by Calculated Risk on 5/02/2011 08:40:00 AM

From the NY Times: Survey Says Small-Business Lending Is Surging (ht Sebastian)

In the third quarter of 2010, five percent of the small companies surveyed [by Greenwich Associates] applied for a loan, a share that tripled in the last three months of the year. In the first three months of 2011, the figure leaped to 29 percent. Loan demand is typically highest at the end of the year, according to Marc Bernstein, the head of small-business banking for Wells Fargo. That would make the jump in applicants in the first months of 2011 especially notable.

The Federal Reserve is expected to release the April 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices later today. The January survey indicated some slight easing of standards and more demand for commercial and industrial (C&I), but not for other businesses. It will be interesting to see if the Fed survey for April saw any increase in demand from small firms.

Weekend:
• Summary for Week ending April 29th
• Goldman estimates 3.5 million Excess Vacant Housing Units.
• Schedule for Week of May 1st

by Calculated Risk on 5/01/2011 11:50:00 PM

By request, a discussion thread.

The Asian markets are mixed tonight with the Nikkei up 1%.

From CNBC: Pre-Market Data shows the S&P 500 up about 11 points, and the Dow futures up about 100 points.

Weekend:
• Summary for Week ending April 29th
• Goldman estimates 3.5 million Excess Vacant Housing Units.
• Schedule for Week of May 1st

Best to all.

by Calculated Risk on 5/01/2011 08:44:00 PM

Three weeks ago there were a couple of articles in the WSJ about lower prices for steel and copper. Here is another more general article: Commodity Surprise: Some Are Now Heading Down

Cotton has pulled back 17% from the all-time record set in early March, and sugar is down 34% from its multidecade high in February. Lead and zinc have tumbled in recent weeks after shooting up in the second half of 2010. Copper has shed 6% this year.

The declines came amid a wild April in which other raw materials continued to climb. U.S. oil prices rose 7% for the month, while gold set fresh records in nominal terms 13 times and silver neared its all-time high.

Lower commodity prices would definitely help, but unfortunately the one that matters the most for the U.S. economy - oil prices - are still high (WTI futures are at $113.56 per barrel, and Brent Crude is at $125.56). High oil and gasoline prices are one of the key downside risks for the economy.

Weekend:
• Summary for Week ending April 29th
• Goldman estimates 3.5 million Excess Vacant Housing Units.
• Schedule for Week of May 1st

by Calculated Risk on 5/01/2011 02:16:00 PM

Catching up - this was released last week at the same time as several other releases. Note: This is a composite index based on a number of economic releases.

From the Chicago Fed: Economic Activity Improved in March

Led by gains in production indicators, the Chicago Fed National Activity Index increased to +0.26 in March from +0.16 in February. March marked the fourth consecutive positive reading of the index and the sixth consecutive positive contribution from employment-related indicators. Neither has exhibited such patterns since April 2006.

The index’s three-month moving average, CFNAI-MA3, edged down to +0.20 in March from +0.27 in February, but remained positive for the third consecutive month for the first time since May 2010. March’s CFNAI-MA3 suggests that growth in national economic activity was somewhat above its historical trend. With regard to inflation, the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.

Click on graph for larger image in graph gallery.

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. According to the Chicago Fed:

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

Not a robust recovery, but this index suggests the economy was growing somewhat above trend in March.

Weekend:
• Summary for Week ending April 29th
• Goldman estimates 3.5 million Excess Vacant Housing Units.
• Schedule for Week of May 1st

by Calculated Risk on 5/01/2011 08:15:00 AM

The key report for this week will be the April employment report to be released on Friday, May 6th. The ISM manufacturing report will be released on Monday, and the ISM non-manufacturing report on Wednesday. There are several Fed speeches this week (only a few are included below). Also the automakers report on vehicle sales on Tuesday.

----- Monday, May 2nd -----
10:00 AM: ISM Manufacturing Index for April. The consensus is for a decrease to a still strong reading of 59.5 from 61.2 in March.

10:00 AM: Construction Spending for March. The consensus is for a 0.3% increase in construction spending.

2:00 PM: The April 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve. The January survey indicated some slight easing of standards and more demand for commercial and industrial (C&I) loans over the fourth quarter. For other types of loans to businesses and households, the January survey indicated banks have stopped tightening standards (they are already very tight), and demand has stopped falling (there is little demand for loans).

----- Tuesday, May 3rd -----
All day: Light vehicle sales for April. Light vehicle sales are expected to decrease to 13.0 million (Seasonally Adjusted Annual Rate), from 13.1 million in March. The impact of the supply chain disruption is a big unknown.

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the March sales rate.

Edmunds is forecasting: "Edmunds.com analysts predict that April's Seasonally Adjusted Annualized Rate (SAAR) will be 13.3 million, up from 13.1 in March 2011.

“As inventories rapidly deteriorate, April could be the last month that we’ll see strong sales numbers until late summer or early fall,” said Edmunds.com Senior Analyst Jessica Caldwell."

