by Calculated Risk on 4/03/2011 08:30:00 AM

Earlier:
• Summary for Week ending April 1st

This will be a light week for economic data.

Note: Reis is expected to release their Q1 Office, Mall and Apartment vacancy rate reports this week. These reports have been showing "stabilizing" vacancy rates for offices and malls, and falling vacancy rates for apartments.

----- Monday, April 4th -----
9:05 AM ET: Atlanta Fed President Dennis Lockhart speaks in Palm Beach, Florida.

7:15 PM ET: Fed Chairman Ben Bernanke, "Clearinghouses and Financial Stability", At the Federal Reserve Bank of Atlanta 2011 Financial Markets Conference, Stone Mountain, Georgia

----- Tuesday, April 5th -----
10:00 AM: ISM non-Manufacturing Index for March. The consensus is for a slight decrease to 59.5 from 59.7 in February.

Click on graph for larger image in graph gallery.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index. The February ISM Non-manufacturing index was at 59.7%, up from 59.4% in January. The employment index indicated faster expansion in February at 55.6%, up from 54.5% in January. Note: Above 50 indicates expansion, below 50 contraction.

12:45 PM: Minneapolis Federal Reserve Bank President Narayana Kocherlakota speaks "The impact of, and response to, industry forces on homeownership in Emerging Markets"

2:00 PM: FOMC Minutes, Meeting of March 15, 2011. The minutes might contain hints about the recent disagreements on QE2, and possibly a discussion about the recently announced post-meeting press conferences.

----- Wednesday, April 6th -----
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.

----- Thursday, April 7th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a decrease to 385,000 from 388,000 last week.

3:00 PM: Consumer Credit for February. The consensus is for a $4.8 billion increase in consumer credit.

----- Friday, April 8th -----
10:00 AM: Monthly Wholesale Trade: Sales and Inventories for February.

Best wishes to All!

by Calculated Risk on 4/02/2011 08:01:00 PM

Catching up (and feeling much better today) ... the Census Bureau reported yesterday that overall construction spending decreased in February compared to January (seasonally adjusted).

[C]onstruction spending during February 2011 was estimated at a seasonally adjusted annual rate of $760.6 billion, 1.4 percent (±1.4%)* below the revised January estimate of $771.0 billion. The February figure is 6.8 percent (±1.6%) below the February 2010 estimate of $815.8 billion.

Private construction spending also decreased in February:

Spending on private construction was at a seasonally adjusted annual rate of $468.0 billion, 1.4 percent (±1.3%) below the revised January estimate of $474.6 billion. Residential construction was at a seasonally adjusted annual rate of $228.5 billion in February, 3.7 percent (±1.3%) below the revised January estimate of $237.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $239.6 billion in February, 0.9 percent (±1.3%)* above the revised January estimate of $237.4 billion.

Click on graph for larger image in graph gallery.

This graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Residential spending is 66% below the peak in early 2006, and non-residential spending is 42% below the peak in January 2008.

As I mentioned in the weekly summary, the story remains the same - manufacturing is expanding and anything housing related is still struggling.

Earlier:
• Summary for Week ending April 1st

by Calculated Risk on 4/02/2011 04:56:00 PM

The National Federation of Independent Business (NFIB) will release their March survey on Tuesday, April 12th, but here is a pre-release of the employment data ... from NFIB: NFIB Jobs Statement: Main Street Adds Jobs for Second Consecutive Month

“The positive job creation observed in February was repeated again in March (sigh of relief here), confirming that the number of net new jobs reported on Main Street was decidedly positive. Employment gains have not been this good since 2007.

“The percent of owners reporting hard to fill job openings was unchanged at 15 percent, supporting the modest reductions in the unemployment rate recently observed. Unfortunately, the net percent of owners planning to create new jobs (increasing the total number of workers employed) lost three points, falling to a net 2 percent of all firms, low, but still 12 points better than the recession low reading of negative 10 percent reached in March 2009.

