by Calculated Risk on 8/29/2011 08:30:00 AM

The BEA released the Personal Income and Outlays report for July:

Personal income increased $42.4 billion, or 0.3 percent ... in July ... Personal consumption expenditures (PCE) increased $88.4 billion, or 0.8 percent.
...
Real PCE increased 0.5 percent ... The price index for PCE increased 0.4 percent in July

The following graph shows real Personal Consumption Expenditures (PCE) through July (2005 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image in graph gallery.

PCE increased 0.8 in July, and real PCE increased 0.5% as the price index for PCE increased 0.4 percent in July.

Note: The PCE price index, excluding food and energy, increased 0.2 percent, the same increase as in June.

The personal saving rate was at 5.0% in July.

Personal saving -- DPI less personal outlays -- was $582.8 billion in July, compared with $638.6 billion in June. Personal saving as a percentage of disposable personal income was 5.0 percent in July, compared with 5.5 percent in June.

This graph shows the saving rate starting in 1959 (using a three month trailing average for smoothing) through the June Personal Income report.

Real PCE was revised up a little for Q2 too. This was a solid increase in spending and above the consensus of 0.5% - however I expect August to be weaker due to the confidence shattering debt ceiling debate.

by Calculated Risk on 8/29/2011 12:00:00 AM

Nothing new, but a summary of some of the headwinds for the large banks face - and the prospects for more layoffs (ht Brian).

From Eric Dash at the NY Times: As Fortunes Dim, Banks Confront a Leaner Future

Battered by a weak economy, the nation’s biggest banks are cutting jobs, consolidating businesses and scrambling for new sources of income ... UBS has announced 3,500 layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told.
...
Lending, the prime driver of revenue, has been depressed for several years and is not expected to pick up anytime soon ... Trading profits have also been waning amid a slowdown in volumes, and Wall Street’s once-lucrative mortgage packaging business is unlikely to bring in the blockbuster fees it earned during the housing boom.

On top of that, the financial regulations enacted by Congress last year are causing banks to add more risk managers and compliance staff ...

Yesterday:
• Summary for Week Ending August 26th (with plenty of graphs)
• Schedule for Week of Aug 28th

by Calculated Risk on 8/28/2011 05:21:00 PM

Last week I noted that 1-4 family Real Estate Owned (REO) by FDIC insured institutions declined to an estimated 80,600 in Q2. As Tom Lawler noted, the FDIC does not collect data on the number of properties held by FDIC-insured institutions, instead they aggregate the carrying value of 1-4 family residential REO on FDIC-insured institutions’ balance sheets.

Here is a graph of the 1-4 family REO carrying value for FDIC insured institutions since Q1 2003.

For Q2 2011, the FDIC reported (See Table V-A) the value was $12.09 billion, down from $13.28 billion in Q1, and down from a high of $14.76 billion in Q3 2010.

Click on graph for larger image in new window.

The left scale is the dollars reported in the FDIC Quarterly Banking Profile, and the right scale is an estimate of REOs using an average of $150,000 per unit. Using this estimate for the average per REO, that gives 80.6 thousand REO at the end of Q2, down from 88.5 thousand at the end of Q1. This is about 5 times the carrying value in 2003.

Note: FDIC insured institutions have other REO and this is just the 1-4 family residential REO (other REO includes Construction & Development, Commercial, Farm Land).

Of course this is just a small portion of the total REO. Here is a repeat of the graph I posted last week showing REO inventory for Fannie, Freddie, FHA, Private Label Securities (PLS), and FDIC insured institutions. (economist Tom Lawler has provided some of this data).

Total REO decreased to 493,000 in Q2 from almost 550,000 in Q1.

As Tom Lawler noted: "This is NOT an estimate of total residential REO, as it excludes non-FHA government REO (VA, USDA, etc.), credit unions, finance companies, non-FDIC-insured banks and thrifts, and a few other lender categories." However this is the bulk of the REO - probably 90% or more. Rounding up the estimate (using 90%) suggests total REO is around 548,000 in Q2.

