by Calculated Risk on 12/13/2012 08:37:00 AM

The DOL reports:

In the week ending December 8, the advance figure for seasonally adjusted initial claims was 343,000, a decrease of 29,000 from the previous week's revised figure of 372,000. The 4-week moving average was 381,500, a decrease of 27,000 from the previous week's revised average of 408,500.

The previous week was revised up from 370,000.

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 declined to 381,500.

The recent sharp increase in the 4 week average was due to Hurricane Sandy as claims increased significantly in NY, NJ and other impacted areas. Now, as expected, the 4-week average is almost back to the pre-storm level.

Weekly claims were lower than the 370,000 consensus forecast.


And here is a long term graph of weekly claims:

Note: We use the 4-week average to smooth out noise, but following an event like Hurricane Sandy,  the 4-week average lags the event. It looks like the average should decline next week to around 370,000 or so.


All current Employment Graphs

by Calculated Risk on 12/12/2012 09:31:00 PM

The big story today was the Federal Open Market Committee (FOMC) of the Federal Reserve announcing thresholds for the unemployment rate and inflation that will guide Fed Funds rate policy in the future. I think this significantly improves Fed communication. Also the FOMC - as expected - announced that they will expand QE3 by $45 billion per month starting in January after the expiration of Operation Twist.

Going forward, the Fed will adjust the amount of monthly QE3 purchases based on their evolving economic outlook.

Thursday economic releases:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to be unchanged at 370 thousand. The 4-week of claims should start to decline back towards the pre-Hurricane Sandy level.

• Also at 8:30 AM, Retail sales for November will be released. October retail sales (especially auto sales) were impacted by Hurricane Sandy, and auto sales bounced back in November. The consensus is for retail sales to increase 0.6% in November, and to be unchanged ex-autos.

• Also at 8:30 AM, the Producer Price Index for November will be released. The consensus is for a 0.5% decrease in producer prices (0.2% increase in core).



Another question for the December economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

by Calculated Risk on 12/12/2012 06:53:00 PM

From DataQuick: More Year-Over-Year Gains for Southland Home Sales and Prices

Southern California’s housing market continued its gradual recovery last month, logging the highest November sales in six years amid strong demand from investors and move-up buyers. ... total of 19,285 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 8.5 percent from 21,075 sales in October, and up 14.2 percent from 16,884 sales in November 2011, according to San Diego-based DataQuick.

A decline in sales from October to November is normal for the season. Last month’s sales were the highest for the month of November since 23,005 homes sold in November 2006, though they were 11.3 percent below the November average of 21,730 since 1988, when DataQuick’s statistics begin.
...
Lower-cost areas again posted the weakest sales compared with last year. The number of homes that sold below $200,000 fell 18.7 percent year-over-year, while sales below $300,000 dipped 7.8 percent. Sales in the more affordable markets have been hampered by the slowdown in foreclosure activity, which results in fewer foreclosed properties listed for sale. Also, lower-cost markets typically have a relatively high percentage of homeowners who owe more than their homes are worth, meaning they can’t sell and move.

Last month foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 15.3 percent of the Southland resale market. That was down from 16.3 percent the month before and 31.6 percent a year earlier. Last month’s level was the lowest since foreclosure resales were 13.6 percent of the resale market in September 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 26.6 percent of Southland resales last month. That was down slightly from an estimated 27.6 percent the month before and up from 25.4 percent a year earlier.

The median price is being impacted by the mix, with fewer low end distressed sales pushing up the median. This is why I focus on the repeat sales indexes.

Sales are declining in the high foreclosures areas because the number of foreclosed properties is declining, but sales are now picking up in other areas, and these are mostly conventional sales - a positive sign for the housing market.  

The NAR is scheduled to report November existing home sales and inventory next week on Thursday, December 20th.

by Calculated Risk on 12/12/2012 04:08:00 PM

From economist Tom Lawler: “Free” Data on Delinquency/Foreclosure Rates for First and Second Liens by State for Five “Mortgage Settlement” Servicers

On “The Office of Mortgage Settlement Oversight,” there is a report that can be downloaded that shows the first- and second-lien servicing portfolios for Ally, Bank of America, Citi, Chase, and Wells by delinquency status as of September 30th, 2012 – both nationally and by state.

Below are some summary stats (stated as a % of number of loan) for each servicer.

