by Calculated Risk on 2/25/2010 08:42:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Feb. 20, the advance figure for seasonally adjusted initial claims was 496,000, an increase of 22,000 from the previous week's revised figure of 474,000. The 4-week moving average was 473,750, an increase of 6,000 from the previous week's revised average of 467,750.
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The advance number for seasonally adjusted insured unemployment during the week ending Feb. 13 was 4,617,000, an increase of 6,000 from the preceding week's revised level of 4,611,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims increased this week by 6,000 to 473,750.

The current level of 496,000 (and 4-week average of 473,750) are very high and suggest continuing job losses in February. This is the highest level since last November.

by Calculated Risk on 2/24/2010 11:59:00 PM

From the American Trucking Association: ATA Truck Tonnage Index Jumped 3.1 Percent in January

Click on graph for slightly larger image in new window.

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index jumped 3.1 percent in January, following a revised 1.3 percent increase in December 2009. The latest gain boosted the SA index from 107 (2000=100) in December to 110.4 in January, its highest level since September 2008.
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For all of 2009, the tonnage index was down 8.7 percent (slightly larger than the previously reported 8.3 percent drop), which was the largest annual decrease since a 12.3 percent plunge in 1982.
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ATA Chief Economist Bob Costello said that the latest tonnage reading, coupled with anecdotal reports from carriers, indicates that both the industry and the economy are clearly in a recovery mode. “While I don’t expect tonnage to continue growing as robustly as it did in January, the industry is finally moving in the right direction. Although there are still risks that could throw the rebound off track, the likelihood of that happening continues to diminish.”
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Trucking serves as a barometer of the U.S. economy, representing nearly 69 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods.

Trucking is a coincident indicator - and some of this increase is related to the inventory cycle - but this suggests growth in January.

by Calculated Risk on 2/24/2010 07:49:00 PM

Note: I've added a list of "Posts Today" and "Posts Yesterday" on the right sidebar so everyone can find posts on recent economic releases (this has been a busy day and week)!

On Monday I linked to an article by Floyd Norris at the NY Times: Horrid Job Number Coming. Norris wrote:

"a lot of people who had jobs may report they did not work during the week, and companies may say they had fewer people on the payroll than they would have cited a week earlier or later. If so, we may get a truly horrid job number."

Since then I've spoken to a BLS representative, and although they will not comment on upcoming releases, he told me the BLS would prominently disclose any possible impact of the recent snow storms on the employment report - similar to the disclosure after Hurricane Katrina. It is possible that the response rates will be lower than usual in certain areas (like Washington D.C.) - this will be disclosed and adjustments will be made.

Other contacts - with knowledge of how the BLS conducts the surveys - have told me the snow storms will have little or no impact on the employment report (other on data collection as will be disclosed by the BLS).

Heck, maybe the snow storm boosted employment because of all the people hired temporarily to shovel snow!

by Calculated Risk on 2/24/2010 05:03:00 PM

Paul Kiel at ProPublica reports: Chase and Other Servicers Leave Many in Loan Mod Limbo; Treasury Threatens Penalties

About 97,000 homeowners in the government’s mortgage modification program have been stuck in a trial period for over six months. Most of them, about 60,000, have their mortgages with a single mortgage servicer, JPMorgan Chase.

Trial periods are designed to last only three months, after which mortgage servicers are supposed to either give homeowners a permanent modification or drop them from the program. According to a ProPublica analysis, about 475,000 homeowners have been in a trial modification for longer than three months.

Paul Kiel has much more.

A couple of key points on HAMP I've mentioned before:

When the HAMP program began, the requirements for putting a borrower in a trial program varied by servicer. Some servicers put anyone who answered the phone, and said they'd make a payment, in to a trial program. Other servicers required homeowners to provide some initial documentation of income, and make the first payment, before putting them in a trial program.

Although the HAMP trial program was supposed to last 3 months, the period was extended to 5 months - and then eventually to the end of January (no matter when the trial started).

The January guidance from Treasury addressed both of the above points.

Effective for all trial period plans with effective dates on or after June 1, 2010, a servicer may evaluate a borrower for HAMP only after the servicer receives the following documents, subsequently referred to as the “Initial Package”. The Initial Package includes:

Request for Modification and Affidavit (RMA) Form,

IRS Form 4506-T or 4506T-EZ, and

Evidence of Income

The trial period will start after the initial documents are received, a trial plan is sent to the borrower, and the borrower makes the initial payment.

The second key component of the directive is how to handle all the current trial modifications. For the borrowers who have not made all of their payments, the directive requires the HAMP trial program to be canceled. For borrowers who have made payments, but are missing documentation, Treasury provides some additional guidelines.

This suggests that there will be fewer trial modifications per month in the future (this is already happening, see graph below) and a surge of trial cancellations in February.

This is graph is from the January Treasury report. This shows the cumulative HAMP trial programs started.

Notice that the pace of new trial modifications has slowed sharply from over 150,000 in September to just over 80,000 in January 2010. This is slowest pace since May 2009 and is probably because of two factors: 1) servicers are now pre-qualifying borrowers, and 2) servicers are running out of eligible borrowers.

by Calculated Risk on 2/24/2010 02:24:00 PM

Historically the best leading indicator for the economy (and employment) has been housing. I've been writing about this for years. For a great summary paper, see Professor Leamer's presentation from the 2007 Jackson Hole Symposium: Housing and the Business Cycle

For housing as a leading indicator, I use Residential Investment (quarterly from the BEA's GDP report), and monthly data on Housing Starts and New Home sales from the Census Bureau, and builder confidence from the NAHB.

Two key points:

Existing home sales is not a leading indicator (sales of existing homes does not add to the housing stock).

This time could be different - the recovery could be led by exports and technology - but I'll stick with housing.

So here is a review of the three monthly leading indicators:

Housing Starts

Click on graph for larger image in new window.

Total housing starts were at 591 thousand (SAAR) in January, up 2.8% from the revised December rate, and up 24% from the all time record low in April 2009 of 479 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959). Total starts had rebounded to 590 thousand in June, and have moved mostly sideways for eight months.

Single-family starts were at 484 thousand (SAAR) in January, up 1.5% from the revised December rate, and 36% above the record low in January and February 2009 (357 thousand). Just like for total starts, single-family starts have been at about this level for eight months.

Housing starts are moving sideways ...

Builder Confidence

This graph shows the builder confidence index from the National Association of Home Builders (NAHB).

The housing market index (HMI) was at 17 in February. This is an increase from 15 in January.

The record low was 8 set in January 2009. This is still very low - and this is what I've expected - a long period of builder depression. The HMI has been in the 15 to 19 range since May 2009.

More moving sideways ...

Note: any number under 50 indicates that more builders view sales conditions as poor than good.

New Home Sales

The Census Bureau reports This graph shows New Home Sales vs. recessions for the last 45 years.

New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 309 thousand. This is a record low and a sharp decrease from the 348 thousand rate in December.

And it would be generous to even call this "moving sideways".

So these leading indicators suggest any growth will be sluggish and choppy.

Now some people might argue that housing starts and new home sales are about to increase sharply. Based on what? That seems unlikely with the large number of excess housing units (new and existing homes and rental units). See: Housing Stock and Flow

As I noted above, it might be different this time with exports and technology leading the way, but I'll stick with housing as a business cycle indicator.