is usually a lagged response to oil price increases, and the worst impact from the sharp increase earlier this year would usually be expected at the end of this year - even though prices have since declined.

However, Hamilton continues:

My reading of developments during 2011 has been that, because of the very high gasoline prices we saw in 2008, U.S. car-buying habits never went back to the earlier patterns, and we did not see the same shock to U.S. automakers as accompanied some of the other, more disruptive oil shocks.

So maybe the impact will be less than for previous price shocks. Lower oil and gasoline prices has to help a little, however as Hamilton concludes, the reasons for the recent oil price decline are not good news for the U.S. economy.

by Calculated Risk on 8/14/2011 10:02:00 AM

From Alana Semuels at the LA Times: Companies are afraid to hire, even if business is improving

Though South Coast Shingle Co. is in the black for the first time in a few years, [Ross Riddle, the president] is fearful of hiring more people in what he believes is a shaky economy.

"I hear politicians say that businesses have money and they should be hiring," said Riddle ... "But if you don't have the demand, you don't hire the people."

Surveys have been showing that lack of demand has been the number one small business problem for over three years.

And it seems like a vicious cycle:

The economy won't improve until businesses hire, but many won't hire without consumer demand, which is weak because of the current state of the job market and concerns about the future.
...
Riddle is also wary. Having ridden out the housing downturn, he seems as eager to pinch pennies as a grandmother who suffered through the Great Depression. He's decided to put off buying new trucks and forklifts this year, although he usually buys one of each annually.

"We're making money now, but we still have five months left in the year," he said. "Who knows what's going to happen?"

Yesterday:
• Summary for Week Ending August 12th
• Schedule for Week of August 14th

by Calculated Risk on 8/13/2011 10:46:00 PM

This is depressing ...from the NY Times: White House Debates Fight on Economy

Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. These include free trade agreements and improved patent protections for inventors.

But others, including Gene Sperling, Mr. Obama’s chief economic adviser [argue] for bigger ideas like tax incentives for businesses that hire more workers ...

Tax incentives are the "bigger idea"? It sounds like the debate is between doing nothing and doing very little.

If I arrived on the scene today - with a 9.1% unemployment rate and about 4.6 million homes with seriously delinquent mortgages or REO - I'd be arguing for an aggressive policy response.

by Calculated Risk on 8/13/2011 07:32:00 PM

Note: this is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Aug 13, 2011.

Changes and comments from surferdude808:

The total number of institutions on the Unofficial Problem Bank Lists remains unchanged from last week at 988. However, there were two removals and two additions. Aggregate assets declined slightly by $391 million to $411.3 billion.

The removals include the failed The First National Bank of Olathe, Olathe, KS ($572 million) and Citizens Bank of Spencer, Tenn., Spencer, TN ($46 million), which merged on an unassisted basis. The additions were State Bank of Herscher, Herscher, IL ($195 million) and Texas Coastal Bank, Pasadena, TX ($32 million).

The other change is the issuance of a Prompt Corrective Action order by the Federal Reserve against Bank of the Eastern Shore, Cambridge, MD ($190 million). Next week, we anticipate the OCC releasing its actions through the middle of July. This will be the first monthly release after the merger of the OCC with the OTS.

It seems like the number of mergers has increased recently.

Earlier:
• Summary for Week Ending August 12th
• Schedule for Week of August 14th

by Calculated Risk on 8/13/2011 02:47:00 PM

Earlier: Summary for Week Ending August 12th

Three key housing reports will be released this week: August homebuilder confidence on Monday, July housing starts on Tuesday, and July existing home sales on Thursday.

For manufacturing, the August NY Fed (Empire state) survey will be released on Monday, the August Philly Fed survey on Thursday, and the July Industrial Production and Capacity Utilization report on Tuesday.

On inflation, the July Producer Price index (PPI) will be released Wednesday and CPI will be released Thursday.

----- Monday, Aug 15th -----
8:30 AM ET: NY Fed Empire Manufacturing Survey for August. The consensus is for a reading of 1.0, up slightly from -3.8 in July (above zero is expansion).

10 AM ET: The August NAHB homebuilder survey. The consensus is for a reading of 15, unchanged from July. Any number below 50 indicates that more builders view sales conditions as poor than good. This index has been below 25 for four years.

10:00 AM ET: NY Fed Q2 Report on Household Debt and Credit

----- Tuesday, Aug 16th -----
8:30 AM: Housing Starts for July. After collapsing following the housing bubble, housing starts have mostly been moving sideways for over two years.

Total housing starts were at 629 thousand (SAAR) in June, up 14.6% from the revised May rate of 549 thousand. Single-family starts increased 9.4% to 453 thousand in June.

The consensus is for a decrease to 600,000 (SAAR) in July.

8:30 AM: Import and Export Prices for July. The consensus is a for a 0.1% decrease in import prices.

9:15 AM ET: The Fed will release Industrial Production and Capacity Utilization for July.

This graph shows industrial production since 1967. Industrial production increased in June to 93.1.

The consensus is for a 0.5% increase in Industrial Production in July, and an increase to 77.0% (from 76.7%) for Capacity Utilization. The Ceridian index suggests Industrial Production was flat in July.

----- Wednesday, Aug 17th -----
Early: The AIA's Architecture Billings Index for July (a leading indicator for commercial real estate).

This graph shows the Architecture Billings Index since 1996. The index decreased in June to 46.3 from 47.2 in May. Anything below 50 indicates a contraction in demand for architects' services.

This index usually leads investment in non-residential structures (hotels, malls, office) by 9 to 12 months.

7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been very weak over the last several months, although refinance activity has picked up recently.

8:30 AM: Producer Price Index for July. The consensus is for no change in producer prices (0.2% increase in core).

----- Thursday, Aug 18th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for an increase to 400,000 from 395,000 last week.

8:30 AM: Consumer Price Index for July. The consensus is for a 0.2% increase in prices. The consensus for core CPI is an increase of 0.2%.

10:00 AM: Philly Fed Survey for August. The consensus is for a reading of 4.0 (above zero indicates expansion), up from 3.2 last month.

10:00 AM: Existing Home Sales for July from the National Association of Realtors (NAR). The consensus is for sales of 4.92 million at a Seasonally Adjusted Annual Rate (SAAR) in July, up from 4.77 million SAAR in June.

Note: the NAR is working on benchmarking existing home sales for previous years with other industry data (expectations are for large downward revisions). These revisions are expected this fall.

10:00 AM: Conference Board Leading Indicators for July. The consensus is for a 0.2% increase for this index.

----- Friday, Aug 19th -----
10:00 AM: Regional and State Employment and Unemployment (Monthly) for July 2011