by Calculated Risk on 8/26/2011 08:30:00 AM

From the BEA: Gross Domestic Product, Second Quarter 2011 (second estimate

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.0 percent in the second quarter of 2011, (that is, from the first quarter to the second quarter), according to the "second" estimate released by the Bureau of Economic Analysis.

This was revised down from 1.3% and slightly below the consensus of 1.1%.

Exports subtracted more from GDP - as did changes in private inventories. Consumption of services and fixed investment were revised up slightly.

The following graph shows the quarterly GDP growth (at an annual rate) for the last 30 years. The current quarter is in blue.

Click on graph for larger image in graph gallery.

The dashed line is the current growth rate. Growth in Q2 at 1.0% annualized was below trend growth (around 3%) - and very weak for a recovery, especially with all the slack in the system.

Here is a table of the changes (contribution to GDP):

Contributions to Percent Change in Q2 Real Gross Domestic Product
	2nd Estimate	Advance	Change
Percent change at annual rate:
Gross domestic product	1.0	1.3	-0.3
Percentage points at annual rates:
Personal consumption expenditures	0.3	0.07	0.23
Goods	-0.34	-0.33	-0.01
Durable goods	-0.4	-0.35	-0.05
Nondurable goods	0.07	0.02	0.05
Services	0.64	0.4	0.24
Gross private domestic investment	0.78	0.87	-0.09
Fixed investment	1.01	0.69	0.32
Nonresidential	0.94	0.61	0.33
Structures	0.38	0.2	0.18
Equipment and software	0.55	0.41	0.14
Residential	0.08	0.08	0
Change in private inventories	-0.23	0.18	-0.41
Net exports of goods and services	0.09	0.58	-0.49
Exports	0.41	0.81	-0.4
Imports	-0.33	-0.23	-0.1
Government consumption expenditures	-0.18	-0.23	0.05
Federal	0.16	0.18	-0.02
National defense	0.38	0.39	-0.01
Nondefense	-0.21	-0.21	0
State and local	-0.34	-0.41	0.07

by Calculated Risk on 8/25/2011 09:25:00 PM

The focus tomorrow is on Fed Chairman Bernanke's speech at Jackson Hole, but there will be some economic data too:

8:30 AM: Q2 GDP (second estimate). The first estimate was for 1.3% annualized real growth in Q2. The consensus is for a downward revision to 1.1% GDP growth.

9:55 AM: Reuters/University of Mich Consumer Sentiment final for August. The consensus is for a slight increase to 56.0 from the preliminary August reading of 54.9.

10:00 AM: Fed Chairman Ben Bernanke speaks at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming, "Near- and Long-Term Prospects for the U.S. Economy"

And on Europe:
From the WSJ: Bailout for Greece Falters Over Demand for Collateral. The Greek 2 year bond yield is almost to 46%.

From the Telegraph: Greece forced to tap emergency fund

In a move described as the "last stand for Greek banks", the embattled country's central bank activated Emergency Liquidity Assistance (ELA) for the first time on Wednesday night.

And from Bloomberg: France, Spain, Italy Extend Bans on Short-Selling

by Calculated Risk on 8/25/2011 04:40:00 PM

With the release of the Q2 FDIC Quarterly Banking Profile, we can estimate the number of REOs held by FDIC insured banks and thrifts. From economist Tom Lawler:

"On the residential REO front, FDIC-insured institutions’ 1-4 family property REO holdings (in $’s of carrying value) declined to $12.0895 billion on June 30th, 2011 from $13.2795 billion on March 31st, 2011 and $13.7221 billion last June. The drop reflected the continued slow pace of REO acquisitions related to foreclosure delays, as well as a likely pick-up in REO dispositions last quarter.

While the FDIC does not collect data on the NUMBER of properties held by FDIC-insured institutions, a reasonable “guess” is that their average carrying value is about 50% higher than the GSEs, or in recent years around $150,000."

This gives an estimate of 80.6 thousand REO at FDIC insured institutions at the end of Q2, down from 88.5 thousand in Q1.

