by Calculated Risk on 6/07/2011 11:52:00 AM

The Association of American Railroads (AAR) reports carload traffic in May 2011 increased 0.5 percent compared with the same month last year (essentially flat), and intermodal traffic (using intermodal or shipping containers) increased 7.5 percent compared with May 2010.

On the carload side, May 2011 was not especially impressive, following a not especially impressive April. U.S. freight railroads originated 1,159,328 carloads in May, an average of 289,832 per week. That’s up 0.5% (5,960 carloads for the month) on a seasonally unadjusted basis over May 2010, though it was up 16.4% (163,308 carloads) over May 2009.

Click on graph for larger image in graph gallery.

This graph shows U.S. average weekly rail carloads (NSA).

As the first graph shows, rail carload traffic collapsed in November 2008, and now, 2 years into the recovery, carload traffic has only recovered about half way. From AAR:

For the year to date through May, total U.S. rail carloadings in 2011 were 6,110,554, up 3.2% (186,751 carloads) over the first five months of 2010. Neither 2011 nor 2010 include the Memorial Day holiday.

For the last two months, traffic has been tracking 2010 (no growth from last year). Of course auto traffic was down in May.

The second graph is for intermodal traffic (using intermodal or shipping containers):

In contrast to carload traffic, U.S. rail intermodal traffic continues to be impressive. U.S. railroads originated 932,956 intermodal trailers and containers in May 2011, an average of 233,239 per week and up 7.5% (65,440 units) over May 2010 on a non-seasonally adjusted basis.

Seasonally adjusted U.S. rail intermodal traffic was up 0.8% in May 2011 over April 2011, the sixth straight monthly increase.

Intermodal’s weekly average in May 2011 of 233,239 units was the second highest May ever. The highest May ever was in 2006 at 233,516 units per week.
excerpts with permission

So intermodal traffic is essentially at record highs, but carload traffic (commodities and autos) is only about half way back to pre-recession levels.

by Calculated Risk on 6/07/2011 10:00:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings in April was 3.0 million, little changed from 3.1 million in March. After increasing in February, job openings have been flat. Job openings have been around 3.0 million for three consecutive months; the last three-month period with levels this high was September—November 2008. The number of job openings was 549,000 higher than at the end of the recession in June 2009 (as designated by the National Bureau of Economic Research) but remains well below the 4.4 million openings when the recession began in December 2007.

The following graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Unfortunately this is a new series and only started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for April, the most recent (and dismal) employment report was for May.

Click on graph for larger image in graph gallery.

Notice that hires (purple) and total separations (red and blue columns stacked) are pretty close each month. When the purple line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

In general job openings (yellow) has been trending up - however job openings declined slightly in April - and are actually down year-over-year compared to April 2010. However April 2010 included decennial Census hiring, so that isn't a good comparison.

Overall turnover remains low.

Note: I've had some questions about "quits", and quits have been trending up (although they were down slightly in April). For this graph I add quits to other discharges to compare to total hires, but I'll look at just tracking quits too.

by Calculated Risk on 6/07/2011 08:38:00 AM

From Robbie Whelan at the WSJ: Second-Mortgage Misery

[A] report to be released Tuesday by real-estate data firm CoreLogic Inc. ... says 38% of borrowers who took cash out of their residences using home-equity loans are underwater ... By contrast, 18% of borrowers who don't have these loans were underwater.
...
Overall ... 10.9 million Americans who borrowed to buy their homes, or 22.7% of all homeowners with a mortgage nationwide, were underwater in the first quarter ...

This is a slight decrease from the 11.1 million, or 23.1 percent of homeowners with a mortgage who were underwater at the end of Q4 2010. The WSJ article notes the decline was probably due to completed foreclosures.

I'll have more when the CoreLogic report is available online.

by Calculated Risk on 6/06/2011 10:05:00 PM

As a followup to my earlier post, Housing Starts and the Unemployment Rate, Professor Amir Sufi sent me this graph of the unemployment rate and residential construction by state.

Credit: Professor Amir Sufi. "This maps the unemployment rate in a state in 2010q4 against the percentage drop in construction of new residential units from 2005 to 2010 (i.e., [new units constructed 2010 – new units constructed 2005]/new units constructed 2005)."