Important: REO inventories have declined over the last couple of quarters. This is a combination of more sales and fewer acquisitions due to the slowdown in the foreclosure process. There are many more foreclosures coming - see my earlier post on Mortgage Delinquencies and REOs.

Yesterday:
• Summary for Week Ending August 26th (with plenty of graphs)
• Schedule for Week of Aug 28th

by Calculated Risk on 8/28/2011 11:35:00 AM

From CNBC: Major Exchanges in NY Still Expect to Open Monday

Main U.S. stock exchanges Nasdaq, NYSE and BATS expect to open trading on Monday as usual despite Hurricane Irene, although a final decision, especially on opening the Big Board floor, is yet to come.

The main question right now is whether public transportation in New York City will be restored by Monday morning. ... The U.S. Securities and Exchange Commission and market operators NYSE Euronext, Nasdaq OMX Group and others plan a conference call at 1 p.m. ET Sunday to discuss power outages and New York City transportation ...

Best wishes to all in Irene's path.

Yesterday:
• Summary for Week Ending August 26th (with plenty of graphs)
• Schedule for Week of Aug 28th

by Calculated Risk on 8/28/2011 08:50:00 AM

From the International Monetary Fund Managing Director, Christine Lagarde: Global Risks Are Rising, But There Is a Path to Recovery. Some excerpts:

The global economy continues to grow, yet not enough. Some of the main causes of the 2008 crisis have been addressed, yet not adequately. There remains a path to recovery, yet we do not have the luxury of time.
...
Developments this summer have indicated that we are in a dangerous new phase. The stakes are clear: we risk seeing the fragile recovery derailed. So we must act now.
...
[European] banks need urgent recapitalization. They must be strong enough to withstand the risks of sovereigns and weak growth. This is key to cutting the chains of contagion. If it is not addressed, we could easily see the further spread of economic weakness to core countries, or even a debilitating liquidity crisis. The most efficient solution would be mandatory substantial recapitalization—seeking private resources first, but using public funds if necessary. One option would be to mobilize EFSF or other European-wide funding to recapitalize banks directly, which would avoid placing even greater burdens on vulnerable sovereigns.

Sounds like the TARP.

Yesterday:
• Summary for Week Ending August 26th (with plenty of graphs)
• Schedule for Week of Aug 28th

by Calculated Risk on 8/27/2011 07:46:00 PM

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

Here is the unofficial problem bank list for Aug 27, 2011.

Changes and comments from surferdude808:

Activities of the FDIC contributed to many changes to the Unofficial Problem Bank List this week as they released their enforcement actions through July 2011. In all, there were eight additions and four removals, which leaves the list at 988 institutions with assets of $403.0 billion compared with 984 institutions and assets of $412.5 billion last week. Asset figures were updated from 2011q1 to 2011q2, which caused aggregate assets to drop by $11.1 billion. The net of additions and removals this week caused assets to rise $1.7 billion.

For the month of August, there were 14 additions, eight unassisted mergers, seven failures, and six action terminations for a net decline of seven institutions. On a monthly basis, the list has experienced a net decline in three of the past five months mainly from a slowing of new additions, increasing unassisted mergers, and a steady pace of failures.

The removals this week were all action terminations by the FDIC against Bank of the Bluegrass and Trust Company, Lexington, KY ($219 million); CrossFirst Bank Leawood (f/k/a Town & Country Bank), Leawood, KS ($86 million); Princeville State Bank, Princeville, IL ($62 million); and Utah Community Bank, Sandy, UT ($30 million).

Among the eight additions this week are Alliance Bank, Lake City, MN ($624 million); International Finance Bank, Miami, FL ($419 million); First State Bank, Lonoke, AR ($264 million); and The Citizens Bank of Logan, Logan, OH ($256 million).

Other additions include the FDIC issuing Prompt Corrective Action orders against Central Progressive Bank, Lacombe, LA ($398 million) and SunFirst Bank, Saint George, UT ($213 million).

