by Calculated Risk on 1/21/2011 12:55:00 PM

The last four weeks have been tough for hotel occupancy with only a small increase over the very low levels for the same period a year ago (includes the holidays). Here is the weekly update on hotels from HotelNewsNow.com: STR: US results for week ending 15 Jan.

In year-over-year comparisons, occupancy increased 4.5 percent to 49.9 percent, average daily rate was up 3.0 percent to US$97.59, and revenue per available room finished the week up 7.6 percent to US$48.70.

The following graph shows the four week moving average of the occupancy rate as a percent of the median occupancy rate from 2000 through 2007.

Click on graph for larger image in graph gallery.

Note: I've changed this graph. Since this is the percent of the median from 2000 to 2007, the percent can be greater than 100%.

The down spike in 2001 was due to 9/11. The up spike in late 2005 was hurricane related (Katrina and Rita). The dashed line is the current level.

This shows how deep the slump was in 2009 compared to the period following the 2001 recession. This also shows the occupancy rate improvement has slowed sharply over the last 4 weeks (only about 90% of the median from 2000 to 2007).

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

by Calculated Risk on 1/21/2011 11:17:00 AM

Twice a month Gallup polls approximately 30,000 adults on unemployment. This survey is Not Seasonally Adjusted (NSA).

Before I get to the data, this is a reminder that the employment series really needs a seasonal adjustment. Every year, even in good employment years, the U.S. economy loses 2.5 to 3.0 million payroll jobs (net) in January. This is because of various seasonal factors, like seasonal retail layoffs, and the headline BLS report is seasonally adjusted (SA).

A good example is the strong employment period from 1995 through 2000. Over those 6 years, U.S. payroll jobs declined 2.6 million on average every January (NSA), and the BLS reported a gain of just under 200 thousand jobs on average (SA). Quite a seasonal factor!

The same pattern is evident in the unemployment rate; the NSA rate is always sharply higher than the SA rate in January. So keep that in mind when looking at the following from Gallup: U.S. Unemployment Steady at 9.6% in Mid-January

Unemployment, as measured by Gallup without seasonal adjustment, remained at 9.6% in mid-January, the same as at the end of December. This marks a one-percentage-point improvement from 10.6% in mid-January 2010.

This suggests a sharp drop in the seasonally adjusted unemployment rate in January (although the timing and methods are different between the two surveys).

In January 2010, the BLS reported the unemployment rate as 10.6% (NSA) and the headline was 9.7% (SA). Gallup also reported the NSA rate at 10.6% for the mid-January 2010.

If the Gallup poll is even close, then the headline seasonally adjusted BLS number might be well below the 9.4% reported last month. Of course if the unemployment rate declines because the participation rate falls further - that isn't really good news.

Use this with caution. There isn't much of a track record of using the Gallup survey to predict the BLS report. But it might be a hint of good news.

by Calculated Risk on 1/21/2011 08:51:00 AM

From Nelson Schwartz at the NY Times DealBook: Bank of America Posts 4th-Quarter Loss of $1.2 Billion

The earnings report was complicated by a series of one-time gains and losses, most notably a $4.1 billion charge for mortgage repurchase claims, including the impact of an agreement late last month with Fannie Mae and Freddie Mac, the government-sponsored mortgage giants, to buy back troubled loans. In addition, Bank of America took a noncash charge of $2 billion to reflect a write-down of goodwill on its acquisition of Countrywide ...

Here is some information from the presentation on foreclosures:

Foreclosures
• Resumed foreclosure sales in most non-judicial states in early December, starting with vacant and non-owner occupied properties; expect to resume sales in remaining states in 1Q11
• Maintaining a deliberate and phased approach
• Remain committed to ensure no property is taken to foreclosure improperly
• Review of our foreclosure process shows the basis for our decisions has been accurate
• Process areas identified for improvement

Delinquency Statistics for Completed Foreclosure Sales
• 78% of borrowers had not made a mortgage payment for more than one year
• Average of 585 days in delinquent status (approximately 19 months)

by Calculated Risk on 1/20/2011 09:10:00 PM

David Leonhardt reviews some choices on reducing the deficit at Economix: The Deficit We Want

Here is the story on the polls Leonhardt discusses: Poll Finds Wariness About Cutting Entitlements

In some ways, this is a common story. When people are asked to choose between cutting spending or raising taxes, they want to cut spending.

Not surprisingly, when given a straight-up choice between broad spending cuts and tax increases, Americans say they would prefer to reduce the deficit mostly through less spending. It’s not even close: 62 percent for spending cuts, 29 percent for tax increases.

But there is overwhelming support for individual programs:

A few questions later, though, our pollsters offered a different choice. Would people rather eliminate Medicare’s shortfall through reduced Medicare benefits or higher taxes?

The percentages then switch, becoming nearly a mirror image of what they had been. Some 64 percent of respondents preferred tax increases, while 24 percent chose Medicare cuts. The same is true of Social Security: 63 percent for higher taxes, 25 percent for reduced benefits.

Herein lies the political problem. We want to cut spending. We just don’t want to cut the benefits that the spending pays for.

This is a huge disconnect.

Note: Medicare is a huge problem, as is the current General Fund structural deficit that requires either tax increases or probably cuts in defense spending. As Leonhardt notes, Social Security is a minor problem in comparison.

by Calculated Risk on 1/20/2011 05:15:00 PM

I haven't posted this graph in some time ...

From Doug Short: Current Market Snapshot: S&P 500 Closes Down But Well off the Intraday Low

The S&P 500 closed the day down 0.13%. The index is 89.2% above the March 9 2009 closing low, which puts it 18.2% below the nominal all-time high of October 2007.

Earlier on Existing Home sales:
• December Existing Home Sales: 5.28 million SAAR, 8.1 months of supply
• Existing Home Inventory increases 8.4% Year-over-Year in December

by Calculated Risk on 1/20/2011 02:31:00 PM

Just getting back to this ...

From the Philly Fed: January 2011 Business Outlook Survey

The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, edged down slightly from a revised reading of 20.8 in December to 19.3 in January. [anything above 0 shows expansion]
...
The new orders index increased 13 points this month, the fourth consecutive monthly increase.
...
The current employment index increased 13 points [to 17.6], and for the fifth consecutive month, the percentage of firms reporting an increase in employment (25 percent) is higher than the percentage reporting a decline (7 percent).

That is all good news. The concern is the pickup in both prices paid and received:

Price increases for inputs as well as firms' own manufactured goods are more widespread this month. Fifty-four percent of the firms reported higher prices for inputs, compared with 52 percent in the previous month. ... More firms reported increases in prices (26 percent) than reported decreases (9 percent), and the prices received index increased 8 points, its second consecutive positive reading.

Click on graph for larger image in new window.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The dashed green line is an average of the NY Fed (Empire State) and Philly Fed surveys through January. The ISM and total Fed surveys are through December.

This early reading suggests the ISM index will be in the high 50s again this month.

Overall the Philly Fed survey was positive.