by Calculated Risk on 6/11/2015 12:11:00 PM

The Federal Reserve released the Q1 2015 Flow of Funds report today: Flow of Funds.

According to the Fed, household net worth increased in Q1 compared to Q4:

The net worth of households and nonprofits rose to $84.9 trillion during the first quarter of 2015. The value of directly and indirectly held corporate equities increased $487 billion and the value of real estate rose $503 billion.

Household net worth was at $84.9 trillion in Q1 2015, up from $83.3 billion in Q4..

The Fed estimated that the value of household real estate increased to $21.1 trillion in Q1 2015. The value of household real estate is still $1.4 trillion below the peak in early 2006 (not adjusted for inflation).

Click on graph for larger image.

The first graph shows Households and Nonprofit net worth as a percent of GDP.  Household net worth, as a percent of GDP, is higher than the peak in 2006 (housing bubble), and above the stock bubble peak.

This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations.

This ratio was increasing gradually since the mid-70s, and then we saw the stock market and housing bubbles.

This graph shows homeowner percent equity since 1952.

Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.

In Q1 2015, household percent equity (of household real estate) was at 55.6% - up from Q4, and the highest since Q4 2006. This was because of an increase in house prices in Q1 (the Fed uses CoreLogic).

Note: about 30.3% of owner occupied households had no mortgage debt as of April 2010. So the approximately 50+ million households with mortgages have far less than 55.6% equity - and millions still have negative equity.

The third graph shows household real estate assets and mortgage debt as a percent of GDP.

Mortgage debt decreased by $33 billion in Q1.

Mortgage debt has declined by $1.26 trillion from the peak. Studies suggest most of the decline in debt has been because of foreclosures (or short sales), but some of the decline is from homeowners paying down debt (sometimes so they can refinance at better rates).

The value of real estate, as a percent of GDP, was up in Q1, and somewhat above the average of the last 30 years (excluding bubble).

by Calculated Risk on 6/11/2015 09:45:00 AM

Earlier the DOL reported:

In the week ending June 6, the advance figure for seasonally adjusted initial claims was 279,000, an increase of 2,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 276,000 to 277,000. The 4-week moving average was 278,750, an increase of 3,750 from the previous week's revised average. The previous week's average was revised up by 250 from 274,750 to 275,000.

There were no special factors impacting this week's initial claims.

The previous week was revised to 277,000.

The following graph shows the 4-week moving average of weekly claims since 1971.

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 increased to 278,750.

This was above the consensus forecast of 276,000, and the low level of the 4-week average suggests few layoffs.

by Calculated Risk on 6/11/2015 08:39:00 AM

On a monthly basis, retail sales were up 1.2% from April to May (seasonally adjusted), and sales were up 2.7% from May 2014.

From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $444.9 billion, an increase of 1.2 percent from the previous month, and 2.7 percent above May 2014. ... The March 2015 to April 2015 percent change was revised from virtually unchanged to +0.2 percent.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline increased 1.0%.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales ex-gasoline increased by 5.2% on a YoY basis (2.7% for all retail sales).

The increase in May was close to the consensus expectations of a 1.3% increase, and sales in March and April were revised up. A solid report.

by Calculated Risk on 6/10/2015 07:52:00 PM

From the Financial Times: Anxious Greeks pull money from banks amid fears of capital controls

“Last month the amounts being moved by individual depositors were noticeably smaller, between €200,000 and €100,000. We’re getting to the bottom of the barrel,” [said an Athens-based banking analyst], estimating Greeks had stashed about €5bn under mattresses and floorboards since January.
except with permission

By the time they impose capital controls, all of the money will be gone.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 276 thousand from 275 thousand.

• Also at 8:30 AM, Retail sales for May will be released. The consensus is for retail sales to increase 1.3% in May, and to increase 0.8% ex-autos.

• At 10:00 AM, Manufacturing and Trade: Inventories and Sales (business inventories) report for April. The consensus is for a 0.2% increase in inventories.

• At 12:00 PM, Q1 Flow of Funds Accounts of the United States from the Federal Reserve.

by Calculated Risk on 6/10/2015 02:36:00 PM

From the WSJ: U.S. Annual Budget Deficit Falls Near Seven-Year Low

Over the past 12 months, the budget deficit has narrowed to $412 billion, down from $460 billion in April and $491 billion a year earlier. That marks the lowest 12-month deficit since August 2008.
...
The brighter budget outlook means the deficit could fall below projections made by analysts just a few months ago. The Congressional Budget Office forecast in March that the federal deficit would rise to $486 billion this year, from $485 billion last year.

Meanwhile, Congress has yet to raise the federal debt limit. The Treasury has been using emergency measures since mid-March to avoid breaching the ceiling.

The Treasury hasn’t yet said how long it might be able to do that, but the CBO estimated in March that those measures should last until October or November.

The most recent CBO projection was for the fiscal 2015 budget deficit to be 2.7% of GDP. Right now it looks like fiscal 2015 will be closer to 2.4% (a significant change).