Click on graph for larger image in graph gallery.

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

Hiring plans decreased in March, but are still positive.

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), I expect small business hiring to be slow to recover in this cycle.

Earlier:
• Summary for Week ending April 1st

by Calculated Risk on 4/02/2011 11:42:00 AM

The BLS reported that payroll employment increased 216,000 in March and that the unemployment rate declined to 8.8%. If we average the first three months of 2011, there were 160,000 payroll jobs added per month. That is enough to keep up with the growth in the labor force, but to only reduce the unemployment rate slowly. Private payrolls were a little better with an average of 188,000 per month, as state and local governments continued to lay off workers (something we expect all year).

The decline in the unemployment rate from 8.9% to 8.8% was good news, especially since the participation rate was unchanged at 64.2%. Unfortunately the number of long term unemployed increased, as did the number of part time workers for economic reasons.

More disappointing news was that the average workweek declined slightly to 34.1 hours, and average hourly earnings was flat.

The March employment report was another small step in the right direction, but the overall employment situation remains grim: There are 7.25 million fewer payroll jobs now than before the recession started in 2007 with 13.5 million Americans currently unemployed. Another 8.4 million are working part time for economic reasons, and about 4 million more workers have left the labor force. Of those unemployed, 6.1 million have been unemployed for six months or more.

Most of the other stories remained the same - growth in manufacturing activity continues to be strong, and house prices declined further in January.

A key piece of disappointing news was the sluggish increase in real Personal Consumption Expenditures (PCE) in February. This suggests real PCE growth of only 1.4% in Q1, and has prompted several analysts to downgrade Q1 GDP growth.

Below is a summary of economic data last week mostly in graphs:

• March Employment Report: 216,000 Jobs, 8.8% Unemployment Rate

The first graph shows the employment population ratio, the participation rate, and the unemployment rate.

Click on graphs for larger image in graph gallery.

The unemployment rate decreased to 8.8% (red line).

The Labor Force Participation Rate was unchanged at 64.2% in March (blue line). This is the lowest level since the early '80s. This is the percentage of the working age population in the labor force. The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although some of the decline is due to the aging population.

The Employment-Population ratio was increased slightly to 58.5% in March (black line).

The second graph shows the job losses from the start of the employment recession, in percentage terms aligned at maximum job losses. The dotted line is ex-Census hiring.

The current employment recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only the early '80s recession with a peak of 10.8 percent was worse).

The third graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at the start of the recession.

Here are the employment posts yesterday with graphs:
March Employment Report: 216,000 Jobs, 8.8% Unemployment Rate

Employment Summary and Part Time Workers, Unemployed over 26 Weeks

Employment Graph Gallery

• Case Shiller: Home Prices Off to a Dismal Start in 2011

This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).

The Composite 10 index is off 31.4% from the peak, and down 0.2% in January (SA) (really a three month average of November, December and January). The Composite 10 is still 2.2% above the May 2009 post-bubble bottom.

The Composite 20 index is also off 31.3% from the peak, and down 0.2% in January (SA). The Composite 20 is only 0.7% above the May 2009 post-bubble bottom and will probably be at a new post-bubble low soon.

The next graph shows the price declines from the peak for each city included in S&P/Case-Shiller indices.

Prices in Las Vegas are off 58% from the peak, and prices in Dallas only off 7.3% from the peak.

From S&P (NSA):

Continuing the trend set late last year, we witnessed 11 MSAs posting new index level lows in January 2011, from their 2006/2007 peaks. These cities are Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland (OR), Seattle and Tampa. These same 11 cities had posted lows with December’s report, as well.

Both composite indices are still slightly above the post-bubble low (SA), but the indexes will probably be at new lows in early 2011.

• Personal Income and Outlays Report for Feburary

The following graph shows real Personal Consumption Expenditures (PCE) through February (2005 dollars).

PCE increased 0.7% in February, but real PCE only increased 0.3% as the price index for PCE increased 0.4 percent in February.