Click on graph for larger image in graph gallery.

Of course cause and effect can run both ways: A higher unemployment rate probably means less residential construction, and less construction would mean a higher unemployment rate (so areas with high levels of construction during the boom - like Florida, Nevada, Arizona and California - would see a higher unemployment rate during the bust).

Note: I've excerpted before from papers by Sufi. Here is a recent Fed Letter with Atif Mian: Consumers and the Economy, Part II: Household Debt and the Weak U.S. Recovery

by Calculated Risk on 6/06/2011 06:58:00 PM

Kash Mansori at the Street Light looks at some interesting data released by the BIS today on who owns the debt, and who sold the default insurance, for Portugal, Ireland and Greece: Betting On the PIGs. It ends up most of the debt is owned by European creditors, but US institutions are more exposed to a default. Kash writes:

If Greece were to default, for example, approximately 94% of the direct losses would fall on European creditors, and only 5% would fall on US creditors. However, US banks and insurance companies would have to make about 56% of the default insurance payouts triggered by such an event, while European agents would make only 43% of those payouts.
...
US and European financial institutions are likely to have very different incentives as negotiations regarding debt restructuring and reprofiling proceed. US banks and insurance companies are surely delighted with the "soft restructuring" that is currently being discussed.
...
In essence, European firms have been betting that a PIG default will happen sooner rather than later, while US firms have been betting that default would happen later or not at all.

It is interesting that European institutions were more willing to sell default insurance for debt issued by Ireland and Portugal than for Greece ... probably from experience.

by Calculated Risk on 6/06/2011 02:45:00 PM

The following is from economist Tom Lawler:

Over the weekend I “downloaded” historical data on active listings of SF homes and condos for 54 metro areas back to April 2006 from housingtracker.net (it was a pain). The historical data are monthly averages of weekly listings, and in May the 54 metro areas combined had 1,111,996 listings.

CR Note: the following graph combines two graphs from Lawler.

Below is a chart for all 54 metro areas [and] of the NAR’s estimate of the inventory of existing homes for sale over the same period (May 2011 data are not yet available).

Click on graph for larger image in graph gallery.

May listings for the 54 metro areas were down 6.8% from last May; down 10.2% from May 2009; and down 26.1% from May 2008!

Obviously, the trend in listings for the 54 metro areas is materially different from the NAR’s inventory estimates over this period. Here is a table showing April 2011 listings compared to listings in April for the previous 5 years.

% Change in Residential Listings/Existing Home Inventory, April 2011 from:
	NAR	HT 54 metro areas
Apr-10	-3.9%	-8.3%
Apr-09	-1.7%	-12.6%
Apr-08	-14.9%	-26.0%
Apr-07	-8.3%	-20.9%
Apr-06	13.3%	-1.7%

There are numerous possible reasons for these differences. First, of course, the 54 metro areas in housingtracker.net’s report are probably not as a group representative of the US market as a whole. There is a heavy representation of “bubble” markets in housingtracker.net’s list where listings soared in 2006/07 but have since fallen sharply (not true, btw, for all troubled markets, with Vegas and Reno being obvious exceptions). Second, HT’s listings may include some new homes listed for sale, which I think NAR tries to exclude.

Another big reason, however, is related to the NAR’s methodology for estimated existing home inventories. The NAR collects sales and “months’ supply” data from around 160 boards/MLS across the country, almost all of which are located in or adjacent to metropolitan statistical areas. The NAR assumes that the % changes in sales from these Boards/MLS reflect total sales across the country, and they apply these changes to “benchmark” estimates of total existing home sales derived from an analysis of decennial Census/AHS data (the last benchmarking was based on 2000/01 data, but that same methodology can’t be done with the Census 2010 data). For inventories the NAR uses the “months’ supply” data from these Boards/MLS to derive a months’ supply estimate for the nation as a whole, and “solves” for the inventory level. (Though multiplication!)

