by Calculated Risk on 3/06/2011 08:32:00 PM

• Libya: Looking like a prolonged civil war ...

From the NY Times: Rebel Advance in Libya Set Back by Heavy Assault

From al Jazeera: Libya Live Blog - March 7

• WTI oil prices at $105.03

• From Brent Hunsberger at The Oregonian: Hundreds of Oregon foreclosure sales stopped after judges' rulings (ht azurite)

Earlier:
• Summary for last week ending March 4th
• Schedule for Week of March 6th

by Calculated Risk on 3/06/2011 02:17:00 PM

The National Federation of Independent Business (NFIB) will release their February survey on Tuesday, but here is a pre-release of the employment data ... from NFIB: Positive Trend in Job Growth

“February brought us good news on the jobs front: The trend for job creation is, at last, decidedly positive. While job creation reports have been improving for almost two years, they have consistently been negative or near zero, indicating that employment at the nation’s small firms was still contracting, albeit at slower and slower rates. But this month’s reading confirms that we are moving in the right direction. Equally important, small firms’ plans to hire have been consistently positive for the past five consecutive months.

Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy. With the high percentage of real estate (including small construction companies), small businesses will be slow to recover this cycle.

Click on graph for larger image in new window.

This graph shows the net hiring plans for the next three months.

Hiring plans increased slightly in February. According to NFIB: “The percent of owners reporting hard-to-fill job openings rose two points to 15 percent, indicating that a reduction in the unemployment rate is likely within the next few months. Plans to create jobs strengthened; up two points to a net 5 percent of all firms. While this is still low, it is 15 points better than the recession low reading of negative 10 percent, reached in March 2009."

Baby steps in the right direction.

Earlier:
• Summary for last week ending March 4th
• Schedule for Week of March 6th

by Calculated Risk on 3/06/2011 08:33:00 AM

Note: Here is the Summary for last week ending March 4th

The key economic reports this week will be the trade balance report on Thursday and February retail sales on Friday.

----- Monday, March 7th -----
8:00 AM ET: Atlanta Fed President Dennis Lockhart speaks at the NABE conference in Arlington, VA. "A View from the Fed"

9:15 AM: Dallas Fed President Richard Fisher speaks at the Institute of International Bankers conference in D.C. "Challenges and Opportunities Facing the U.S. and Global Economy and Financial Markets"

3:00 PM: Consumer Credit for January. The consensus is for a $3.4 billion increase in consumer credit. Consumer credit has increased for three straight months after declining sharply during and after the recession.

----- Tuesday, March 8th -----
7:30 AM: NFIB Small Business Optimism Index for February. This index has been showing some increases in optimism.

Click on graph for larger image in graph gallery.

This graph shows the small business optimism index since 1986. The index increased to 94.1 in January from 92.6 in December.

Although still fairly low, this is the highest level for the index since December 2007.

10:00 AM: Senate confirmation hearing for Federal Reserve Board nominee and Nobel laureate Peter Diamond

----- Wednesday, March 9th -----
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.

9:00 AM ET: Ceridian-UCLA Pulse of Commerce Index™ This is the diesel fuel index for February (a measure of transportation).

10:00 AM: Monthly Wholesale Trade: Sales and Inventories for January. The consensus is for a 0.9% increase in inventories.

----- Thursday, March 10th -----
8:30 AM: The initial weekly unemployment claims report will be released. The number of initial claims had been trending down over the last few months. The consensus is for a slight increase to 378,000 from 368,000 last week.

8:30 AM: Trade Balance report for January from the Census Bureau.

This shows the monthly U.S. exports and imports in dollars through December 2010.

Imports had been mostly flat since May, but increased again in December. Exports have started increasing again after the mid-year slowdown.

The consensus is for the U.S. trade deficit to be around $41.5 billion, up from $40.6 billion in December.

10:00 AM Regional and State Employment and Unemployment (Monthly) for January 2010

12:00 PM: Q4 Flow of Funds Accounts from the Federal Reserve.

----- Friday, March 11th -----
8:30 AM: Retail Sales for February.

This graph shows retail sales since 1992. This is monthly retail sales, seasonally adjusted (total and ex-gasoline).

Retail sales are up 13.7% from the bottom, and now 0.4% above the pre-recession peak.

