by Calculated Risk on 6/30/2014 08:18:00 PM

From the National Restaurant Association: Restaurant Performance Index Rose to Its Highest Level in More Than Two Years

Driven by stronger sales and traffic levels and an increasingly optimistic outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) rose to its highest level in more than two years. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.1 in May, the third consecutive monthly gain and strongest reading since March 2012. In addition, the RPI stood above 100 for the 15th consecutive month, which signifies expansion in the index of key industry indicators.
...
“Positive sales results fueled the May increase in the RPI, as nearly two-thirds of restaurant operators said their same-store sales rose above year-ago levels,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “In addition, restaurant operators are increasingly optimistic about continued sales gains in the months ahead, a sentiment that is also showing up in their capital expenditure plans.”
emphasis added

Click on graph for larger image.

The index increased to 102.1 in May, up from 101.7 in April. (above 100 indicates expansion).

Restaurant spending is discretionary, so even though this is "D-list" data, I like to check it every month - and this is a solid reading.

Tuesday:
• Early: Reis Q2 2014 Office Survey of rents and vacancy rates.

• All day: Light vehicle sales for June. The consensus is for light vehicle sales to decrease to 16.4 million SAAR in June from 16.7 million in May (Seasonally Adjusted Annual Rate).

• At 10:00 AM ET, the ISM Manufacturing Index for June. The consensus is for an increase to 55.6 from 55.4 in May. In May the employment index was at 52.8%, and the new orders index was at 56.9%.

• At 10:00 AM, Construction Spending for May. The consensus is for a 0.5% increase in construction spending.

by Calculated Risk on 6/30/2014 05:12:00 PM

Here is another weekly update on housing inventory ...

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then usually peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data released was for May).  However Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data for the last several years.

Click on graph for larger image.

This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012, 2013 and 2014.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.

In 2013 (Blue), inventory increased for most of the year before declining seasonally during the holidays.  Inventory in 2013 finished up 2.7% YoY compared to 2012.

Inventory in 2014 (Red) is now 14.0% above the same week in 2013. (Note: There are differences in how the data is collected between Housing Tracker and the NAR).

Also inventory is now above the same week in 2012.   This increase in inventory should slow price increases, and might lead to price declines in some areas.

Note: One of the key questions for 2014 will be: How much will inventory increase?  My guess was inventory would be up 10% to 15% year-over-year at the end of 2014 based on the NAR report.  Right now it looks like inventory might increase more than I expected.

by Calculated Risk on 6/30/2014 04:28:00 PM

Fannie Mae reported today that the Single-Family Serious Delinquency rate declined in May to 2.08% from 2.13% in April. The serious delinquency rate is down from 2.83% in May 2013, and this is the lowest level since October 2008.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Last week, Freddie Mac reported that the Single-Family serious delinquency rate declined in May to 2.10% from 2.15% in April. Freddie's rate is down from 2.85% in May 2013, and is at the lowest level since January 2009. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

Note: These are mortgage loans that are "three monthly payments or more past due or in foreclosure".

Click on graph for larger image

The Fannie Mae serious delinquency rate has fallen 0.75 percentage points over the last year, and at that pace the serious delinquency rate will be under 1% in late 2015.

Note: The "normal" serious delinquency rate is under 1%.

Maybe serious delinquencies will be back to normal in late 2015 or 2016.

by Calculated Risk on 6/30/2014 01:55:00 PM

Just an update to the weekly schedule ... adding the quarterly Reis surveys of rents and vacancy rates for offices, apartments and malls.

----- Tuesday, July 1st -----
Early: Reis Q2 2014 Office Survey of rents and vacancy rates.

----- Wednesday, July 2nd -----
Early: Reis Q2 2014 Apartment Survey of rents and vacancy rates.

----- Thursday, July 3rd -----
Early: Reis Q2 2014 Mall Survey of rents and vacancy rates.

by Calculated Risk on 6/30/2014 10:30:00 AM

From the Dallas Fed: Texas Manufacturing Activity Picks Up Pace

Texas factory activity increased again in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 11 to 15.5, indicating output grew at a faster pace than in May.

Other measures of current manufacturing activity also reflected growth in June. The new orders index rose from 3.8 to 6.5 but remained below the levels seen earlier in the year. The capacity utilization index held steady at 9.2. The shipments index came in at 10.3, similar to its May level, with nearly a third of manufacturers noting an increase in volumes.

Perceptions of broader business conditions were more optimistic this month. The general business activity index rose from 8 to 11.4. ...

Labor market indicators reflected stronger employment growth and longer workweeks. The June employment index rebounded to 13.1 after dipping to 2.9 in May.
emphasis added

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (dashed green, through June), and five Fed surveys are averaged (blue, through June) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through May (right axis).