The following demographic changes were made to the list: First Capital Bank, Marianna, FL ($44 million) changes its name to Chipola Community Bank; Golden Coast Bank, Long Beach, CA ($41 million) changed its name to Evergreen International Bank; Atlantic Coast Bank, Waycross, GA ($804 million) moved its headquarters to Jacksonville, FL; Heritage First Bank, Orange Beach, Al ($54 million) moved its headquarters to Gulf Shores; The Palmetto Bank, Laurens, SC ($1.3 billion) moved its headquarters to Greenville; and United Trust Bank, Bridgeview, IL ($42 million) moved its headquarters to Palos Heights.

CR note: The FDIC released the Q2 Quarterly Banking Profile last week. The FDIC reported:

The number of institutions on the FDIC's "Problem List" fell for the first time in 19 quarters. The number of "problem" institutions declined from 888 to 865. This is the first time since the third quarter of 2006 that the number of "problem" banks fell. Total assets of "problem" institutions declined from $397 billion to $372 billion.

The differences are due to timing and definition. The FDIC's official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public. (CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.)

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest.

Earlier:
• Summary for Week Ending August 26th (with plenty of graphs)
• Schedule for Week of Aug 28th

by Calculated Risk on 8/27/2011 02:19:00 PM

Earlier:
• Summary for Week ending August 26th (with plenty of graphs)

This will be a busy week for economic data. The key release is the August employment report on Friday. Other key releases will be the July Personal Income & Outlays report on Monday, Case-Shiller house prices on Tuesday, the ISM manufacturing index on Thursday, and auto sales also on Thursday.

Also the FOMC minutes for the August 9th meeting, to be released on Tuesday, might include a discussion of additional policy options.

----- Monday, Aug 29th -----
8:30 AM: Personal Income and Outlays for July. The following graph shows real Personal Consumption Expenditures (PCE) through June (2005 dollars).

Click on graph for larger image in graph gallery.

PCE decreased 0.2 in June, and real PCE decreased less than 0.1% as the price index for PCE decreased 0.2 percent in June. On a quarterly basis, PCE barely increased in Q2 from Q1.

The consensus is for a 0.3% increase in personal income in July, and a 0.5% increase in personal spending, and for the Core PCE price index to increase 0.2%.

10:00 AM: Pending Home Sales Index for July. The consensus is for a 1% decrease in the index.

10:30 AM: Dallas Fed Manufacturing Survey for August. The Texas production index increased 10.8 in July. The consensus is for a reading of -6 (contraction) in August. This is the last of the regional surveys, and most of the surveys have been weak.

----- Tuesday, Aug 30th -----
9:00 AM: S&P/Case-Shiller Home Price Index for June. Although this is the June report, it is really a 3 month average of April, May and June.

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

The consensus is for flat prices in June. The CoreLogic index showed a 0.7% increase in June.

10:00 AM: Conference Board's consumer confidence index for August. The consensus is for a decrease to 52.5 from 59.6 last month due to the debt ceiling debate.

2:00 PM: FOMC Minutes, Meeting of Aug 9, 2011. The minutes could include a discussion of additional policy options.

----- Wednesday, Aug 31st -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been very weak over the last several months and was at the lowest level in 15 years last week.

8:15 AM: The ADP Employment Report for August. This report is for private payrolls only (no government). The consensus is for +100,000 payroll jobs in August, down from the +114,000 reported in July.

9:45 AM: Chicago Purchasing Managers Index for August. The consensus is for a decrease to 53.5, down from 58.8 in July.

10:00 AM: Manufacturers' Shipments, Inventories and Orders for July (Factory Orders). The consensus is for a 1.8% increase in orders.

----- Thursday, Sept 1st-----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a decrease to 407,000 from 417,000 last week.

10:00 AM: Construction Spending for July. The consensus is for a 0.1% increase in construction spending.

10:00 AM: ISM Manufacturing Index for August. The consensus is for a decrease to 48.5 from 50.9 in July. Based on the regional manufacturing surveys, the ISM index will probably be below 50 in August for the first time since July 2009 (indicating contraction).

All day: Light vehicle sales for August. Light vehicle sales are expected to decrease to 12.1 million (Seasonally Adjusted Annual Rate), from 12.2 million in July.