10:00 AM: Manufacturers' Shipments, Inventories and Orders for March. The consensus is for a 0.3% increase in orders.

----- Wednesday, May 4th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been very weak over the last couple months suggesting weak home sales through the first few months of 2011.

8:00 AM: Boston Fed President Eric Rosengren speaks before the NAIOP Commercial Real Estate Development Association

8:15 AM: The ADP Employment Report for April. This report is for private payrolls only (no government). The consensus is for +195,000 payroll jobs in April, down slightly from the 201,000 reported in March.

10:00 AM: ISM non-Manufacturing Index for April.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index. The March ISM Non-manufacturing index was at 57.3% in March. The employment index indicated slower expansion in March at 53.7%.

The consensus is for a slight increase in April to 58.0.

3:00 PM: San Francisco Fed President John Williams gives his first policy speech on "Maintaining Price Stability in a Global Economy" in Los Angeles.

----- Thursday, May 5th -----
8:30 AM: The initial weekly unemployment claims report will be released. The number of claims has increased over the last few weeks. The consensus is for a decrease to 410,000 from 429,000 last week.

9:00 AM: Fed Chairman Ben Bernanke, "Implementing a Macroprudential Approach to Supervision and Regulation" in Chicago.

----- Friday, May 6th -----
8:30 AM: Employment Report for April.

The consensus is for an increase of 185,000 non-farm payroll jobs in April, down slightly from the 216,000 added in March.

This graph shows the net payroll jobs per month (excluding temporary Census jobs) since the beginning of the recession. The estimate for April is in blue.

The consensus is for the unemployment rate to remain at 8.8% in April.

The second employment graph shows the percentage of payroll jobs lost during post WWII recessions through March - aligned at maximum job losses.

This shows the severe job losses during the recent recession - there are currently 7.25 million fewer jobs in the U.S. than when the recession started.

3:00 PM: Consumer Credit in March from the Federal Reserve. The consensus is for credit to increase $5 billion.

Best wishes to All!

by Calculated Risk on 4/30/2011 06:10:00 PM

Some key numbers for the U.S. economy are: 1) the current number of excess housing units, 2) how many new households are being formed each year, and 3) how many housing units are being added to the housing stock each year (at a record low this year).

Unfortunately reliable data for the first two numbers is unavailable except with a significant lag.

I've used the quarterly Housing Vacancy Survey (HVS), but that is not really designed for this purpose.

Goldman Sachs put out an estimate yesterday of 3.5 million units based on the HVS: "Based on data from the Census Bureau, we estimate that about 3.5 million housing units currently sit vacant, above and beyond normal seasonal and frictional vacancies." They calculated a range of 2.5 to 4.5 million units based on different assumptions.

Recently economist Tom Lawler took a long look at the 2010 Census data, and estimated there were about 2 to 3 million excess vacant housing units as of April 1, 2010. With the record low number of housing units delivered last year, Lawler estimated that as of April 1, 2011 the excess “would be somewhere in the range of 1.45 to 2.45 million units – with the latter almost certainly too high”. With another record low number of units added to the housing stock this year, the excess will be in the 750 thousand to 1.7 million range next April (with the latter “certainly too high"). This suggests the excess supply will be gone sometime between early 2014 and 2016.

Goldman has a higher estimate of excess vacant units, but they also have a higher estimate for household formation (partially because of pent up formation from all those people who doubled up during the recession). The conclude "[W]e think the recovery in single family housing starts will remain very slow. A plausible central scenario would be an increase in starts from about 475,000 units in 2010 to 600,000 by 2012. We do not expect single-family housing starts to return to their historical average rate of about 1 million units until 2015 or later."

In Thoughts on Residential Investment Recovery, I noted: 'My guess is housing starts will return to "normal" in 2015 or 2016.' It is hard to pinpoint an exact date because the data is uncertain. Frustrating!

But here is a little good news on data via Tom Lawler:

The Census Bureau announced that beginning next week it will release “demographic” profiles of 13 states each Thursday in May, with the first round of “states” will be the District of Columbia, Florida, Kentucky, Maine, Massachusetts, Michigan, Mississippi, New Mexico, North Dakota, Rhode Island, South Carolina, Tennessee and West Virginia. For folks interested in the housing markets, the data will include (among other things) data on housing tenure (owners/renters), occupancy/vacancy (include vacancy status – for rent, for sale, seasonal, etc.), age and sex distributions, and household types. These releases will help analysts get a much better “feel” for the overall housing market as of April 1, 2010, and will highlight just how “messed up” the data from the Census Housing Vacancy Survey really is – and why analysts should not use it to try to estimate the “excess supply” of housing.

I think the Goldman estimate is too high, but no one really knows. Hopefully by the end of May we will have a much better estimate for the excess supply as of April 1, 2010.

Earlier:
• Summary for Week ending April 29th