The data highlight how truly badly Bank of America’s servicing portfolio is performing, with the “DLQ 180+” and “in Foreclosure” %’s suggesting unusual “slowness” in resolving seriously-delinquent loans (Chase’s “in foreclosure” % suggests problems at that institution as well).

The reports (which, again, have data by state) are available here. (click on “servicer performance data”). Here is the spreadsheet.

1st Lien Portfolio	Bank of America	Chase	Ally	Citi	Wells
Current (0-29)	84.44%	87.29%	88.85%	89.43%	91.91%
DLQ 30-59	3.07%	3.62%	3.48%	3.14%	2.50%
DLQ 60-179	2.08%	2.07%	2.47%	2.11%	1.74%
DLQ 180+	3.27%	0.51%	0.49%	1.13%	0.70%
Bankruptcy	2.33%	1.46%	1.65%	1.69%	0.80%
Foreclosure	4.81%	5.06%	3.06%	2.50%	2.35%
Total Active Portfolio	100.00%	100.00%	100.00%	100.00%	100.00%
2nd Lien Portfolio	Bank of America	Chase	Ally	Citi	Wells
Current (0-29)	92.81%	95.19%	93.33%	93.18%	95.12%
DLQ 30-59	1.48%	1.31%	1.87%	1.64%	0.80%
DLQ 60-179	1.65%	1.27%	2.07%	1.96%	1.01%
DLQ 180+	1.71%	0.30%	0.46%	0.61%	0.42%
Bankruptcy	2.15%	1.49%	2.15%	2.30%	1.98%
Foreclosure	0.20%	0.45%	0.13%	0.31%	0.66%
Total Active Portfolio	100.00%	100.00%	100.00%	100.00%	100.00%

by Calculated Risk on 12/12/2012 02:00:00 PM

Here are the updated projections from the FOMC meeting.

Fed Chairman Ben Bernanke's press conference starts at 2:15 PM ET. Here is the video stream.


Live stream by Ustream

The FOMC is no longer presenting a "date-based guidance" for policy, and instead changed to announcing thresholds for raising the Fed Funds rate based on the unemployment rate and inflation. How this will work will be a key topic of the press conference today. Currently the thresholds are holding rates low "at least" until the unemployment rate is below 6 1/2%, and the inflation outlook "between one and two years ahead" is no more than 2 1/2%, as long as inflation expectations remain "well anchored" - this means inflation could increase to 3% or 4% without an increase in rates, as long as expectations remain anchored and the outlook one to two years ahead is at or below 2 1/2%. This is a significant change in policy guidance.

Another key question is: Which will come first, a rate hike or stopping or slowing QE3 (the FOMC will expand QE3 to $85 billion per month in January)? 

The four tables below show the FOMC December meeting projections, and the September projections to show the change.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in Real GDP1	2012	2013	2014	2015
Dec 2012 Projections	1.7 to 1.8	2.3 to 3.0	3.0 to 3.5	3.0 to 3.7
Sept 2012 Projections	1.7 to 2.0	2.5 to 3.0	3.0 to 3.8	3.0 to 3.8

¹ Projections of change in real GDP and in inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

GDP projections have been revised down slightly for 2013.

The unemployment rate was at 7.7 in November, and the projection for 2012 has been revised down. The projection for 2014 was revised down too.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment Rate2	2012	2013	2014	2015
Dec 2012 Projections	7.8 to 7.9	7.4 to 7.7	6.8 to 7.3	6.0 to 6.6
Sept 2012 Projections	8.0 to 8.2	7.6 to 7.9	6.7 to 7.3	6.0 to 6.6

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

The forecasts for overall and core inflation show the FOMC is still not concerned about inflation.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE Inflation1	2012	2013	2014	2015
Dec 2012 Projections	1.6 to 1.7	1.3 to 2.0	1.5 to 2.0	1.7 to 2.0
Sept 2012 Projections	1.7 to 1.8	1.6 to 2.0	1.6 to 2.0	1.8 to 2.0

Here is core inflation:

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core Inflation1	2012	2013	2014	2015
Dec 2012 Projections	1.6 to 1.7	1.6 to 1.9	1.6 to 2.0	1.8 to 2.0
Sept 2012 Projections	1.7 to 1.9	1.7 to 2.0	1.8 to 2.0	1.9 to 2.0