All of the regional surveys showed expansion in June, and it seems likely the ISM index will be at about the same level as in May, or increase slightly in June.  The ISM index for June will be released tomorrow, Tuesday, July 1st.

by Calculated Risk on 6/30/2014 10:00:00 AM

From the NAR: Pending Home Sales Surge in May

Pending home sales rose sharply in May, with lower mortgage rates and increased inventory accelerating the market, according to the National Association of Realtors®. All four regions of the country saw increases in pending sales, with the Northeast and West experiencing the largest gains.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 6.1 percent to 103.9 in May from 97.9 in April, but still remains 5.2 percent below May 2013 (109.6).
...
The PHSI in the Northeast jumped 8.8 percent to 86.3 in May, and is now 0.2 percent above a year ago. In the Midwest the index rose 6.3 percent to 105.4 in May, but is still 6.6 percent below May 2013.

Pending home sales in the South advanced 4.4 percent to an index of 117.0 in May, and is 2.9 percent below a year ago. The index in the West rose 7.6 percent in May to 95.4, but remains 11.1 percent below May 2013.

Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in June and July.

by Calculated Risk on 6/29/2014 09:00:00 PM

Monday:
• At 9:45 AM ET, the Chicago Purchasing Managers Index for June. The consensus is for a decrease to 64.0, down from 65.5 in May.

• At 10:00 AM, the Pending Home Sales Index for May. The consensus is for a 1% increase in the index.

• At 10:30 AM, the Dallas Fed Manufacturing Survey for June. This is the last of the regional Fed manufacturing surveys for June.

Weekend:
• Demographics: Prime and Near-Prime Population and Labor Force
• Schedule for Week of June 29th

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are down slightly and DOW futures are down 11 (fair value).

Oil prices moved down slightly over the last week with WTI futures at $105.45 per barrel and Brent at $113.10 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.68 per gallon, up about 20 cents from 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

by Calculated Risk on 6/29/2014 12:33:00 PM

Earlier this week, I posted some demographic data for the U.S., see: Census Bureau: Largest 5-year Population Cohort is now the "20 to 24" Age Group and The Future is still Bright!

I pointed out that "even without the financial crisis we would have expected some slowdown in growth this decade (just based on demographics). The good news is that will change soon."

Here are a couple more graphs making this point. The first shows prime and near-prime working age population in the U.S. since 1948 (this is population, not labor force).

Click on graph for larger image.

There was a huge surge in the prime working age population in the '70s, '80s and '90s - and the prime age population has been mostly flat recently (even declined a little).

The near-prime group has been growing - especially the 55 to 64 age group.

The good news is the prime working age group will start growing again by 2020, and this should boost economic activity.

The second graph shows prime and near-prime working age labor force in the U.S. since 1948 (this is labor force - the first graph was population).

The prime working age labor force grew even quicker than the population in the '70s and '80s due the increase in participation of women. In fact, the prime working age labor force was increasing 3%+ per year in the '80s!

So when compare economic growth to the '70s, '80, or 90's we have to remember this difference in demographics (the '60s saw solid economic growth as near-prime age groups increased).

The third graph is via Joseph Weisenthal of Business Insider and is from a report by Bruegel on migration.  Note: This is in percentage terms.

As Bruegel notes, the working age population in the US is expected to grow over the next few decades - so the US has much better demographics than Europe, China or Japan (not included).

The key points are:
1) A slowdown in the US was expected this decade just based on demographics (the housing bust, financial crisis were piled on top of weak demographics).

2) The prime working age population in the US will start growing again soon.

by Calculated Risk on 6/28/2014 01:11:00 PM

This will be a busy holiday week for economic data with several key reports including the June employment report on Thursday.

Other key reports include the ISM manufacturing index on Tuesday, June vehicle sales on Tuesday, and the May Trade Deficit and June ISM non-manufacturing index on Thursday.

Fed Chair Janet Yellen will speak on Financial Stability.

----- Monday, June 30th -----
9:45 AM: Chicago Purchasing Managers Index for June. The consensus is for a decrease to 64.0, down from 65.5 in May.

10:00 AM ET: Pending Home Sales Index for May. The consensus is for a 1% increase in the index.

10:30 AM: Dallas Fed Manufacturing Survey for June. This is the last of the regional Fed manufacturing surveys for June.

----- Tuesday, July 1st -----
Early: Reis Q2 2014 Office Survey of rents and vacancy rates.

All day: Light vehicle sales for June. The consensus is for light vehicle sales to decrease to 16.4 million SAAR in June from 16.7 million in May (Seasonally Adjusted Annual Rate).

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

10:00 AM: Construction Spending for May. The consensus is for a 0.5% increase in construction spending.

10:00 AM: ISM Manufacturing Index for June. The consensus is for an increase to 55.6 from 55.4 in May.