The consensus is for retail sales to rise sharply in February, a 1.0% increase from January. (0.7% increase ex-auto).

9:55 AM: Reuters/University of Mich Consumer Sentiment preliminary for March. The consensus is for a slight decrease to 76.5 from 77.5 in February.

10:00 AM: Manufacturing and Trade: Inventories and Sales for January. The consensus is for a 0.8% increase in inventories.

10:00 AM: Job Openings and Labor Turnover Survey for January from the BLS. This report has been showing a general increase in job openings, but very little turnover in the labor market.

Best Wishes to All!

by Calculated Risk on 3/05/2011 11:07:00 PM

Earlier: Here is the Summary for last week ending March 4th

• From Nelson Schwartz and David Streitfeld at the NY Times: Mortgage Modification Overhaul Sought by States

State attorneys general have presented the nation’s five biggest banks with a list of demands that could drastically alter the foreclosure process ...

Under the blueprint, banks would be prohibited from starting foreclosure proceedings while a borrower was actively trying to lower the interest rate or ease other terms of the home loan, a process known as a mortgage modification.

Any borrower who successfully made three payments in a trial modification would be given a permanent modification. When a modification was denied, it would be automatically reviewed by an ombudsman or independent review panel.

It was absurd that servicers would deny a modification when the borrower was making all the payments in a trial program - that just seemed like the servicer was taking advantage of the borrower. This is definitely a needed change.

• From Nick Timiraos and Ruth Simon at the WSJ: Mortgage Practices Overhaul Proposed

Current government modification programs are largely voluntary, and there are few rules governing servicers' practices. But on Thursday, the nation's largest banks, including Wells Fargo & Co., Bank of America Corp., and Citigroup Inc., received a detailed 27-page proposal from state attorneys general and federal agencies to force a shakeup in banks' mortgage-servicing policies.

One mortgage industry executive familiar with the document described it as "almost like a wish list."

Obviously this is just the beginning ...

by Calculated Risk on 3/05/2011 05:27:00 PM

As I noted yesterday, a key question is what happens to the labor force participation rate as the economy hopefully improves. The current participation rate is 64.2%.

Here are a two earlier analysis pieces:
• From BLS economist Mitra Toossi in November 2006: A new look at long-term labor force projections to 2050
• From Austin State University Professor Robert Szafran in September 2002: Age-adjusted labor force participation rates, 1960–2045

Those papers were written when the participation rate was in the mid-66% range. Based on demographics, Szafran had forecast the participation rate to fall to 64.6% in 2015, and Toosi had forecast the rate to fall to 64.5% in 2020. So some of the recent decline was expected - although it happened sooner and faster than either expected because of the severe recession.

And there might be reasons those forecasts were too high. First the participation rate of the 16 to 19 age group has fallen much faster than Toosi forecast (and might not bounce back much after the recession), and second, some people might have permanently given up.

Sudeep Reddy and Sara Murray at the WSJ wrote: Jobless Rate Falls Further

A growing number of workers with health problems are applying for Social Security Disability Insurance benefits. The disability rolls, where many beneficiaries remain for life, have surged more than 14% since the recession began, to nearly 10.2 million in December 2010.

"We already know from the number of people who have entered the disability rolls that there's going to be a permanent hit to the labor force participation rate," said Lawrence Katz, a Harvard University economist. "That's both costly to them—they're going to be less happy—and costly to us to lose someone who could be a productive worker."

I still expect some bounce back in the participation rate, and how many people return to the labor force is key in estimating how many jobs are needed to reduce the unemployment rate.

As I noted yesterday, if the Civilian noninstitutional population (over 16 years old) grows by about 2 million per year - and the participation rate stays flat - the economy will need to add about 100 thousand jobs per month to keep the unemployment rate steady at 8.9%.

If the population grows faster (say 2.5 million per year), and/or the participation rate rises, it could take significantly more jobs per month to hold the unemployment rate steady. As an example, if the working age population grows 2.5 million per year and the participation rate rises to 65% (from 64.2%) over the next two years, the economy will need to add 200 thousand jobs per month to hold the unemployment rate steady.

One thing is clear - we need more jobs!

Earlier:
• Summary for Week ending March 4th