by Calculated Risk on 10/10/2011 08:54:00 AM

From the NY Times: Recession Officially Over, U.S. Incomes Kept Falling. A few excerpts:

Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.

So the inflation-adjusted median household income has continued to decline even after the recession ended.

And for people who lost their jobs - and were lucky enough to find a new job:

In a separate study, Henry S. Farber, an economics professor at Princeton, found that people who lost jobs in the recession and later found work again made an average of 17.5 percent less than they had in their old jobs.

And on education:

Median annual income declined most for households headed by someone with an associate’s degree, dropping 14 percent, to $53,195, in the four-year period that ended in June 2011, the report said.

For households headed by people who had not completed high school, median income declined by 7.9 percent, to $25,157. For those with a bachelor’s degree or more, income declined by 6.8 percent, to $82,846.

Grim numbers. This is no surprise given the high level of unemployment and underemployment.

Weekend:
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th

by Calculated Risk on 10/09/2011 11:50:00 PM

From Bloomberg: Merkel, Sarkozy Pledge Bank Recapitalization

Angela Merkel and Nicolas Sarkozy ... gave themselves three weeks to devise a plan to recapitalize banks, get Greece on the right track and fix Europe’s economic governance.

“By the end of the month, we will have responded to the crisis issue and to the vision issue,” the French president said in Berlin yesterday at a joint briefing with the German chancellor before they dined at her office.

... Merkel said European leaders will do “everything necessary” to ensure that banks have enough capital. Sarkozy said they would deliver a plan by the Nov. 3 Group of 20 summit.

The Asian markets are mixed tonight (update: Nikkei is closed).

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 is up about 10 points, and Dow futures are up about 100 points.

Oil: WTI futures are up to $83.50 and Brent is up to $106 per barrel.

Yesterday:
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th

by Calculated Risk on 10/09/2011 04:13:00 PM

No details, but a new "deadline": the end of October. There is a meeting of European leaders scheduled for Oct 17th and 18th summit in Brussels.

• From the Financial Times: Merkel and Sarkozy set euro deadline

France and Germany have set themselves a deadline of the end of October to reach agreement on a comprehensive package of measures to stabilise the eurozone, including the recapitalisation of European banks if they need it.
excerpt with permission

• From the WSJ: Merkel, Sarkozy Claim Broad Agreement to Stabilize Euro Zone

German Chancellor Angela Merkel and French President Nicolas Sarkozy said Sunday that they have reached broad agreement on a plan to shore up Europe's battered banks and restore stability to the euro zone. ...

"We are determined to do what is necessary to guarantee the recapitalization of our banks," Mrs. Merkel told reporters. "We will make proposals in a comprehensive package that will enable closer cooperation between euro-zone countries that will include changes to treaties."

Yesterday:
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th

by Calculated Risk on 10/09/2011 11:51:00 AM

• From the Financial Times: Merkel and Sarkozy hold talks on crisis German Chancellor Angela Merkel and French President Nicolas Sarkozy are holding the talks today in Berlin on the financial crisis. A key point is trying to agree on how to recapitalize European banks. Merkel is pushing for a solution prior to the Oct 17th and 18th summit of European leaders in Brussels.

• From the WSJ: Belgium, France to Nationalize Part of Dexia

The governments of Belgium and France agreed to nationalize the Belgian subsidiary of Dexia SA, paving the way for the embattled Belgian-French lender to be broken up.

If Merkel and Sarkozy wait too long, the markets will force an ad-hoc approach.

• From Reuters: Barroso says Greek default would spread crisis: paper

"If we give up on Greece, there is a big danger that the crisis will spread to other countries," [European Commission President Jose Manuel Barroso] told Bild in an interview to be published on Monday ... "This is new territory for us and we are discussing solutions which have not really been tested before," he said.

But the European Union was convinced that a Greek bankruptcy was "not cheaper for all participants than the current aid schemes," he said.

The next two weeks are critical for Europe.

Yesterday:
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th

by Calculated Risk on 10/09/2011 08:57:00 AM

The graph below shows the number of total construction payroll jobs in the U.S., including both residential and non-residential, since 1969.

Construction employment is down 2.175 million jobs from the peak in April 2006, but up 53 thousand this year through the September BLS report.

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).

Click on graph for larger image.

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 usual pickup in residential construction following 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) and through September for 2011.

	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 September 2011	53	-6	59

After five consecutive years of job losses for residential construction (and four years for total construction), it looks like construction employment will increase this year (and residential will be close). However there will not be a strong increase in residential construction until the excess supply of housing is absorbed.

In addition residential investment has made a positive contribution to GDP so far this year for the first time since 2005.

Yesterday:
• Summary for Week Ending Oct 7th
• Schedule for Week of Oct 9th