by Calculated Risk on 11/28/2014 09:11:00 PM

A few key points:
1) There is a clear seasonal pattern for house prices.
2) The surge in distressed sales during the housing bust distorted the seasonal pattern.
3) Even though distressed sales are down significantly, the seasonal factor is based on several years of data - and the factor is now overstating the seasonal change.
4) Still the seasonal index is probably a better indicator of actual price movements than the Not Seasonally Adjusted (NSA) index.

For in depth description of these issues, see Trulia chief economist Jed Kolko's article "Let’s Improve, Not Ignore, Seasonal Adjustment of Housing Data"

Note: I was one of several people to question the change in the seasonal factor (here is a post in 2009) - and this led to S&P Case-Shiller questioning the seasonal factor too (from April 2010).  I still use the seasonal factor (I think it is better than using the NSA data).

Click on graph for larger image.

This graph shows the month-to-month change in the CoreLogic and NSA Case-Shiller National index since 1987 (both through September).   The seasonal pattern was smaller back in the '90s and early '00s, and increased since the bubble burst.

Both indexes were negative seasonally (NSA) in September and will probably stay slightly negative for a few months.

The second graph shows the seasonal factors for the Case-Shiller National index since 1987. The factors started to change near the peak of the bubble, and really increased during the bust.

It appears the seasonal factor has started to decrease, and I expect that over the next several years - as the percent of distressed sales declines further and recent history is included in the factors - the seasonal factors will move back towards more normal levels.  However, as Kolko noted, there will be a lag with the seasonal factor since it is based on several years of recent data.

by Calculated Risk on 11/28/2014 03:05:00 PM

As of the October BLS report, the economy has added 2.225 million private sector jobs, and 2.285 million total jobs in 2014.

The consensus is the economy will add another 220 thousand jobs in November (215 thousand private sector jobs).   If that happens, 2014 will be the best year for private employment since 1999.

Here is a table showing the best years for nonfarm employment growth since 1995. To be the best year since the '90s, the economy needs to add an additional 222 thousand total nonfarm jobs. This could happen in the November report to be released next Friday, December 5th or in the December employment report to be released in early January.

This is happening with only 60 thousand public sector jobs added so far this year.  For comparison, there were 186 thousand public sector jobs added in 2005

Top Years Since 1995 Change in Nonfarm Payrolls per Year (000s)
Year	Total Nonfarm Employment
1997	3,408
1999	3,177
1998	3,047
1996	2,825
2005	2,506
2013	2,331
20141	2,285
2012	2,236
1995	2,159
1 2014 is through October.

For private employment, to be the best year since the '90s, the economy needs to add an additional 176 thousand private sector jobs (probably happen in the November report).

There is a small chance that 2014 will be the best year since 1998 for private employment.  However it would take an additional 491 thousand private sector jobs added in November and December (it would take 505 thousand additional jobs to be the best since 1997).  That would be a very strong finish to the year - unlikely, but not impossible.

Top Years Since 1995 Change in Private Payrolls per Year (000s)
Year	Private Employment
1997	3,213
1998	2,734
1996	2,720
1999	2,716
2011	2,400
2013	2,365
2005	2,320
2012	2,294
20141	2,225
1995	2,081
1 2014 is through October.

Right now it seems very likely that 2014 will be the best year since 1999 for both total nonfarm and private sector employment.

by Calculated Risk on 11/28/2014 10:41:00 AM

From HotelNewsNow.com: US hotel results for week ending 22 November

The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 16-22 November 2014, according to data from STR, Inc.

In year-over-year measurements, the industry’s occupancy rose 5.5 percent to 60.7 percent. Average daily rate increased 4.1 percent to finish the week at US$112.52. Revenue per available room for the week was up 9.8 percent to finish at US$68.34.
emphasis added

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Hotels are now heading into the slow period of the year.

Click on graph for larger image.

The red line is for 2014, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.  Purple is for 2000.

The 4-week average of the occupancy rate is solidly above the median for 2000-2007, and since mid-June, the 4-week average of the occupancy rate has been a little higher than for the same week in 2000.