Personal income growth was slightly below expectations. Note: Core PCE - PCE excluding food and energy - increased 0.2 percent in February.

Even though PCE growth was at expectations, real PCE was low - and this suggests analysts will downgrade their forecasts for Q1 GDP. Using the two month estimate for PCE growth (averaging the growth of January and February over the first two months of the previous quarter) suggests PCE growth of around 1.4% in Q1 (down sharply from 4.0% in Q4).

• ISM Manufacturing Index increases in March

PMI at 61.2%, slightly above expectations.

From ISM: Economic activity in the manufacturing sector expanded in March for the 20th consecutive month ... The recent trend of rapid growth in the manufacturing sector continued in March, as the PMI registered above 60 percent for the third consecutive month. The component indexes of the PMI remain at very positive levels and signal strong sector performance in the first quarter. While manufacturers are benefiting from strength in new orders and production, there is significant concern with regard to commodity prices. Many manufacturers indicate the prices they have to pay for inputs are rising, and there is concern about the impact of higher prices on their margins." [said Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee]

• U.S. Light Vehicle Sales 13.1 million SAAR in March

This graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate. The current sales rate is finally off the bottom of the '90/'91 recession - and there were fewer registered drivers and a smaller population back then.

This was slightly below the consensus estimate of 13.2 million SAAR, possibly because of rising oil prices. I don't think the Japanese supply disruptions had any impact on sales.

• CoreLogic: Shadow Inventory Declines Slightly

From CoreLogic "the current residential shadow inventory as of January 2011 declined to 1.8 million units, representing a nine months’ supply. This is down slightly from 2.0 million units, also a nine months’ supply, from a year ago."

This graph from CoreLogic shows the breakdown of "shadow inventory" by category. For this report, CoreLogic estimates the number of 90+ day delinquencies, foreclosures and REOs not currently listed for sale. Obviously if a house is listed for sale, it is already included in the "visible supply" and cannot be counted as shadow inventory.

This report provides a couple of key numbers: 1) there are 1.8 million homes seriously delinquent, in the foreclosure process or REO that are not currently listed for sale, and 2) there are about 2 million current negative equity loans that are more than 50 percent “upside down”.

• Other Economic Stories ...
• Restaurant Performance Index increases in February
• Kansas City Manufacturing Survey at Record High, Chicago PMI Strong in March
• ADP: Private Employment increased by 201,000 in March
• From the Dallas Fed: Texas Manufacturing Activity Strengthens Further
• From the NAR: February Pending Home Sales Rise
• Unofficial Problem Bank List at 985 Institutions, Correction for Capitol Bancorp

Best wishes to all!

by Calculated Risk on 4/02/2011 08:17:00 AM

Note: this is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Apr 1, 2011.

Changes and comments from surferdude808:

All enforcement actions against the banks on the Unofficial Problem Bank List were terminated this week leaving us nothing to publish. April Fools! In reality, however, it was a fairly safe & sound week as no new banks were added to the list nor were there any failures. The only change was the OTS issuing a Cease & Desist Order against Brooklyn Federal Savings Bank, Brooklyn, NY ($489 million Ticker: BFSB), which was already operating under a Supervisory Agreement.

The only thing left to do this week is to issue an apology to Capitol Bancorp for an inaccurate comment last week stating they had a failed subsidiary. The confusion come from the similar name of the Capitol Bancorp subsidiary High Desert Bank and the failed High Desert State Bank coupled with the FDIC issuing cross-guarantee waivers to former or current subsidiaries of Capitol Bancorp. A closer inspection of their complex structure history finds they have reduced their subsidiary count from 64 in 2008 to 24 currently. The reduction in 40 charters results from 13 sales and 27 affiliate mergers. As can be determined, the FDIC has issued cross-guaranty waivers to at least 11 former or current subsidiaries of Capitol Bancorp, which is unusual given that there has not been a loss to the insurance fund yet.

by Calculated Risk on 4/01/2011 09:29:00 PM

Earlier:
• March Employment Report: 216,000 Jobs, 8.8% Unemployment Rate
• Employment Summary and Part Time Workers, Unemployed over 26 Weeks
• Employment Graph Gallery
• U.S. Light Vehicle Sales 13.1 million SAAR in March

CR Note: The FHFA released two Mortgage Market Notes notes this week, one of the Qualified Residential Mortgage (QRM) standard and the other on the conforming loan limit.

