by Calculated Risk on 12/29/2011 04:13:00 PM

A few weeks ago, I posted: Labor Force Participation Rate: The Kids are Alright

Catherine Rampell at the NY Times adds some more data: Instead of Work, Younger Women Head to School

Workers are dropping out of the labor force in droves, and they are mostly women. In fact, many are young women. But they are not dropping out forever; instead, these young women seem to be postponing their working lives to get more education.

[M]any of the workers on the sidelines are young people upgrading their skills, which could portend something like the postwar economic boom, when millions of World War II veterans went to college through the G.I. Bill instead of immediately entering, and overwhelming, the job market.

Both men and women are going back to school, but the growth in enrollment is significantly larger for women (who dominated college campuses even before the financial crisis). In the last two years, the number of women ages 18 to 24 in school rose by 130,000, compared with a gain of 53,000 for young men.
...
The main risk in going back to school is the accompanying student loan debt.

The flip side is that many older workers are also going back to school and getting student loans, see: Middle-aged borrowers piling on student debt (ht Ann)

Middle-aged borrowers are piling up student debt faster than any other age group, according to a new analysis obtained by Reuters.

That is deeply concerning.

But in the long run, more education is a positive for the economy - and Rampell's article suggests the kids (well, young adults) are alright!

by Calculated Risk on 12/29/2011 11:45:00 AM

This is the last of the regional Fed surveys for December. The regional surveys provide a hint about the ISM manufacturing index - and the regional surveys were mixed in December although they showed some improvement in the aggregate.

From the Kansas City Fed: Tenth District Manufacturing Activity Eased Slightly

According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity eased slightly, but expectations for future months improved somewhat.

“We saw a slight moderation in factory activity in our region in December,” said Wilkerson. “But plant managers continue to expect solid growth in the months ahead and are planning to increase employment and capital spending accordingly.”
...
The month-over-month composite index was -4 in December, down from 4 in November and 8 in October, and the first negative reading since December 2009 ... Most other month-over-month indexes also fell somewhat in December. The production and shipments indexes moved into negative territory, and the new orders and order backlog indexes fell further. The employment index dropped to its lowest level since mid-2009, and the new orders for exports index edged down.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (dashed green, through December), and five Fed surveys are averaged (blue, through December) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through November (right axis).

The ISM index for December will be released Tuesday, Jan 3rd and the regional surveys suggest another reading in the low to mid 50s. for December.

by Calculated Risk on 12/29/2011 10:10:00 AM

• Chicago PMI: The overall index declined slightly to 62.5 in December from 62.6 in November. This was above consensus expectations of 60.1. Note: any number above 50 shows expansion.

• From the NAR: Pending Home Sales Highest in a Year-and-a-Half

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 7.3 percent to 100.1 in November from an upwardly revised 93.3 in October and is 5.9 percent above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4 percent monthly gain.

The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit.
...
The PHSI in the Northeast rose 8.1 percent to 77.1 in November but is 0.3 percent below November 2010. In the Midwest the index increased 3.3 percent to 91.6 in November and is 9.5 percent above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7 percent above November 2010. In the West the index surged 14.9 percent to 121.2 in November and is 2.9 percent higher than a year ago.

by Calculated Risk on 12/29/2011 08:39:00 AM

The DOL reports:

In the week ending December 24, the advance figure for seasonally adjusted initial claims was 381,000, an increase of 15,000 from the previous week's revised figure of 366,000. The 4-week moving average was 375,000, a decrease of 5,750 from the previous week's revised average of 380,750.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week to 375,000.

This is the lowest level for the 4-week average since June 2008.

And here is a long term graph of weekly claims:

Although initial claims increased this week, the 4-week moving average is still falling and is now well below 400,000.



All current Employment Graphs

by Calculated Risk on 12/28/2011 06:16:00 PM

Residential investment made a small positive contribution to GDP in 2011, for the first time since 2005. And construction employment turned slightly positive in 2011.

Now the question is what will happen in 2012? I think some pickup is likely, but I'm not as optimistic as some other people ...

From the WSJ: Hedge Funds See Rebirth for U.S. Housing

Hedge funds run by Caxton Associates LP, SAC Capital Advisors LP, Avenue Capital and Blackstone Group LP have been buying housing-related investments, betting on a rebound. And formerly bearish research firm Zelman & Associates now predicts a housing pickup, as does Goldman Sachs Group Inc.
...
Even some housing skeptics acknowledge that real estate may no longer be the drag it has been on the economy. ... "I'm sold that it's a bottom," says James Bianco, who runs Bianco Research, in Chicago. "It's gone from a negative to a nothing for the economy," ...

Ivy Zelman [predicts] that rising rents will push would-be buyers to purchase homes. A housing recovery isn't "happening as fast as everyone would like," she says. But there are "a lot of pillars in place to give us some optimism."

Of course there are still housing bears:

"The smartest money in the world has been carried out on stretchers betting on a true recovery for housing," says Mark Hanson

I think we will probably see some increase in new home sales in 2012, but it will be from a very low level (around 300 thousand new homes will be sold in 2011, a record low since the Census Bureau started tracking new home sales in 1963). I'll have more on housing and residential investment soon.