by Calculated Risk on 1/12/2012 09:00:00 AM

On a monthly basis, retail sales were up 0.1% from November to December (seasonally adjusted, after revisions), and sales were up 6.5% from December 2010. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $400.6 billion, an increase of 0.1 percent (±0.5%)* from the previous month and 6.5 percent (±0.7%) above December 2010.

Sales for November were revised up from a 0.2% increase to 0.4%. Retail sales excluding autos decreased 0.2% in December.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales are up 20.4% from the bottom, and now 5.9% above the pre-recession peak (not inflation adjusted)

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 6.1% on a YoY basis (6.5% for all retail sales). Retail sales ex-gasoline increase 0.3% in December.

This was well below the consensus forecast for retail sales of a 0.4% increase in December, and a 0.4% increase ex-auto.


All current retail sales graphs

by Calculated Risk on 1/12/2012 08:39:00 AM

The DOL reports:

In the week ending January 7, the advance figure for seasonally adjusted initial claims was 399,000, an increase of 24,000 from the previous week's revised figure of 375,000. The 4-week moving average was 381,750, an increase of 7,750 from the previous week's revised average of 374,000.

The previous week was revised up to 375,000 from 372,000.

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 increased this week to 381,750.

The 4-week moving average is still well below 400,000.

And here is a long term graph of weekly claims:





All current Employment Graphs

by Calculated Risk on 1/12/2012 01:13:00 AM

From RealtyTrac: 2011 Year-End Foreclosure Market Report: Foreclosures on the Retreat

RealtyTrac® ... today released its Year-End 2011 U.S. Foreclosure Market Report™, which shows a total of 2,698,967 foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 1,887,777 U.S. properties in 2011, a decrease of 34 percent in total properties from 2010. Foreclosure activity in 2011 was 33 percent below the 2009 total and 19 percent below the 2008 total.

“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” said Brandon Moore, chief executive officer of RealtyTrac. “The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages — particularly in states with a judicial foreclosure process."

From Reuters: Foreclosure filings hit four-year low in 2011

Bank seizures of homes fell to 804,423 from 1,050,500 in 2010, also marking the lowest level in four years.

"A big part that is inflating the size of the decrease is a continuing extended foreclosure process," said Daren Blomquist, director of marketing communications at RealtyTrac.

This is close to Tom Lawler's estimate of the number of completed foreclosure sales using data from Hope Now.

Earlier this week I argued foreclosure activity would increase in 2012:

There are 4 million seriously delinquent loans (90 day and in-foreclosure). This is about 3 million more properties than normal. Probably when the mortgage settlement is announced, some of these loans will cure as part of the settlement with loan modifications that include principal reduction, but many of these properties will become REOs fairly quickly.

So even though REO inventory is declining, there are still many more [foreclosures] to come ...

My guess is the policy changes will all be announced in the next few months, and that foreclosure activity will increase significantly. Some portion of these REO will be sold in bulk to investors and rented, so it is difficult to tell how many REOs will come on the market.

by Calculated Risk on 1/11/2012 09:48:00 PM

Last week I posted some housing forecasts from Wells Fargo, Goldman Sachs and Fannie Mae: Some Housing Forecasts.

Here are two more forecasts ...

From Merrill Lynch on Housing "It is too early to get bullish"

We expect single family housing starts to be little changed in 2012 relative to 2011. This will continue the sideways movement which began in 2009 after single family housing starts plunged 80% from the peak...

The good news is that builders have been successful at reducing inventory, bringing new supply to 6 months. This means that any increase in demand will warrant a new housing start. If the economy recovers more quickly this year than we assume, single family housing starts will receive a boost.

And real estate consultant John Burns is forecasting an increase to 359 thousand new home sales in 2012 (from around 300 thousand in 2011), and for total starts to increase to 717 thousand from around 600 thousand in 2011 (this includes a significant increase in multifamily starts).

And comments from homebuilders Lennar and Toll Brothers:

From Reuters: Lennar Says High Rents Helped Home Orders Increase 20%

“As I look ahead to 2012, I am cautiously optimistic that we are seeing a real bottom form and we will begin to see signs of recovery,” Lennar’s chief executive, Stuart A. Miller, said in a conference call.

Lennar said high rents were driving customers to buy new homes, and low home prices and low interest rates were helping.

The company is experiencing more traffic at its model homes, Mr. Miller said.

From Bloomberg: Toll Brothers: NYC Best Home Market in ’12

Nationwide, Toll Brothers expects to sell “not that much more” than 2,600 homes in 2012, [Chief Executive Officer Douglas Yearley Jr.] said in today’s interview. If the traditional spring selling season is strong, the company could deliver as many 3,200 houses this year, he said. The company sold 2,611 homes in fiscal 2011 ...

As I noted last week, I think a small increase in new home sales and housing starts is likely in 2012. The increase in sales in 2012 will not be huge; even a 20% increase in new home sales would make 2012 the third lowest on record behind 2011 and 2010.

by Calculated Risk on 1/11/2012 06:24:00 PM

Yesterday, in answering a question on China, I mentioned that Professor Michael Pettis is an excellent source about China. He also comments on Europe.

An excerpt from Michael Pettis: If no trade reversal now, then when?

Europe’s underlying problem is not budget deficits or even unsustainable debt. These are mainly symptoms. The real problem with Europe is the huge divergence in costs between the core and the periphery – in the past decade costs between Germany and some of the peripheral countries have diverged by anywhere from 20% to 40%. This divergence has made the latter uncompetitive and has resulted in the massive trade imbalances within Europe.

Trade imbalances, of course, are the obverse of capital imbalances, and the surge in debt in peripheral Europe in the past decade – debt owed ultimately to Germany and the other core countries – was the inevitable consequence of those capital flow imbalances. While European policymakers alternatively sweat and shiver over fiscal deficits, surging government debt, and collapsing banks, there is almost no prospect of their resolving the European crisis until they address the divergence in costs. Of course if they don’t resolve this problem, the problem will be resolved for them in the form of a break-up of the euro.

It doesn't appear European policymakers are addressing the imbalances at all.

And on China:

There isn’t nearly as much (at least visible) antagonism and undermining behavior among Chinese policymakers, but I worry that there is nonetheless the same lack of logical thinking among them in regards to their “right” to a trade surplus – although at least they are not facing massive defaults in the countries to whom they have lent. As China’s trade surplus declines dramatically, more and more people within the country are calling for interventionist steps to halt the decline, including depreciating the RMB, or at least halting its appreciation.
...
But we would have to ask the same question of China as we would of Germany: if now is not the right time for China to run a trade deficit, when its reserves are sky high, when rebalancing the Chinese economy away from investment to consumption is more urgent than ever, when global imbalances have thrown the world into crisis, when will it ever be the right time?

Not [this] year, apparently. There is developing in Beijing, I think, almost a panic about global economic prospects and the impact of the European crisis on China. This panic is going make the rebalancing process harder than ever ...