Economist Tom Lawler discusses the conforming loan limit: FHFA: Where the Conforming Loan Limit Might Fall on October 1

Without legislative action, the conforming loan limit will revert back to those established under the Housing and Economic Recovery Act (HERA) of 2008. That act upped the conforming loan limit in many parts of the country, but the HERA hike was “trumped” by the Economic Stimulus Act (ESA) of 2008 and the Continuing Appropriations Act of 2011. The “formulas” that determined the conforming loan limits under the latter legislations, which were based on a % of an area’s 2007 median sales price, were liberally interpreted by regulators in that the median sales price for the county with the highest median sales in a metro area was used to derive the loan limit for the whole metro area, resulting in a loan limit that in many counties was two or more times that county’s median sales price.

According to a “Mortgage Market Note” published by FHFA this week, if loan limits were to revert back to the HERA limits, the loan limits would likely decline in only about 250 counties (or county-equivalents) -- and only 205 counties if you exclude Puerto Rico and Northern Mariana Islands. Moreover, in many of these counties the conforming loan limit would not fall by much – and in most areas the loan limits would be MASSIVELY above the most recent year’s median sales prices.

FHFA estimates that Fannie and Freddie combined acquired only about 50,000 mortgages originated in 2010 with loan balances in between the current loan limits and the HERA loan limits.

The county where the loan limits would fall the most is Monterey, California (from $729,750 to $483,000), followed by Monroe, Florida (from $729,750 to $529,000). Monroe County is at the southern tip of Florida, and includes the Florida Keys.

“Letting” the conforming loan limits go down on October 1st is not a big deal from the standpoint of the housing market, and the new limits would still leave the VAST bulk of home sales transactions eligible for GSE acquisition. However, it is a “big deal” in terms of it being the first (though very small) step to reduce the government’s/GSE’s “footprint” in the US mortgage market.

CR Note: This was from Tom Lawler

by Calculated Risk on 4/01/2011 04:30:00 PM

On Employment earlier:
• March Employment Report: 216,000 Jobs, 8.8% Unemployment Rate
• Employment Summary and Part Time Workers, Unemployed over 26 Weeks
• Employment Graph Gallery

Click on graph for larger image in new window.

Based on an estimate from Autodata Corp, light vehicle sales were at a 13.1 million SAAR in March. That is up 12% from March 2010, and down 1.2% from the sales rate last month (Feb 2011).

This graph shows the historical light vehicle sales (seasonally adjusted annual rate) from the BEA (blue) and an estimate for March (red, light vehicle sales of 13.1 million SAAR from Autodata Corp).

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate. The current sales rate is finally off the bottom of the '90/'91 recession - and there were fewer registered drivers and a smaller population back then.

This was slightly below the consensus estimate of 13.2 million SAAR, possibly because of rising oil prices. I don't think the Japanese supply disruptions have impacted sales much yet.

by Calculated Risk on 4/01/2011 12:34:00 PM

On Employment earlier:
• March Employment Report: 216,000 Jobs, 8.8% Unemployment Rate
• Employment Summary and Part Time Workers, Unemployed over 26 Weeks

Autos: I'll post graphs of the Seasonally Adjusted Annual Rate (SAAR) around 4 PM ET.
• From MarketWatch: GM’s auto sales rise 9.6% in March
• From MarketWatch: Ford U.S. auto sales in March up 19.2% to 212,777
• From MarketWatch: Chrysler March U.S. sales surge 31% to 121,730

ISM Manufacturing:
• From the Institute for Supply Management: January 2011 Manufacturing ISM Report On Business®

Click on graph for larger image in new window.