Right now it looks like 2014 will be the best year since 2000 for hotels.  And since it takes some time to plan and build hotels, I expect 2015 will be even better for hotel occupancy.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 11/27/2014 08:02:00 PM

The automakers will report November vehicle sales on Tuesday, December 2nd. Sales in October were at 16.35 million on a seasonally adjusted annual rate basis (SAAR), and it appears sales in November might be at or above 17 million SAAR.

Note:  There were 25 selling days in November this year compared to 26 last year.

Here are a few forecasts:

From WardsAuto: Forecast: SAAR Could Reach 17 Million for Second Time in Four Months

A WardsAuto forecast calls for U.S. light-vehicle sales to reach a 17 million-unit seasonally adjusted annual rate for just the second time since 2006, after crossing that threshold most recently in August, when deliveries equated to a 17.4 million SAAR. The WardsAuto report is calling for 1.29 million light vehicles to be delivered over 25 selling days. The resulting daily sales rate of 51,461 units represents an 8.1% improvement over same-month year-ago (over 26 days) and a 9.1% month-to-month gain on October (27 days), slightly ahead of an average 6% October-November gain over the past three years. The 17 million-unit SAAR would be significantly higher than the 16.3 million recorded year-to-date through October, and would help bring 2014 sales in line with WardsAuto’s full year forecast of 16.4 million units.

From J.D. Power: New-Vehicle Retail Sales On Pace for 1.1 Million, the Strongest November Since 2001

New-vehicle retail sales in November 2014 are projected to come in at 1.1 million units, a 5.5 percent increase on a selling-day adjusted basis, compared with November 2013 (November 2014 has one fewer selling day than November 2013).
...
“The industry continues to demonstrate strong sales growth, which is exceptional considering that November is currently on pace to record the highest average customer-facing transaction prices ever,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. [Total forecast 16.5 million SAAR]

From Kelley Blue Book: New-Vehicle Sales To Rise 2.2 Percent In November On Black Friday Deals, According To Kelley Blue Book

In November 2014, new light-vehicle sales, including fleet, are expected to hit 1,270,000 units, up 2.2 percent from November 2013, and down 0.6 percent from October 2014. The seasonally adjusted annual rate (SAAR) for November 2014 is estimated to be 16.8 million, up from 16.2 million in November 2013, and up from 16.3 million in October 2014.

From TrueCar: TrueCar Forecasts 17 Million SAAR in November as Early Black Friday Events Prime the Market

TrueCar, Inc. ... forecasts the pace of auto sales in November accelerated to a seasonally adjusted annualized rate ("SAAR") of 17 million new units with the early launch of Black Friday sales campaigns.

New light vehicle sales in the U.S. (including fleet) are expected to reach 1,296,700 units for the month, up 4.1 percent from a year ago. On a daily selling rate (DSR) basis, with one less selling day this November, deliveries are expected to rise 8.2 percent. ... Best November since 2001

Another strong month for auto sales, and 2014 should be the best year since 2006.

by Calculated Risk on 11/27/2014 12:48:00 PM

From the WSJ: OPEC Leaves Production Target Unchanged

The Organization of the Petroleum Exporting Countries said its 12 members, who collectively pump around one-third of the world’s oil, would comply with its current production ceiling of 30 million barrels a day. That would involve a supply cut of around 300,000 barrels a day based on the cartel’s output in October, according to the group’s own data.
...
The oil producer group’s decision led to a further sharp selloff in major global oil benchmarks, with U.S. markets closed for the Thanksgiving holiday. Brent crude fell about 6% to below $73, a four-year low, while the West Texas Intermediate benchmark was down 3.2% to $71.36 a barrel.

Click on graph for larger image

This graph shows WTI and Brent spot oil prices from the EIA. (Prices today added).

According to Bloomberg, WTI has fallen over 4% today to $69.40 per barrel, and Brent to $72.97.

Prices are off over 35% from the peak for the year, and if this price decline holds, there should be further declines in gasoline prices over the next couple of weeks.  Gasoline futures are down about 10 cents per gallon.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $2.80 per gallon (down about 45 cents from 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