This graph shows REO inventory for Fannie, Freddie, FHA, Private Label Securities (PLS), and FDIC insured institutions. (economist Tom Lawler has provided some of this data).

Total REO decreased to 493,000 in Q2 from almost 550,000 in Q1.

As Tom Lawler noted: "This is NOT an estimate of total residential REO, as it excludes non-FHA government REO (VA, USDA, etc.), credit unions, finance companies, non-FDIC-insured banks and thrifts, and a few other lender categories." However this is the bulk of the REO - probably 90% or more. Rounding up the estimate (using 90%) suggests total REO is around 548,000 in Q2.

Important: REO inventories have declined over the last couple of quarters. This is a combination of more sales and fewer acquisitions due to the slowdown in the foreclosure process. There are many more foreclosures coming - see my earlier post on Mortgage Delinquencies and REOs.

Tom Lawler wrote today: "[I]f in fact REO inventories have declined in line with the Fannie, Freddie, FHA, and bank/thrift data, one shouldn’t view that as a “bullish” signal – after all, the main reason for the drop has been the artificially low pace of REO acquisitions associated with increasing foreclosure timelines/delays.

[I]n quite a few markets the lower REO inventories have reduce the REO shares of overall sales as well as the number of REO properties for sale, which has temporarily improved various measures of home prices. Many markets in Florida are prime examples, as judicial foreclosure delays have reduced substantially the pace of REO acquisitions as well as the inventory of REO properties for sale, even as the number of properties in the foreclosure process has remained at nosebleed levels."

by Calculated Risk on 8/25/2011 01:40:00 PM

Note: This is one of the industry specific measures that I follow. I only post this every few weeks or so. Looking back at this data during the recession, hotel occupancy first declined in Dec 2007, and then declined sharply in the fall of 2008. Right now the occupancy rate is holding up pretty well.

From HotelNewsNow.com: STR: Miami hotels report strong weekly results

Overall, the U.S. hotel industry’s occupancy rose 3.1% to 67.3%, its ADR increased 4.4% to US$101.80, and its RevPAR finished the week up 7.6% to US$68.53.

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The following graph shows the seasonal pattern for the hotel occupancy rate using a four week average for the occupancy rate.

Click on graph for larger image in graph gallery.

The summer leisure travel season is ending, and the 4-week average of the occupancy rate is starting to decrease. Right now the occupancy rate is tracking just below the "median" level.

Smith Travel Research also reports that U.S. hotels sold a record number of rooms in July. From Jason Freed at HotelNewsNow Demand records are made to be broken

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 8/25/2011 11:00:00 AM

From the Kansas City Fed: Manufacturing Sector Continues to Expand Modestly

The Federal Reserve Bank of Kansas City released the August Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity continued to expand modestly, and producers remained generally positive about future months.

“Factory activity in our region continues to be buoyed by strong growth among agriculture and energy-related manufacturers,” said Wilkerson. “New orders accelerated at these firms in August even as some other firms experienced softness. But hiring and capital spending plans remain fairly solid across broader categories of producers.”
...
The month-over-month composite index was 3 in August, unchanged from 3 in July and down from 14 in June. ... Manufacturing activity slowed in nondurable goods factories, while growth in factory activity increased in durable goods producing plants, particularly for machinery, fabricated metal, and electronic equipment products. Other month-over-month indexes were mixed in August. The production index fell from 2 to -2, and the shipments index also moved into negative territory. However, the new orders index rebounded after dropping last month, and the employment and new orders for export indexes also rose.

Here is a table of the regional surveys in July and August; the Dallas Fed Texas Manufacturing will be released on Monday, August 29th.

Manufacturing Survey	July	August
Empire State	-3.76	-7.7
Philly Fed	3.2	-30.7
Richmond Fed	-1	-10
Kansas City Fed	3	3
Dallas Fed	10.8	---

Most of the regional surveys were very weak in August. The ISM index for August will be released Thursday, Sept 1st.