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

Edmunds is forecasting:

An estimated 1,087,000 new cars will be sold in August for a projected Seasonally Adjusted Annualized Rate (SAAR) of 12.3 million, forecasts Edmunds.com, the premier online resource for automotive information. The sales pace is virtually flat compared to July’s 12.2 million SAAR.

----- Friday, Sept 2nd -----
8:30 AM: Employment Report for August.

The consensus is for an increase of 67,000 non-farm payroll jobs in August, down from the 117,000 jobs added in July. The lower number is partially related to the Verizon strike that is now over.

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

The consensus is for the unemployment rate to hold steady at 9.1% in August.

This second employment graph shows the percentage of payroll jobs lost during post WWII recessions. This shows the severe job losses during the recent recession.

Through the first seven months of 2011, the economy has added 930,000 total non-farm jobs or just 133 thousand per month. This is a better pace of payroll job creation than last year, but the economy still has 6.8 million fewer payroll jobs than at the beginning of the 2007 recession.

by Calculated Risk on 8/27/2011 08:10:00 AM

The focus last week was on Fed Chairman Ben Bernanke’s speech at Jackson Hole. Although Bernanke did not discuss additional monetary easing, he did note that the September meeting will be expanded to two days to allow for a "fuller discussion" of policy options. For more on his speech, see: A few articles on Bernanke's Speech

The data last week was weak again. Second quarter GDP growth was revised down to a 1.0% annual rate, from the already weak 1.3% advance estimate. July New Home sales were under 300 thousand on a seasonally adjusted annual rate (SAAR) basis. And mortgage delinquencies increased slightly in Q2.

Two more regional manufacturing surveys for August were released; the Richmond Fed survey indicated activity declined in August; however the Kansas City survey showed modest growth.

In Europe, the negotiations over the Greek bailout plan heated up, and the Greek bond yields are soaring. Otherwise the European bond markets were relatively quiet for the week.

Here is a summary in graphs:

• Q2 real GDP growth revised down to 1.0% annualized rate

From the BEA: Gross Domestic Product, Second Quarter 2011 (second estimate "Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.0 percent in the second quarter of 2011". Growth was revised down from 1.3%, and was slightly below the consensus of 1.1%.

Click on graph for larger image in graph gallery.

This graph shows the quarterly GDP growth (at an annual rate) for the last 30 years. The current quarter is in blue.

The dashed line is the current growth rate. Growth in Q2 at 1.0% annualized was below trend growth (around 3%) - and very weak for a recovery, especially with all the slack in the system.

The alternate measure of GDP - Gross Domestic Income - grew at a 1.6% annualized rate in Q2 and is now back above the pre-recession peak.

• New Home Sales in July at 298,000 Annual Rate

The Census Bureau reported New Home Sales in July were at a seasonally adjusted annual rate (SAAR) of 298 thousand. This was down from a revised 300 thousand in June (revised from 312 thousand).

This graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

This graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale was at 61,000 units in July. The combined total of completed and under construction is at the lowest level since this series started.

This graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In July 2011 (red column), 27 thousand new homes were sold (NSA). The record low for July was 26 thousand in 2010 (following the expiration of the homebuyer tax credit). The high for July was 117 thousand in 2005.

This was below the consensus forecast of 313 thousand, and was just above the record low for the month of July. New home sales have averaged only 300 thousand SAAR over the 15 months since the expiration of the tax credit ... moving sideways at a very low level.

• MBA: Mortgage Delinquencies increased slightly in Q2

The MBA reported that 12.87 percent of mortgage loans were either one payment delinquent or in the foreclosure process in Q2 2011 (seasonally adjusted). This is up slightly from 12.84 percent in Q1 2011. From the MBA: Delinquencies Rise, Foreclosures Fall in Latest MBA Mortgage Delinquency Survey

This graph shows the percent of loans delinquent by days past due.

Loans 30 days delinquent increased to 3.46% from 3.35% in Q1. This is probably related to the increase in the unemployment rate. Delinquent loans in the 60 day bucket increased slightly to 1.37% from 1.35%.

There was a slight decrease in the 90+ day delinquent bucket. This decreased to 3.61% from 3.65% in Q1 2011. The percent of loans in the foreclosure process decreased to 4.43%.

So short term delinquencies ticked up, and the 90+ day and in-foreclosure rates declined.

This graph shows the percent of loans in the foreclosure process by state and by foreclosure process. Red is for states with a judicial foreclosure process. Because the judicial process is longer, those states typically have a higher percentage of loans in the process. Nevada is an exception.

Florida, Nevada, New Jersey and Illinois are the top four states with percent of loans in the foreclosure process.

This graph shows all delinquent loans by state (sorted by percent seriously delinquent).

Florida and Nevada have the highest percentage of serious delinquent loans, followed by New Jersey, Illinois, New York, Ohio and Maine.

Note: the MBA's National Delinquency Survey (NDS) covered "MBA’s National Delinquency Survey covers about 43.9 million first-lien mortgages on one- to four-unit residential properties" and the "The NDS is estimated to cover around 88 percent of the outstanding first-lien mortgages in the market." This gives almost 50 million total first lien mortgages or about 6.4 million delinquent or in foreclosure.

This graph shows the range of percent seriously delinquent and in-foreclosure for each state (dashed blue line) since Q1 2007. The red diamond indicates the current serious delinquency rate (this includes 90+ days delinquent or in the foreclosure process).

Some states have made progress: Arizona, Michigan, Nevada and California. Other states, like New Jersey and New York, have made little or no progress in reducing serious delinquencies.

Arizona, Michigan, Nevada and California are all non-judicial foreclosure states. States with little progress like New Jersey, New York, Illinois and Florida are all judicial states.

Note: This data is for 42 states only and D.C.

• Regional Manufacturing Surveys

There were two more regional manufacturing surveys released this week: Richmond Fed and Kansas City Fed. From the Richmond Fed: Manufacturing Activity Pulled Back Markedly in August; Shipments and New Orders Declined. And from the Kansas City Fed: Manufacturing Sector Continues to Expand Modestly

Here is a table of the regional surveys in July and August; the Dallas Fed Texas Manufacturing will be released on Monday, August 29th.

Manufacturing Survey	July	August
Empire State	-3.76	-7.7
Philly Fed	3.2	-30.7
Richmond Fed	-1	-10
Kansas City Fed	3	3
Dallas Fed	10.8	---

Most of the regional surveys were very weak in August. The ISM index for August will be released Thursday, Sept 1st.

• Final August Consumer Sentiment at 55.7, Down Sharply from July

The final August Reuters / University of Michigan consumer sentiment index increased slightly to 55.7 from the preliminary reading of 54.9. This was down sharply from 63.7 in July.

In general consumer sentiment is a coincident indicator and is usually impacted by employment (and the unemployment rate) and gasoline prices. I think consumer sentiment declined sharply in August because of the heavy coverage of the debt ceiling debate.

This was slightly below the consensus forecast of 56.0.

• Weekly Initial Unemployment Claims increased to 417,000

This graph shows the 4-week moving average of weekly claims since January 2000 (longer term graph in graph gallery).

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased this week to 407,500.

Weekly claims have increased for two consecutive weeks and the 4-week average is still elevated.

• Moody's: Commercial Real Estate Prices increased in June

From Bloomberg: Commercial Property Prices Rose 0.9% in June, Moody’s Says. Here is a comparison of the Moodys/REAL Commercial Property Price Index (CPPI) and the Case-Shiller composite 20 index. Beware of the "Real" in the title - this index is not inflation adjusted.

CRE prices only go back to December 2000. The Case-Shiller Composite 20 residential index is in blue (with Dec 2000 set to 1.0 to line up the indexes).

According to Moody's, CRE prices are down 6.6% from a year ago and down about 45% from the peak in 2007. Some of this is probably seasonal, although Moody's mentioned a price pickup "beyond trophy properties and major U.S. coastal cities". Note: There are few commercial real estate transactions compared to residential, so this index is very volatile.

• Other Economic Stories ...
• Chicago Fed: Economic growth below trend in July
• ATA Trucking index decreased 1.3% in July
• Europe Update: Greek Bond Yields Surge
• Update on Q2 REO Inventory
• FHFA Introduces Expanded House Price Index


Have a great weekend. Stay safe on the East Coast!

by Calculated Risk on 8/26/2011 09:46:00 PM

• From Jon Hilsenrath at the WSJ: Speech Hints at Options for Fed

The next big moment comes on Sept. [20 and 21] when Fed policy makers meet in Washington in a session, Mr. Bernanke disclosed Friday, that has been expanded to two days from one "to allow a fuller discussion" of the options.
...
The Fed chairman, who was appointed by a Republican and reappointed by a Democrat, aimed his sharpest remarks at U.S. lawmakers and the White House, scolding them for a divisive debate about raising the federal debt limit earlier this month that, he said, "disrupted financial markets and probably the economy as well."

• From Binyamin Appelbaum at the NY Times: Bernanke Blames Politics for Financial Upheaval

Mr. Bernanke said he remained optimistic about future growth — he gave no indication that the Fed would increase its economic aid programs, though he said the central bank’s policy-making board would revisit the issue at a scheduled meeting in September — but he warned that the government had emerged as perhaps the greatest threat to recovery.
...
“The country would be well served by a better process for making fiscal decisions,” he said.

• From Neil Irwin at the WaPo: Fed chief scolds Congress on debt-ceiling showdown

Federal Reserve Chairman Ben S. Bernanke chided Congress on Friday for its contentious approach to the national debt, saying the brinksmanship displayed by lawmakers could endanger the U.S. economy.

• My earlier post: Analysis: Bernanke highlights September FOMC meeting, Suggests more Fiscal Stimulus

I think it is quite clear the debt ceiling debate disrupted the economy. The key is the September meeting has been expanded to two days to allow for a "fuller discussion" of policy options - and the FOMC will be watching the incoming data over the next few weeks to see if the economy is bouncing back a little for the debate induced slowdown.

by Calculated Risk on 8/26/2011 06:15:00 PM

There are really two measures of GDP: 1) real GDP, and 2) real Gross Domestic Income (GDI). The BEA also released Q2 GDI today as part of the second estimate for Q2 GDP. Recent research suggests that early releases of GDI is often more accurate than GDP.

For a discussion on GDI, see from Fed economist Jeremy Nalewaik, “Income and Product Side Estimates of US Output Growth,” Brookings Papers on Economic Activity. An excerpt:

The U.S. produces two conceptually identical official measures of its economic output, currently called Gross Domestic Product (GDP) and Gross Domestic Income (GDI). These two measures have shown markedly different business cycle fluctuations over the past twenty five years, with GDI showing a more-pronounced cycle than GDP. These differences have become particularly glaring over the latest cyclical downturn, which appears considerably worse along several dimensions when looking at GDI. ...

In discussing the information content of these two sets of estimates, the confusion often starts with the nomenclature. GDP can mean either the true output variable of interest, or an estimate of that output variable based on the expenditure approach. Since these are two very different things, using “GDP” for both is confusing. Furthermore, since GDI has a different name than GDP, it may not be initially clear that GDI measures the same concept as GDP, using the equally valid income approach.

The following graph is constructed as a percent of the previous peak in both GDP and GDI. This shows when the indicator has bottomed - and when the indicator has returned to the level of the previous peak. If the indicator is at a new peak, the value is 100%.

Click on graph for larger image in graph gallery.

It appears that GDP bottomed in Q2 2009 and GDI in Q3 2009. Real GDP is still below the pre-recession peak in Q2 2011, but real GDI is finally above the previous peak. Also real GDI increased 2.7% annualized in Q1 (GDP increased only 0.4%), and real GDI increased 1.6% in Q2 (GDP increased 1.0%).

Note: Mark Thoma and Justin Wolfers mentioned this earlier today.

However, by other measures - like real personal income less transfer payments and employment - the economy is still far below the pre-recession peak.