by Calculated Risk on 1/13/2011 09:13:00 AM

The Department of Commerce reports:

[T]otal November exports of $159.6 billion and imports of $198.0 billion resulted in a goods and services deficit of $38.3 billion, down from $38.4 billion in October, revised. November exports were $1.2 billion more than October exports of $158.4 billion. November imports were $1.1 billion more than October imports of $196.8 billion.

Click on graph for larger image.

The first graph shows the monthly U.S. exports and imports in dollars through November 2010.

Imports have been mostly flat since May, and exports have started increasing again after the mid-year slowdown.

The second graph shows the U.S. trade deficit, with and without petroleum, through November.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The petroleum deficit increased in November as import prices continued to rise - averaging $76.81 in November. Prices will be even higher in December. The deficit with China increased to $25.634 billion from $25,517 in October. Once again oil and China deficits are essentially the entire trade deficit (or even more).

by Calculated Risk on 1/13/2011 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Jan. 8, the advance figure for seasonally adjusted initial claims was 445,000, an increase of 35,000 from the previous week's revised figure of 410,000. The 4-week moving average was 416,500, an increase of 5,500 from the previous week's revised average of 411,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims for the last 40 years. It is difficult to compare directly to the '70s and '80s because the labor force is larger now and other changes.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased this week by 5,500 to 416,500.

Although weekly claims increased sharply this week - to the highest level since October - the four week average is still much lower than a few months ago.

by Calculated Risk on 1/12/2011 08:32:00 PM

Here is an REO tour in San Diego from Jim the Realtor. Jim makes an interesting point that there were no postponements for some of these - and that appears to be a change in procedures.

The one at 6:22 is interesting. The owner paid $384,000 in 1988, and quitclaimed it to a relative in 2003 and the property was free and clear. Then "the refi parade started". The amount owed on the first was over $1.1 million - and there several other loans.

by Calculated Risk on 1/12/2011 05:13:00 PM

To put the following forecasts into prespective, there were around 474,000 single-family housing starts in 2010, and about 588,000 total housing starts (the final numbers are not available yet).

From MarketWatch: Home-building rebound in 2011 a small matter

Home building is set for a rebound in 2011, with single-family housing starts projected to climb 21% to 575,000 units, the [National Association of Home Builders chief economist David Crowe] said Wednesday.

I expect a rebound for housing starts, but that forecast seems overly optimistic. Economist Tom Lawler is forecasting single-family starts at 520,000 in 2011.

And here is an even lower forecast:

“We do not see any significant increase in starts occurring this year,” said Edward Sullivan, chief economist for the Portland Cement Association. ... Sullivan forecast single-family housing starts will hit 492,000 in 2011, a 3.4% increase from 2010.

Here is a long term graph of housing starts through November ...

Click on graph for larger image in graph gallery.

Even if single-family housing starts increased to 575,000 (the NAHB forecast) that would still leave starts below the bottom of the '90/'91 recession.

Hopefully housing starts will not rebound too much, and the excess vacant housing inventory will be reduced in 2011.

The Census Bureau will report December and 2011 housing starts next Wednesday, January 19th.

by Calculated Risk on 1/12/2011 02:00:00 PM

Fed's Beige Book:

Reports from the twelve Federal Reserve Districts suggest that economic activity continued to expand moderately from November through December.
...
Contacts in the manufacturing sector in all Districts reported that activity continued to recover, with the Richmond and Chicago Districts citing especially solid gains in orders. However, the Boston, Atlanta, and Dallas Districts noted that business remained weak for manufacturers selling into the construction sector. Retailers in all Districts indicated that sales appeared to be higher in this holiday season than in 2009 and, in some cases, better than expectations.

And on real estate:

Activity in residential real estate and new home construction remained slow across all Districts. A majority of the Districts, including Boston, New York, Cleveland, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco characterized local housing markets as weak and sluggish with little change from the previous reporting period.
...
High levels of existing home inventories continued to damp the pace of new home construction in most Districts reporting on construction, although Boston, Richmond, Dallas, and San Francisco mentioned pick-ups in multifamily construction within their Districts. Home prices generally declined or held steady in the New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, Kansas City, Minneapolis, and San Francisco Districts; the New York, Atlanta, Chicago, and San Francisco Districts mentioned distressed properties placing downward pressure on prices.
...
Commercial real estate markets displayed mixed results across the Districts again this reporting period, as leasing markets exhibited increasing signs of recovery and nonresidential construction remained weak.

This fits with other recent data. One of the keys is the pick-up in multifamily construction - I expect this sector to provide some boost to GDP and employment this year.

by Calculated Risk on 1/12/2011 11:19:00 AM

From the WSJ: Illinois House Passes Big Income-Tax Increase

Among the increases in the bill, the individual income-tax rate would jump to 5%, from 3%. ... The corporation tax would also rise to 7% from 4.8%.

It sounds like this will pass in the Illinois state senate and be signed into law.

This is a key theme for 2011: State and local spending cuts and tax hikes. Question #7 for 2011: State and Local Governments. This will be a drag on growth and employment as the states try to get their fiscal houses in order.

Also Meredith Whitney was on CNBC: Whitney Defends Muni Call, Sees 'Indiscriminate Selling'. Her key call was not the number of muni defaults, but the size of the defaults. On 60 Minutes Whitney said about this year: "You could see 50 sizeable defaults. Fifty to 100 sizeable defaults. More. This will amount to hundreds of billions of dollars' worth of defaults." As I noted in the State and Local government post, I think that level of defaults is unlikely.