RSS Feed by Calculated Risk on 4/21/2014 01:25:00 PM
Monday, April 21, 2014
Chicago Fed: "Economic Growth Moderated in March"
The Chicago Fed released the national activity index (a composite index of other indicators): Economic Growth Moderated in March
Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to +0.20 in March from +0.53 in February. Two of the four broad categories of indicators that make up the index made positive contributions to the index in March, and two of the four categories decreased from February. ...This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.
The index’s three-month moving average, CFNAI-MA3, increased to a neutral reading in March from –0.14 in February, marking its third consecutive nonpositive value. March’s CFNAI-MA3 suggests that growth in national economic activity was at its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.
emphasis added
Click on graph for larger image.This suggests economic activity was at the historical trend in March (using the three-month average).
According to the Chicago Fed:
What is the National Activity Index? The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.
A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.
Report: Property Tax Collections above Pre-Recession Peak
by Calculated Risk on 4/21/2014 11:22:00 AM
From Bloomberg: Property-Tax Collections Rising at Fastest Pace Since U.S. Crash
Property-tax collections nationally rose to $182.8 billion during the last three months of 2013 ... according to a U.S. Census estimate last month. That topped the previous peak four years earlier ...
In cities including San Jose, California, Nashville, Tennessee, Houston and Washington, revenue from real-estate levies has set records, or is poised to.
Local governments are using the money to hire police, increase salaries and pave roads after the decline in property values and 18-month recession that ended in 2009 forced them to eliminate about 600,000 workers ...
Click on graph for larger image.Here is the report from the Census Bureau: Quarterly Summary of State and Local Government Tax Revenue for 2013:Q4
This graph from the Census Bureau report shows Q4 property taxes since 2003 - and property taxes have increased slightly in Q4 2013 and are back to the pre-recession peak.
This another data point suggesting that aggregate layoffs are over at the state and local level.
DOT: Vehicle Miles Driven decreased 0.8% year-over-year in February
by Calculated Risk on 4/21/2014 09:50:00 AM
Some of this monthly decline appears weather related since miles driven were down 3.0% in the Northeast. Miles driven were up 0.4% in the West.
The Department of Transportation (DOT) reported:
Travel on all roads and streets changed by -0.8% (-1.7 billion vehicle miles) for February 2014 as compared with February 2013.The following graph shows the rolling 12 month total vehicle miles driven.
...
Travel for the month is estimated to be 212.8 billion vehicle miles.
The rolling 12 month total is still mostly moving sideways but has started to increase a little recently.
Click on graph for larger image.In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.
Currently miles driven has been below the previous peak for 75 months - 6+ years - and still counting. Currently miles driven (rolling 12 months) are about 2.3% below the previous peak.
The second graph shows the year-over-year change from the same month in the previous year.
In February 2014, gasoline averaged of $3.43 per gallon according to the EIA. that was down from February 2013 when prices averaged $3.73 per gallon.As we've discussed, gasoline prices are just part of the story. The lack of growth in miles driven over the last 6 years is probably also due to the lingering effects of the great recession (high unemployment rate and lack of wage growth), the aging of the overall population (over 55 drivers drive fewer miles) and changing driving habits of young drivers.
With all these factors, it might take a few more years before we see a new peak in miles driven.
Sunday, April 20, 2014
Sunday Night Futures
by Calculated Risk on 4/20/2014 08:39:00 PM
An article from Tim Logan at the LA Times on a subject I've discussed with several people via email: Student debt holds back many would-be home buyers
Of the many factors holding back young home buyers — rising prices, tougher lending standards, a still-shaky job market — none looms larger than the recent explosion of college debt.Monday:
The amount owed on student loans has tripled in a decade, to nearly $1.1 trillion, according to the Federal Reserve Bank of New York. People in their 20s and 30s — often the best-educated and highest-earning among them — owe most of that tab. That is keeping a crucial segment of home buyers on the sidelines, deferring one of the traditional markers of adult success.
• At 8:30 AM ET, the Chicago Fed National Activity Index for March. This is a composite index of other data.
Weekend:
• Schedule for Week of April 20th
From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up 3 and DOW futures are up 35 (fair value).
Oil prices are up recently with WTI futures at $104.25 per barrel and Brent at $109.53 per barrel.
Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.63 per gallon (up sharply over the last ten weeks and more than 10 cents above the level of a year ago). If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.
| Orange County Historical Gas Price Charts Provided by GasBuddy.com |
WSJ: Slight Easing of Mortgage Credit Standards
by Calculated Risk on 4/20/2014 10:51:00 AM
From Nick Timiraos and AnnaMaria Andriotis at the WSJ: Mortgage Lenders Ease Rules for Home Buyers in Hunt for Business
While standards remain tight by historical measures, lenders have started to accept lower credit scores and to reduce down-payment requirements.No one wants a return to the loose lending standards of the mid-00s - and I hope we never see another Alt-A loan - but I expect standards to loosen over the next few years.
...
Another sign that banks could get less picky: Credit scores for borrowers seeking conventional mortgages also are easing. Scores on purchase mortgages stood at 755 in March, down from 761 a year earlier, according to data from Ellie Mae, a mortgage-software provider. Those on purchase loans backed by the FHA dropped to 684, compared with 696 one year earlier. ...
Smaller lenders are accepting even lower scores. Average credit scores on purchase loans closed through a consortium called LendingTree fell to 679 in March, down from the year-earlier 715.
...
"Tiny fractions of borrowers can do things that they could not a year ago," said Lou Barnes, a mortgage banker in Boulder, Colo.
Saturday, April 19, 2014
Unofficial Problem Bank list declines to 521 Institutions
by Calculated Risk on 4/19/2014 01:25:00 PM
This is an unofficial list of Problem Banks compiled only from public sources.
Here is the unofficial problem bank list for April 18, 2014.
Changes and comments from surferdude808:
An expected update from the OCC on its recent enforcement action activity contributed to a noticeable reduction in the Unofficial Problem Bank List this week. After nine removals, the list stands at 521 institutions with assets of $168.9 billion. A year ago, the list held 781 institutions with assets of $288.5 billion.
Finding their way off the list through merger were National Bank of Earlville, Earlville, IL ($57 million) and Liberty Savings Bank, F.S.B., Pottsville, PA ($23 million). Actions were terminated against Eastern Savings Bank, FSB, Hunt Valley, MD ($425 million); Phoenixville Federal Bank and Trust, Phoenixville, PA ($388 million); First Federal Savings Bank, Ottawa, IL ($380 million); Southwestern National Bank, Houston, TX ($348 million); Columbia Community Bank, Hillsboro, OR ($335 million Ticker: CLBC); Pacific Global Bank, Chicago, IL ($155 million); The First National Bank of Hartford, Hartford, AL ($120 million); and Central Federal Savings and Loan Association of Chicago, Chicago, IL ($95 million).
Next Friday we anticipate an update from the FDIC on its recent enforcement action activity.
Schedule for Week of April 20th
by Calculated Risk on 4/19/2014 08:31:00 AM
The key reports this week are March Existing Home Sales on Tuesday and March New Home sales on Wednesday.
For manufacturing, the April Richmond and Kansas City Fed surveys will be released.
8:30 AM ET: Chicago Fed National Activity Index for March. This is a composite index of other data.
9:00 AM: FHFA House Price Index for February 2013. This was original a GSE only repeat sales, however there is also an expanded index. The consensus is for a 0.3% increase.
10:00 AM: Existing Home Sales for March from the National Association of Realtors (NAR). The consensus is for sales of 4.56 million on seasonally adjusted annual rate (SAAR) basis. Sales in February were at a 4.60 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 4.64 million SAAR.
As always, a key will be inventory of homes for sale.
10:00 AM: Richmond Fed Survey of Manufacturing Activity for April. The consensus is for a reading of 0, up from -7 in March.
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.
10:00 AM: New Home Sales for March from the Census Bureau. This graph shows New Home Sales since 1963. The dashed line is the February sales rate.
The consensus is for an in increase in sales to 455 thousand Seasonally Adjusted Annual Rate (SAAR) in March from 440 thousand in February.
During the day: The AIA's Architecture Billings Index for March (a leading indicator for commercial real estate).
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 313 thousand from 304 thousand.
8:30 AM: Durable Goods Orders for March from the Census Bureau. The consensus is for a 2.0% increase in durable goods orders.
11:00 AM: the Kansas City Fed manufacturing survey for April.
9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for April). The consensus is for a reading of 82.5, down from the preliminary reading of 82.6, but up from the March reading of 80.0.
Friday, April 18, 2014
By Request: Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama
by Calculated Risk on 4/18/2014 08:21:00 PM
Following some comments from Senator Rand Paul, I've been requested to post this again with a couple of tables added.
Senator Paul said last week: "When is the last time in our country we created millions of jobs? It was under Ronald Reagan ..."
That is completely wrong. (I've corrected both Republicans and Democrats, but recently it is mostly prominent Republicans that make stuff up!).
Here is a table for private sector jobs. Reagan's 2nd term saw about the same job growth as during Carter's term. Note: There was a severe recession at the beginning of Reagan's first term (when Volcker raised rates to slow inflation) and a recession near the end of Carter's term (gas prices increased sharply and there was an oil embargo).
| Term | Private Sector Jobs Added (000s) |
|---|---|
| Carter | 9,041 |
| Reagan 1 | 5,360 |
| Reagan 2 | 9,357 |
| GHW Bush | 1,510 |
| Clinton 1 | 10,885 |
| Clinton 2 | 10,070 |
| GW Bush 1 | -841 |
| GW Bush 2 | 379 |
| Obama 1 | 1,998 |
| Obama 21 | 2,692 |
| 1Just over one year into 2nd term | |
The first graph below shows the change in private sector payroll jobs from when each president took office until the end of their term(s). President George H.W. Bush only served one term, and President Obama is just starting the second year of his second term.
Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (yellow) took office.
There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.
Click on graph for larger image.The first graph is for private employment only.
The employment recovery during Mr. G.W. Bush's (red) first term was very sluggish, and private employment was down 841,000 jobs at the end of his first term. At the end of Mr. Bush's second term, private employment was collapsing, and there were net 462,000 private sector jobs lost during Mr. Bush's two terms.
Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.
Private sector employment increased by 20,955,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green).
There were only 1,998,000 more private sector jobs at the end of Mr. Obama's first term. Just over one year into Mr. Obama's second term, there are now 4,690,000 more private sector jobs than when he initially took office.
And a table for public sector jobs. Public sector jobs declined the most during Obama's first term, and increased the most during Reagan's 2nd term.
| Term | Public Sector Jobs Added (000s) |
|---|---|
| Carter | 1,304 |
| Reagan 1 | -24 |
| Reagan 2 | 1,438 |
| GHW Bush | 1,127 |
| Clinton 1 | 692 |
| Clinton 2 | 1,242 |
| GW Bush 1 | 900 |
| GW Bush 2 | 844 |
| Obama 1 | -713 |
| Obama 21 | -25 |
| 1Just over one year into 2nd term | |
A big difference between the presidencies has been public sector employment. Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010. The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).
However the public sector has declined significantly since Mr. Obama took office (down 738,000 jobs). These job losses have mostly been at the state and local level, but more recently at the Federal level. This has been a significant drag on overall employment.
Looking forward, I expect the economy to continue to expand for the next few years, so I don't expect a sharp decline in private employment as happened at the end of Mr. Bush's 2nd term (In 2005 and 2006 I was warning of a coming recession due to the bursting of the housing bubble).
The bottom line is Mr. Paul was completely wrong.
The best private sector job growth was under Clinton (both terms) followed by Reagan's 2nd term and Carter (Obama's 2nd term will probably be close - even with a declining participation rate).
The largest increase in public sector jobs was during Reagan's 2nd term. The largest decrease was under Obama. It is important to get the facts correct.
Existing Home Sales: Lawler vs. the Consensus
by Calculated Risk on 4/18/2014 03:24:00 PM
The NAR will report March Existing Home Sales on Tuesday, April 22nd. The consensus is for sales of 4.56 million on seasonally adjusted annual rate (SAAR) basis. Sales in February were at a 4.60 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 4.64 million SAAR.
Housing economist Tom Lawler has been sending me his predictions of what the NAR will report for 4 years. The table below shows the consensus for each month, Lawler's predictions, and the NAR's initial reported level of sales.
Lawler hasn't always been closer than the consensus, but usually when there has been a fairly large spread between Lawler's estimate and the "consensus", Lawler has been closer.
Over the last four years, the consensus average miss was 160 thousand with a standard deviation of 170 thousand. Lawler's average miss was 70 thousand with a standard deviation of 50 thousand.
Note: Many analysts now change their "forecast" after Lawler's estimate is posted, so the consensus is doing a little better recently!
| Existing Home Sales, Forecasts and NAR Report millions, seasonally adjusted annual rate basis (SAAR) | |||
|---|---|---|---|
| Month | Consensus | Lawler | NAR reported1 |
| May-10 | 6.20 | 5.83 | 5.66 |
| Jun-10 | 5.30 | 5.30 | 5.37 |
| Jul-10 | 4.66 | 3.95 | 3.83 |
| Aug-10 | 4.10 | 4.10 | 4.13 |
| Sep-10 | 4.30 | 4.50 | 4.53 |
| Oct-10 | 4.50 | 4.46 | 4.43 |
| Nov-10 | 4.85 | 4.61 | 4.68 |
| Dec-10 | 4.90 | 5.13 | 5.28 |
| Jan-11 | 5.20 | 5.17 | 5.36 |
| Feb-11 | 5.15 | 5.00 | 4.88 |
| Mar-11 | 5.00 | 5.08 | 5.10 |
| Apr-11 | 5.20 | NA | 5.05 |
| May-11 | 4.75 | 4.80 | 4.81 |
| Jun-11 | 4.90 | 4.71 | 4.77 |
| Jul-11 | 4.92 | 4.69 | 4.67 |
| Aug-11 | 4.75 | 4.92 | 5.03 |
| Sep-11 | 4.93 | 4.83 | 4.91 |
| Oct-11 | 4.80 | 4.86 | 4.97 |
| Nov-11 | 5.08 | 4.40 | 4.42 |
| Dec-11 | 4.60 | 4.64 | 4.61 |
| Jan-12 | 4.69 | 4.66 | 4.57 |
| Feb-12 | 4.61 | 4.63 | 4.59 |
| Mar-12 | 4.62 | 4.59 | 4.48 |
| Apr-12 | 4.66 | 4.53 | 4.62 |
| May-12 | 4.57 | 4.66 | 4.55 |
| Jun-12 | 4.65 | 4.56 | 4.37 |
| Jul-12 | 4.50 | 4.47 | 4.47 |
| Aug-12 | 4.55 | 4.87 | 4.82 |
| Sep-12 | 4.75 | 4.70 | 4.75 |
| Oct-12 | 4.74 | 4.84 | 4.79 |
| Nov-12 | 4.90 | 5.10 | 5.04 |
| Dec-12 | 5.10 | 4.97 | 4.94 |
| Jan-13 | 4.90 | 4.94 | 4.92 |
| Feb-13 | 5.01 | 4.87 | 4.98 |
| Mar-13 | 5.03 | 4.89 | 4.92 |
| Apr-13 | 4.92 | 5.03 | 4.97 |
| May-13 | 5.00 | 5.20 | 5.18 |
| Jun-13 | 5.27 | 4.99 | 5.08 |
| Jul-13 | 5.13 | 5.33 | 5.39 |
| Aug-13 | 5.25 | 5.35 | 5.48 |
| Sep-13 | 5.30 | 5.26 | 5.29 |
| Oct-13 | 5.13 | 5.08 | 5.12 |
| Nov-13 | 5.02 | 4.98 | 4.90 |
| Dec-13 | 4.90 | 4.96 | 4.87 |
| Jan-14 | 4.70 | 4.67 | 4.62 |
| Feb-14 | 4.64 | 4.60 | 4.60 |
| Mar-14 | 4.56 | 4.64 | --- |
| 1NAR initially reported before revisions. | |||
The Sluggish Recovery for U.S. Heavy Truck Sales
by Calculated Risk on 4/18/2014 12:25:00 PM
Just a quick graph ... heavy truck sales really collapsed during the recession, falling to a low of 181 thousand in April 2009 on a seasonally adjusted annual rate (SAAR) from a peak of 555 thousand in February 2006.
Sales doubled from the recession low by April 2012 - and have mostly moved sideways since then.
Click on graph for larger image.
This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is current estimated sales rate.
As construction - both residential and commercial - picks up, heavy truck sales will probably increase further.
