by Calculated Risk on 4/21/2014 01:25:00 PM

The Chicago Fed released the national activity index (a composite index of other indicators): Economic Growth Moderated in March

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to +0.20 in March from +0.53 in February. Two of the four broad categories of indicators that make up the index made positive contributions to the index in March, and two of the four categories decreased from February. ...

The index’s three-month moving average, CFNAI-MA3, increased to a neutral reading in March from –0.14 in February, marking its third consecutive nonpositive value. March’s CFNAI-MA3 suggests that growth in national economic activity was at its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.
emphasis added

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity was at the historical trend in March (using the three-month average).

According to the Chicago Fed:

What is the National Activity Index? The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

by Calculated Risk on 4/21/2014 11:22:00 AM

From Bloomberg: Property-Tax Collections Rising at Fastest Pace Since U.S. Crash

Property-tax collections nationally rose to $182.8 billion during the last three months of 2013 ... according to a U.S. Census estimate last month. That topped the previous peak four years earlier ...

In cities including San Jose, California, Nashville, Tennessee, Houston and Washington, revenue from real-estate levies has set records, or is poised to.

Local governments are using the money to hire police, increase salaries and pave roads after the decline in property values and 18-month recession that ended in 2009 forced them to eliminate about 600,000 workers ...

Click on graph for larger image.

Here is the report from the Census Bureau: Quarterly Summary of State and Local Government Tax Revenue for 2013:Q4

This graph from the Census Bureau report shows Q4 property taxes since 2003 - and property taxes have increased slightly in Q4 2013 and are back to the pre-recession peak.

This another data point suggesting that aggregate layoffs are over at the state and local level.

by Calculated Risk on 4/21/2014 09:50:00 AM

Some of this monthly decline appears weather related since miles driven were down 3.0% in the Northeast. Miles driven were up 0.4% in the West.

The Department of Transportation (DOT) reported:

Travel on all roads and streets changed by -0.8% (-1.7 billion vehicle miles) for February 2014 as compared with February 2013.
...
Travel for the month is estimated to be 212.8 billion vehicle miles.

The following graph shows the rolling 12 month total vehicle miles driven.

The rolling 12 month total is still mostly moving sideways but has started to increase a little recently.


Click on graph for larger image.

In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Currently miles driven has been below the previous peak for 75 months - 6+ years - and still counting.  Currently miles driven (rolling 12 months) are about 2.3% below the previous peak.

The second graph shows the year-over-year change from the same month in the previous year.

 In February 2014, gasoline averaged of $3.43 per gallon according to the EIA.  that was down from February 2013 when prices averaged $3.73 per gallon.


As we've discussed, gasoline prices are just part of the story.  The lack of growth in miles driven over the last 6 years is probably also due to the lingering effects of the great recession (high unemployment rate and lack of wage growth), the aging of the overall population (over 55 drivers drive fewer miles) and changing driving habits of young drivers.

With all these factors, it might take a few more years before we see a new peak in miles driven.

by Calculated Risk on 4/20/2014 08:39:00 PM

An article from Tim Logan at the LA Times on a subject I've discussed with several people via email: Student debt holds back many would-be home buyers

Of the many factors holding back young home buyers — rising prices, tougher lending standards, a still-shaky job market — none looms larger than the recent explosion of college debt.

The amount owed on student loans has tripled in a decade, to nearly $1.1 trillion, according to the Federal Reserve Bank of New York. People in their 20s and 30s — often the best-educated and highest-earning among them — owe most of that tab. That is keeping a crucial segment of home buyers on the sidelines, deferring one of the traditional markers of adult success.

Monday:
• At 8:30 AM ET, the Chicago Fed National Activity Index for March. This is a composite index of other data.

Weekend:
• Schedule for Week of April 20th

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up 3 and DOW futures are up 35 (fair value).

Oil prices are up recently with WTI futures at $104.25 per barrel and Brent at $109.53 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.63 per gallon (up sharply over the last ten weeks and more than 10 cents above the level of a year ago).  If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 4/20/2014 10:51:00 AM

From Nick Timiraos and AnnaMaria Andriotis at the WSJ: Mortgage Lenders Ease Rules for Home Buyers in Hunt for Business

While standards remain tight by historical measures, lenders have started to accept lower credit scores and to reduce down-payment requirements.
...
Another sign that banks could get less picky: Credit scores for borrowers seeking conventional mortgages also are easing. Scores on purchase mortgages stood at 755 in March, down from 761 a year earlier, according to data from Ellie Mae, a mortgage-software provider. Those on purchase loans backed by the FHA dropped to 684, compared with 696 one year earlier. ...

Smaller lenders are accepting even lower scores. Average credit scores on purchase loans closed through a consortium called LendingTree fell to 679 in March, down from the year-earlier 715.
...
"Tiny fractions of borrowers can do things that they could not a year ago," said Lou Barnes, a mortgage banker in Boulder, Colo.

No one wants a return to the loose lending standards of the mid-00s - and I hope we never see another Alt-A loan - but I expect standards to loosen over the next few years.