by Calculated Risk on 3/27/2009 04:09:00 PM

Form Bloomberg: Omni National Bank in Georgia Shut, 21st U.S. Failure (ht Brad)

Omni National Bank of Atlanta was seized by federal regulators, the 21st U.S. bank to fail this year ...

Omni National, with $980 million in assets, was shut by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. was named receiver, the OCC said today in a statement. ...

The failed bank had six branches in Georgia, Illinois, Florida and Texas, and two loan offices in Alabama and Pennsylvania, the OCC said. The lender opened in 2000. The FDIC, which arranges to sell the deposits and assets of failed banks, didn’t immediately identify a buyer for Omni National.

No word from the FDIC yet. Did Bloomberg jump the gun?

by Calculated Risk on 3/27/2009 02:39:00 PM

From Bloomberg: Default Rate Rises for Student Loans, U.S. Government Reports (ht Anthony)

Student-loan default rates for people who recently left school rose to 6.9 percent from 5.2 percent a year earlier as a deteriorating economy weighed on borrowers, the U.S. government said.

... The rate is based on borrowers who were to begin making repayments between October 2006 and October 2007, and who fell at least nine months behind by late September 2008.

Almost 232,000 of those borrowers entered default, a 13 percent increase from the previous year and a jump of 43 percent from two years earlier, the department said.

by Calculated Risk on 3/27/2009 11:34:00 AM

The BEA released vehicle sales for February this morning. Total auto and truck sales in the U.S. were 9.29 million (SAAR).

The automakers will release March sales numbers next Wednesday.

Click on graph for larger image in new window.

The first graph shows monthly vehicle sales (autos and trucks) as reported by the BEA at a Seasonally Adjusted Annual Rate (SAAR).

This shows that sales have plunged to a 9.29 million annual rate in February; the lowest since Dec 1981.

March 2009 sales will be down sharply from March 2008 too, but analysts will be looking for some stabilization on a seasonally adjusted basis.

This graph shows the total number of registered vehicles in the U.S. divided by the sales rate - and gives a turnover ratio for the U.S. fleet (this doesn't tell you the age of the fleet).

Currently this ratio is at 26.8 years, the highest ever. This is an unsustainable level (I doubt most vehicles will last 27 years!), and the ratio will probably decline over the next few years. This could happen with vehicles being removed from the fleet, but more likely because of a sales increase.

This suggests vehicle sales are much nearer the bottom than the top, and there will probably be some sort of modest rebound later this year.

by Calculated Risk on 3/27/2009 11:04:00 AM

In addition to the Personal Income report this morning, the BEA released the final Q4 private fixed investment supplemental tables.

One of the key areas for downward revisions in the final Q4 GDP report was non-residential investment. These revisions were significant.

I'll use lodging as an example ... this first graph was based on the advanced GDP report:

Click on graph for larger image in new window.

This graph shows investment in lodging as a percent of GDP.

In the advance report, lodging investment was reported at 0.34% of GDP - an all time high.

Note: prior to 1997, the BEA included Lodging in a category with a few other buildings. This earlier data was normalized using 1997 data, and is an approximation.

The second graph is based on the final Q4 GDP report.

Instead of increasing slightly in Q4 - as suggested by the advance report - lodging investment declined at a 15.7% annual rate in Q4.

Office investment declined at a 10.1% annual rate in Q4, and mall investment declined at a 11.3% annual rate.

The turning point for non-residential investment was in Q4. Let the cliff diving begin!

by Calculated Risk on 3/27/2009 08:26:00 AM

The BEA released the Personal Income and Outlays report for February this morning. The report shows that PCE will probably make a positive contribution to GDP in Q1 2009.

Each quarter I've been estimating PCE growth based on the Two Month method. This method is based on the first two months of each quarter and has provided a very close estimate for the actual quarterly PCE growth.

Some background: The BEA releases Personal Consumption Expenditures monthly and quarterly, as part of the GDP report (also released separately quarterly).

You can use the monthly series to exactly calculate the quarterly change in real PCE. The quarterly change is not calculated as the change from the last month of one quarter to the last month of the next. Instead, you have to average all three months of a quarter, and then take the change from the average of the three months of the preceding quarter.

So, for Q1 2009, you would average real PCE for January, February, and March, then divide by the average for October, November and December. Of course you need to take this to the fourth power (for the annual rate) and subtract one.

The March data isn't released until after the advance Q1 GDP report. But we can use the change from October to January, and the change from November to February (the Two Month Estimate) to approximate PCE growth for Q1.

The two month method suggests real PCE growth in Q1 of 0.8% (annualized). Not much, but a significant improvement from the previous two quarters (declines of -3.8% and -4.3% in PCE).

The following graph shows this calculation:

Click on graph for larger image in new window.

This graph shows real PCE for the last 12 months. The Y-axis doesn't start at zero to better show the change.

The dashed red line shows the comparison between January and October. The dashed green line shows the comparison between February and November.

Since PCE was weak in December, the March to December comparison will probably be positive too.

This graph also show the declines in PCE in Q3 and Q4.

For Q3, compare July through September with April through June. Notice the sharp decline in PCE. The same was true in Q4.

This suggests that PCE will make a positive contribution to GDP in Q1.

Also interesting:

Personal saving -- DPI less personal outlays -- was $450.7 billion in February, compared with $478.1 billion in January. Personal saving as a percentage of disposable personal income was 4.2 percent in February, compared with 4.4 percent in January.

This is substantially above the near zero percent saved of recent years.

This graph shows the saving rate starting in 1959 (using a three month centered average for smoothing).

Although this data may be revised significantly, this does suggest households are saving substantially more than during the last few years (when they saving rate was close to zero). This is a necessary but painful step ... and a rising saving rate will repair balance sheets, but also keep downward pressure on personal consumption.

It is not much, but this is definitely a positive report.