by Calculated Risk on 7/02/2012 09:04:00 AM

From Eurostat: Euro area unemployment rate at 11.1%

The euro area (EA17) seasonally-adjusted unemployment rate was 11.1% in May 2012, compared with 11.0% in April. It was 10.0% in May 2011. The EU27 unemployment rate was 10.3% in May 2012, compared with 10.2% in April4. It was 9.5% in May 2011.

Eurostat estimates that 24.868 million men and women in the EU27, of whom 17.561 million were in the euro area, were unemployed in May 2012.

From the WSJ: Euro-Zone Data Show No Sign of Improvement

Activity at euro-zone factories continued to fall sharply in June, while the currency area's unemployment rate rose to a record high in May ...

In a particularly worrying sign for the currency bloc's economy, German manufacturing activity fell at its fastest rate in three years—the latest evidence that Europe's biggest national economy is braking ... The final reading of the manufacturing purchasing managers' index was 45.1 in June [below 50 is contraction]

It is no surprise that Germany's export economy is starting to feel the impact of the eurozone recession. The "good" news is Spanish 10-year bond yields are down to 6.27%, and Italian yields are down to 5.71%.

And the ECB is expected to cut rates on Thursday.

by Calculated Risk on 7/01/2012 09:57:00 PM

The key report Monday will be the ISM Manufacturing survey. Most of the regional surveys were weak in June, and the ISM index will probably decline too.

• At 10:00 AM ET, the ISM Manufacturing Index for June will be released. The consensus is for a decrease to 52.0 from 53.5 in May.

• Also at 10:00 AM, Construction Spending for May will be released. The consensus is for a 0.2% increase in construction spending.

The Asian markets are green tonight. The Nikkei is up 0.3%, and the Shanghai Composite is up slightly.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 futures are down about 2, and Dow futures are down 23.

Oil: WTI futures are up to $84.37 (this is down from $109.77 in February, but up last week) and Brent is at $97.27 per barrel. According to a formula from Professor Hamilton, the price of Brent would suggest gasoline at $3.27 per gallon (the current national average price is $3.35, so even with the increase in Brent, gasoline prices will probably fall further).

Yesterday:
• Summary for Week Ending June 29th
• Schedule for Week of July 1st
For the monthly economic question contest (questions for July):

by Calculated Risk on 7/01/2012 05:16:00 PM

A report on investor buying in Oakland: Who Owns Your Neighborhood? The Role of Investors in Post-Foreclosure Oakland (ht picosec, Tom)

From the San Francisco Chronicle: Investors buying, renting many Oakland foreclosures

According to the Urban Strategies Council's report, real estate investors have purchased - usually with cash - 42 percent of the 10,508 homes in Oakland that went into foreclosure between January 2007 and October 2011.

Many of these investors are turning the homes into rental properties ...

"They are massive landlords in neighborhoods that historically have had high rates of homeownership, and very few people are aware of the investor activity that's taking place under their feet," said Steve King, the organization's housing and economic development coordinator.
...
In its report, the Urban Strategies Council, which focuses on development issues in low-income urban areas, argues that banks and government-controlled financial institutions Fannie Mae and Freddie Mac could be doing more to help families buy foreclosed homes.

Among its recommendations: Expand programs that give owner-occupiers and nonprofits a "first look" at foreclosed homes before they go up for auction.

The report focuses on the impact of non-local ownership on Oakland neighborhoods. However, another impact of cash-flow investor buying, is that these properties will probably not be sold any time soon - and this keeps the level of inventory down in these communities. This is one of the reasons that inventory has declined sharply.

Yesterday:
• Summary for Week Ending June 29th
• Schedule for Week of July 1st

by Calculated Risk on 7/01/2012 11:57:00 AM

By request, here is an update to four key indicators used by the NBER for business cycle dating: GDP, Employment, Industrial production and real personal income less transfer payments.

Note: The following graphs are all constructed as a percent of the peak in each indicator. This shows when the indicator has bottomed - and when the indicator has returned to the level of the previous peak. If the indicator is at a new peak, the value is 100%.

These graphs show that several major indicators are still significantly below the pre-recession peaks.

Click on graph for larger image.

This graph is for real GDP through Q1 2012. Real GDP returned to the pre-recession peak in Q3 2011, and has been at new post-recession highs for three consecutive quarters.

At the worst point - in Q2 2009 - real GDP was off 5.1% from the 2007 peak.

Real GDP has performed better than other indicators ...

This graph shows real personal income less transfer payments as a percent of the previous peak through the May report released Friday.

This measure was off 10.7% at the trough in October 2009.

Real personal income less transfer payments is still 3.7% below the previous peak.

The third graph is for industrial production through May.

Industrial production was off over 17% at the trough in June 2009, and has been one of the stronger performing sectors during the recovery.

However industrial production is still 3.4% below the pre-recession peak.

The final graph is for employment. This is similar to the graph I post every month comparing percent payroll jobs lost in several recessions.

Payroll employment is still 3.6% below the pre-recession peak.

All of these indicators collapsed in 2008 and early 2009, and only real GDP is back to the pre-recession peak. At the current pace of improvement, industrial production will be back to the pre-recession peak in early 2013, personal income less transfer payments in 2014, and employment in 2015.

by Calculated Risk on 7/01/2012 10:00:00 AM

For the economic question contest in June, the leaders were (Congratulations all!):

First Place tie:
Jeremy Strouse
Bryant Dodson
Alexander Petrov

4th Place tie:
Walt Tucker
Bill Dawers
Bill Jefferies

Yesterday:
• Summary for Week Ending June 29th
• Schedule for Week of July 1st

And the first two questions for July: