by Calculated Risk on 8/02/2012 10:31:00 AM

It is difficult to find good and timely data on the number of household formations in the US, and also for the number of excess vacant housing units. The decennial Census is probably the best measure (and also the ACS), but those two estimates aren't consistent (the Census Bureau is looking into the reasons why). Another Census Bureau survey, the Housing Vacancies and Homeownership (HVS) is clearly flawed. The HVS indicates that the number of occupied households increase by 809 thousand over the last year - and that seems too low.

Jed Kolko, chief economist at Trulia, has been looking at Postal Service data.

From Jed Kolko at Trulia: Housing Glut or Housing Shortage? America’s Got Both

With this post, we present a new measure of vacancies, based on U.S. Postal Service (USPS) monthly data on the number of addresses that are and are not receiving mail. ... Here’s what we found.

Nationally, the number of occupied housing units – that is, those receiving mail – rose by 970,000 in the last year, from mid-July 2011 to mid-July 2012. Over the same period, the total number of housing units – those that could receive mail – rose by 760,000. The difference – 210,000 – is the reduction in the number of vacant units. That’s a 5% drop in the number of vacant units nationally. As a percentage of all units, the vacancy rate declined from 3.6% one year ago to 3.4% now.

In fact, vacancies have declined in 90 of the 100 largest metros.

There is much more in Kolko's post.

This data suggests close to 1 million household formations over the last year. I have less confidence in the count of housing units, since total completions only increased by a little more than 600 thousand last year (single family, multi-family and manufactured homes) - and there were also some demolitions.

Clearly the vacancy rate is falling - and the number of household formations exceeds the number of housing units added to the housing stock.

by Calculated Risk on 8/02/2012 08:30:00 AM

The DOL reports:

In the week ending July 28 the advance figure for seasonally adjusted initial claims was 365,000, an increase of 8,000 from the previous week's revised figure of 357,000. The 4-week moving average was 365,500, a decrease of 2,750 from the previous week's revised average of 368,250.

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 declined to 365,500.

The sharp swings over the last few weeks are apparently related to difficulty adjusting for auto plant shutdowns.

And here is a long term graph of weekly claims:

This was below the consensus forecast of 370,000 and is the lowest level for the four week average since March - and is near the post bubble low of 363,000.

All current Employment Graphs

by Calculated Risk on 8/01/2012 09:36:00 PM

From Jon Hilsenrath and Kristina Peterson at the WSJ: Wary Fed Is Poised to Act

The Federal Reserve is heading toward launching a new round of stimulus to buck up the weak economy, but stopped short of doing so right away.

The decision to make what amounted to a conditional promise of action came Wednesday at the end of the central bank's two-day policy meeting. In an uncharacteristically strong statement, the Fed said it will "closely monitor" the economy and "will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions." Translation: The Fed will move if growth and employment don't pick up soon on their own.

The Fed has been saying "soon" for months.

On Thursday:
• At 7:45 AM ET, the European Central Bank (ECB) will announce their decision on rates. The key is the after meeting press conference. From the FT Alphaville:

Any further policy action would be announced during Draghi’s subsequent press conference. To recap, the likeliest options seem to be: another rate cut (note that earlier time), a revived Securities Markets Programme, and then (getting quite a bit less likely) another LTRO, approval of an eventual banking license for the ESM, or a yield targeting framework for bond-buying.

• At 8:30 AM, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 370 thousand from 353 thousand last week.

• At 10:00 AM, the Manufacturers' Shipments, Inventories and Orders (Factory Orders) for May will be released. The consensus is for a 0.7% increase in orders.

I'll also post an employment preview tomorrow too.

by Calculated Risk on 8/01/2012 06:16:00 PM

The BEA released the underlying details today for the Q2 Advance GDP report.

The first graph shows investment in offices, malls and lodging as a percent of GDP. With the annual revisions, it now appears office, mall and lodging investment has increased slightly - but from a very low level.

Investment in offices is down about 61% from the peak (as a percent of GDP). With the high office vacancy rate, investment will probably not increase significantly (as a percent of GDP) for several years.

Click on graph for larger image.

Investment in multimerchandise shopping structures (malls) peaked in 2007 and is down about 59% from the peak (note that investment includes remodels, so this will not fall to zero).

Lodging investment peaked at 0.32% of GDP in Q2 2008 and is down about 75%.

The second graph is for Residential investment (RI) components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories (dormitories, manufactured homes).

Usually the most important components are investment in single family structures followed by home improvement.

Investment in single family structures is finally increasing after mostly moving sideways for almost three years (the increase in 2009-2010 was related to the housing tax credit).

Investment in home improvement was at a $158 billion Seasonally Adjusted Annual Rate (SAAR) in Q2 (just over 1.0% of GDP), significantly above the level of investment in single family structures of $122 billion (SAAR) (or 0.78% of GDP). Eventually single family structure investment will overtake home improvement as the largest category of residential investment.

Brokers' commissions increased slightly in Q2 as a percent of GDP. And investment in multifamily structures increased in Q2. This is a small category, and even though investment is increasing, the positive impact on GDP will be relatively small.

These graphs show there is currently very little investment in offices, malls and lodging. And residential investment is starting to pickup, but from a very low level.

All Housing Investment and Construction graphs

by Calculated Risk on 8/01/2012 03:18:00 PM

Based on an estimate from Autodata Corp, light vehicle sales were at a 14.09 million SAAR in July. That is up 14% from July 2011, and down 1.7% from the sales rate last month (14.33 million SAAR in June 2012).

This was slightly above the consensus forecast of 14.0 million SAAR (seasonally adjusted annual rate).

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for July (red, light vehicle sales of 14.09 million SAAR from Autodata Corp).

Click on graph for larger image.

The year-over-year increase was fairly large because the auto industry was still recovering from the impact of the tsunami and related supply chain issues in 2011.

Sales have averaged a 14.12 million annual sales rate through the first seven months of 2012, up sharply from the same period of 2011.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate.

This shows the huge collapse in sales in the 2007 recession.

In 2012, sales are mostly moving sideways suggesting auto sales will probably not add significantly to GDP.