Most analysts believe – as does the NAR, by the way – that the NAR’s methodology has overstated existing home sales for the past four years or so, with the overstatement emerging no later than 2007 and growing over subsequent years. Given the NAR’s methodology of using sales and months’ supply to generate inventories, an overstatement in sales would also produce an overstatement in inventories, and a rise in the degree to which sales are overstated would result in an increasing overstatement of inventories as well. (In discussions of the NAR’s “overstatement” of existing home sales, some analysts incorrectly concluded that one implication was that the months’ supply numbers were understated. That is not correct.) Thus, inventories over the last 4-5 years have probably declined by more than that suggested in the NAR report.

There may be other differences as well. E.g., Boards/MLS do not all report active listings on a consistent basis.

But flipping back to the housingtracker.net numbers, it seems pretty clear that inventories in a large number of metro areas have declined significantly over the last several years, and have declined significantly more than a look at the NAR data might suggest.

To be sure, declining listings across most of the country is not necessarily “bullish” for housing, as home sales have also declined – that is, there has been declining demand as well as declining supply. Still, the declining supply is welcome news.

A table showing May 2011 listings compared to listings in the May of the previous 3 years is shown [below].

Active Listings, May 2011 Compared to May of Previous 3 Years, Various Metro Areas
	2010	2009	2008		2010	2009	2008
Albuquerque	-4.9%	-9.5%	-20.8%	Minneapolis	-10.9%	-11.5%	-28.8%
Atlanta	-9.9%	-21.3%	-41.6%	Nashville	-9.0%	-7.3%	-10.0%
Austin	-16.8%	-4.2%	-11.2%	New Orleans	-10.1%	-6.1%	-14.4%
Baltimore	-2.7%	-4.9%	-14.0%	New York	6.6%	6.6%	1.7%
Boise City	-30.6%	-39.9%	-47.7%	Newark	7.9%	5.2%	-3.4%
Boston	1.7%	4.4%	-20.4%	Oklahoma City	5.8%	4.6%	0.4%
Cape Coral	-33.1%	-40.2%	-46.6%	Omaha	-2.3%	9.5%	-9.3%
Chicago	-11.5%	-13.9%	-27.9%	Orange County	0.0%	10.2%	-8.7%
Cincinnati	-5.6%	11.7%	2.5%	Orlando	-23.1%	-48.3%	-57.7%
Cleveland	-3.1%	1.6%	-21.8%	Philadelphia	4.5%	6.5%	5.2%
Columbus	10.6%	14.3%	-10.8%	Phoenix	-21.0%	-31.7%	-45.8%
Dallas	-3.2%	-2.6%	-18.1%	Portland	-14.4%	-17.7%	-32.2%
Denver	-8.2%	-8.3%	-25.7%	Raleigh	-5.5%	0.1%	-3.2%
Detroit	-18.9%	-38.4%	-56.1%	Reno	8.7%	3.5%	2.2%
Edison	9.4%	10.2%	1.1%	Riverside	2.6%	-4.1%	-39.0%
Honolulu	-5.9%	-20.5%	-27.9%	Sacramento	-2.6%	8.4%	-22.5%
Houston	-5.7%	6.2%	-16.0%	Salt Lake City	-15.0%	-20.3%	-20.3%
Indianapolis	-8.4%	-4.1%	-19.4%	San Antonio	-0.8%	-1.4%	-7.6%
Jacksonville	-17.4%	-18.0%	-32.0%	San Diego	2.9%	30.8%	-15.4%
Kansas City	-3.0%	-2.4%	-22.4%	San Francisco	-3.7%	-3.3%	-29.1%
Las Vegas	4.6%	-2.8%	-2.4%	San Jose	-6.7%	-9.8%	-28.2%
Long Island	1.2%	-1.7%	-4.0%	Seattle	-15.0%	12.1%	-5.1%
Los Angeles	2.7%	6.1%	-23.1%	St. Louis	-7.4%	2.9%	-13.4%
Louisville	-4.0%	-4.1%	-11.0%	Tampa	-9.5%	-25.5%	-37.9%
Memphis	-6.7%	-12.9%	-32.7%	Tucson	-7.4%	-3.3%	-20.1%
Miami	-25.3%	-45.9%	-56.8%	Va. Beach	-6.0%	4.3%	-1.1%
Milwaukee	-8.2%	-3.1%	-10.1%	DC	-4.4%	-11.5%	-30.7%
Source: Housingtracker.net