by Calculated Risk on 1/04/2011 02:00:00 PM

From the December 14, 2010 FOMC meeting. These are probably the key sentences:

While the economic outlook was seen as improving, members generally felt that the change in the outlook was not sufficient to warrant any adjustments to the asset-purchase program, and some noted that more time was needed to accumulate information on the economy before considering any adjustment. Members emphasized that the pace and overall size of the purchase program would be contingent on economic and financial developments; however, some indicated that they had a fairly high threshold for making changes to the program.

And on the outlook:

Regarding their overall outlook for economic activity, participants generally agreed that, even with the positive news received over the intermeeting period, the most likely outcome was a gradual pickup in growth with slow progress toward maximum employment. However, they held a range of views about the risks to that outlook. A few mentioned the possibility that growth could pick up more rapidly than expected, particularly in light of the very accommodative stance of monetary policy currently in place. It was noted that such an acceleration would likely be accompanied by significantly more rapid growth in bank lending and in the monetary aggregates, suggesting that such indicators might prove to be useful sources of information. Others pointed to downside risks to growth. One common concern was that the housing sector could weaken further in light of the considerable supply of houses either on the market or likely to come to market. Another concern was the ongoing deterioration in the fiscal position of U.S. states and localities, which could lead to sharp cuts in spending and increases in taxes. In addition, participants expressed concerns about a possible worsening of the banking and financial strains in Europe, which could spill over to U.S. financial markets and institutions, and so to the broader U.S. economy. ...

Regarding the outlook for inflation, participants generally anticipated that inflation would remain for some time below levels judged to be most consistent, over the longer run, with maximum employment and price stability. In particular, most participants expected that underlying measures of inflation would bottom out around current levels and then move gradually higher as the recovery progresses.

by Calculated Risk on 1/04/2011 11:03:00 AM

Note: The real key is the seasonally adjusted annual sales rate (SAAR) compared to the last few months, not the year-over-year comparison provided by the automakers.

From MarketWatch: GM posts 7.5% gain in December U.S. sales

[GM] reported a 7.5% increase in December U.S. sales to 224,185 cars and trucks.

Once all the reports are released, I'll post a graph of the estimated total December light vehicle sales (SAAR) - usually around 4 PM ET. Most estimates are for an increase to 12.3 million SAAR in December from the 12.2 million SAAR in November. Sales in December 2009 were at a 11.1 million SAAR.

I'll add reports from the other major auto companies as updates to this post.

Update: MarketWatch reports: Ford 2010 sales up 19% vs year ago

From CNBC:

Chrysler says its sales for December of 2010 were up 16.4 percent from the same time in 2009. The carmaker sold 100,702 vehicles in December vesus 86,523 in the same month of 2009.

by Calculated Risk on 1/04/2011 08:59:00 AM

From Bloomberg: U.S. Office Market Has First Gain in Occupied Space Since 2007, Reis Says

Office buildings added 2.5 million square feet ... of occupied space in the fourth quarter, compared with a loss of 14 million square feet a year earlier, Reis said in its report. It was the first rise in net absorption since the fourth quarter of 2007.

The office vacancy rate was unchanged from the third quarter at 17.6 percent, remaining at the highest level since 1993, as supply also increased. ... “Vacancy has finally appeared to have stabilized,” Ryan Severino, an economist at Reis, said ...

Click on graph for larger image in new window.

This graph shows the office vacancy rate starting in 1991.

Reis is reporting the vacancy rate was at 17.6% in Q4 2010, the same as in Q3 and up from 17.0% in Q4 2009.

Reis should release the Mall and Apartment vacancy rates over the next few days.

by Calculated Risk on 1/03/2011 10:15:00 PM

From CNBC: Home Prices Will Decline for Years: Zuckerman (ht Scott)

Mort Zuckerman ... blamed the continuing price decline on the so-called shadow inventory of foreclosed homes that's yet to come on the market.

“That’s what’s going to put downward pressure on residential prices,” Zuckerman added, “And in my judgment, that’s going to continue for several years.”

And from MarketWatch: S&P warns on ‘shadow inventory’ (ht jb)

Standard & Poor’s Ratings Services said Monday that it’s taking longer for the U.S. housing market to absorb foreclosed homes, which means there may be a major drag on prices for a few more years.

My view is house prices - as measured by the Case-Shiller and CoreLogic repeat sales indexes - will decline another 5% to 10%. I think it is likely that nominal house prices will bottom in 2011, but that real house prices (inflation adjusted) will decline for another two to three years. (See: Question #1 for 2011: House Prices)

by Calculated Risk on 1/03/2011 07:09:00 PM

From the American Bankruptcy Institute: Consumer Bankruptcy Filings increase 9 percent in 2010

U.S. consumer bankruptcies increased 9 percent nationwide in 2010 from the previous year, according to the American Bankruptcy Institute (ABI) relying on data from the National Bankruptcy Research Center (NBKRC). The data showed that the overall consumer filing total for the 2010 calendar year (Jan. 1 – Dec. 31, 2010) reached 1,530,078 compared to the 1,407,788 total consumer filings recorded during 2009. Annual consumer filings have increased each year since the Bankruptcy Abuse Prevention and Consumer Prevention Act was enacted in 2005.

“The steady climb of consumer filings notwithstanding the 2005 bankruptcy law restrictions demonstrate that families continue to turn to bankruptcy as a result of high debt burdens and stagnant income growth,” said ABI Executive Director Samuel J. Gerdano. “We expect that consumer filings will continue to rise in 2011.”

This is slightly below ABI's forecast for 1.6 million filings last year. The following graph shows the annual consumer bankruptcy filings based on data from the U.S. Courts (and the ABI for 2010).

by Calculated Risk on 1/03/2011 03:30:00 PM

This is one of several industry specific indexes I track each month.

Click on graph for larger image in new window.

Unfortunately the data for this index only goes back to 2002.

Note: Any reading above 100 shows expansion for this index.

From the National Restaurant Association (NRA): Restaurant Performance Index Declined in November as Sales and Traffic Slipped

As a result of a downtick in same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) fell below 100 in November. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 99.9 in November, down 0.8 percent from October. November marked the first time in three months that the RPI stood below 100, the level above which signifies expansion in the index of key industry indicators.
...
For the first time in three months, restaurant operators reported a net decline in same-store sales. ... Restaurant operators also reported a net decline in customer traffic levels in November.

This is just one month of slight contraction, but something to watch.