Here is a long term graph of the ISM manufacturing index.

This was a strong report and slightly above expectations.

• From NY Fed President William Dudley: The Road to Recovery: Puerto Rico and the Mainland

[I]t is important to emphasize that we at the Federal Reserve have been expecting the economy to strengthen. We provided additional monetary policy stimulus via the asset purchase program to help ensure that the recovery regained momentum. A stronger recovery with more rapid progress toward our dual mandate objectives is what we have been seeking. This is welcome and not a reason to reverse course.

Yet, we must not be overly optimistic about the growth outlook. The coast is not completely clear—the healing process in the aftermath of the crisis takes time and there are still several areas of vulnerability and weakness.

No change in course.

by Calculated Risk on 4/01/2011 10:04:00 AM

Note: ISM Manufacturing survey PMI was at PMI at 61.2% in March, down slightly from 61.4% in February. This is very strong. Here is the report - (I'll post a graph later).

Here are a few more graphs based on the employment report ...

Percent Job Losses During Recessions

Click on graph for larger image in graph gallery.

This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at the start of the recession.

In the previous post, the graph showed the job losses aligned at maximum job losses.

In terms of lost payroll jobs, the 2007 recession is by far the worst since WWII, and the "recovery" for payroll jobs is one of the slowest.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in March, at 8.4 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of workers only able to find part time jobs (or have had their hours cut for economic reasons) increased slightly to 8.43 million in March from 8.34 million in February.

These workers are included in the alternate measure of labor underutilization (U-6) that declined to 15.7% in March from 15.9% in February. Still very high, but improving.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 6.122 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 5.993 million in February. This remains very high, and is one of the defining features of this employment recession.

Summary

This was an OK report; a little better than most recent reports, but still a long ways to go.

If we average the last three months together that gives about 160,000 payroll jobs per month. That is more than enough to keep up with the growth in the labor force, but it will only push the unemployment rate down slowly. Private payrolls were a little better at an average of 188,000 per month, as state and local governments continued to lay off workers (something we expect all year).

The decline in the unemployment rate from 8.9% to 8.8%, was good news, especially since the participation rate was unchanged at 64.2%. Note: This is the percentage of the working age population in the labor force.

However the increases for the long term unemployed, and for the number of part time workers for economic reasons, was not welcome news - although U-6 declined to 15.7%. All of these levels are very high.

The average workweek declined slightly to 34.1 hours, and average hourly earnings was flat. Both very disappointing.

Overall this was another small step in the right direction.

• Earlier Employment post: March Employment Report: 216,000 Jobs, 8.8% Unemployment Rate

by Calculated Risk on 4/01/2011 08:30:00 AM

From the BLS:

Nonfarm payroll employment increased by 216,000 in March, and the unemployment rate was little changed at 8.8 percent, the U.S. Bureau of Labor Statistics reported today.
...
The change in total nonfarm payroll employment for January was revised from +63,000 to +68,000, and the change for February was revised from +192,000 to +194,000.

The following graph shows the employment population ratio, the participation rate, and the unemployment rate.

Click on graph for larger image in graph gallery.

The unemployment rate decreased to 8.8% (red line).

The Labor Force Participation Rate was unchanged at 64.2% in March (blue line). This is the lowest level since the early '80s. This is the percentage of the working age population in the labor force. The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although some of the decline is due to the aging population.

The Employment-Population ratio was increased slightly to 58.5% in March (black line).

The second graph shows the job losses from the start of the employment recession, in percentage terms aligned at maximum job losses. The dotted line is ex-Census hiring.

The current employment recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only the early '80s recession with a peak of 10.8 percent was worse).

This was slightly above expectations for payroll jobs. Over the last three months, the economy has added about 160 thousand payroll jobs per month (188 thousand private payroll jobs per month). I'll have much more soon ...