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

The ISM manufacturing index indicated expansion in May at 55.4%. The employment index was at 52.8%, and the new orders index was at 56.9%.

----- Wednesday, July 2nd -----
Early: Reis Q2 2014 Apartment Survey of rents and vacancy rates.

7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for June. This report is for private payrolls only (no government). The consensus is for 210,000 payroll jobs added in June, up from 180,000 in May.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for May. The consensus is for a 0.3% decrease in May orders.

11:00 AM: Speech by Fed Chair Janet Yellen, Financial Stability, At the Inaugural Michel Camdessus Central Banking Lecture at the International Monetary Fund, Washington, D.C.

----- Thursday, July 3rd -----
Early: Reis Q2 2014 Mall Survey of rents and vacancy rates.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 314 thousand from 312 thousand.

8:30 AM: Employment Report for June. The consensus is for an increase of 211,000 non-farm payroll jobs added in June, down from the 217,000 non-farm payroll jobs added in May.

The consensus is for the unemployment rate to be unchanged at 6.3% in May. 

This graph shows the percentage of payroll jobs lost during post WWII recessions through May.  The red line is back to zero!

The economy has added 9.4 million private sector jobs since employment bottomed in February 2010 (8.8 million total jobs added including all the public sector layoffs).

There are 617 thousand more private sector jobs now than when the recession started in 2007, and total employment is now 98 thousand above the pre-recession peak.

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

Both imports and exports increased in April.

The consensus is for the U.S. trade deficit to be at $45.1 billion in May from $47.2 billion in April.

10:00 AM: ISM non-Manufacturing Index for June. The consensus is for a reading of 56.2, down from 56.3 in May. Note: Above 50 indicates expansion.

----- Friday, July 4th -----
All US markets are closed in observance of the Independence Day holiday.

by Calculated Risk on 6/28/2014 08:15:00 AM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for June 27, 2014.

Changes and comments from surferdude808:

FDIC providing an update on its enforcement action activities and a deeper scrubbing of the list drove a net decline in the Unofficial Problem Bank List to 468 institutions with assets of $149.2 billion. In all, there were 21 removals and one addition this week. A year ago, the list held 749 institutions with assets of $273.3 billion. During this June, the list declined by a net 28 institutions after 26 action terminations, two failures, one merger, and one addition. The failure this week, The Freedom State Bank, Freedom, OK surprisingly was not on the list as the only action issued by FDIC that can be located is a Prompt Corrective Action order only issued less than 60 days ago.

Removals this week were The Bank of Delmarva, Seaford, DE ($425 million); Community Bank of the South, Smyrna, GA ($348 million); Mercantile Bank, Quincy, IL ($347 million); The Pueblo Bank and Trust Company, Pueblo, CO ($320 million); First Farmers & Merchants Bank, Cannon Falls, MN ($265 million); Firstier Bank, Kimball, NE ($245 million); SouthPoint Bank, Birmingham, AL ($202 million); Marine Bank & Trust Company, Vero Beach, FL ($152 million); Bank of Fairfield, Fairfield, WA ($147 million); Concord Bank, St. Louis, MO ($138 million); Town & Country Bank, Las Vegas, NV ($120 million); Freedom Bank of America, Saint Petersburg, FL ($107 million); State Bank of Park Rapids, Park Rapids, MN ($100 million); Community Pride Bank, Isanti, MN ($94 million); First Bank, West Des Moines, IA ($90 million); First Carolina Bank, Rocky Mount, NC ($89 million); Sherburne State Bank, Becker, MN ($84 million); Bank of the Prairie, Olathe, KS ($80 million); Security Bank, New Auburn, WI ($75 million); Holladay Bank & Trust, Salt Lake City, UT ($51 million); and Maple Bank, Champlin, MN ($51 million).

The sole addition this week Community 1st Bank Las Vegas, Las Vegas, NM ($146 million).

We have updated the Unofficial Problem Bank List transition matrix through the second quarter of 2014. Full details are available in the accompanying table and a graphic depicting trends in how institutions have arrived and departed the list. Since publication of the Unofficial Problem Bank List started in August 2009, a total of 1,672 institutions have appeared on the list. New entrants have slowed since late 2012, but this quarter seven institutions were added up from only three being added in the previous two quarters.

At the end of the second quarter, only 468 or 28 percent of the banks that have been on a list at some point remain. Action terminations of 619 account for around 51 percent of the 1,204 institutions removed. However, a significant number of institutions have left the list through failure. So far, 381 institutions have failed accounting for nearly 32 percent of departures. Should another institution on the list not fail, then more than 22 percent of the 1,672 institutions making an appearance would have failed. A 22 percent default rate would be more than double the rate often cited by media reports on the failure rate of banks on the FDIC's official list.

Unofficial Problem Bank List
Change Summary
		Number of Institutions	Assets ($Thousands)
Start (8/7/2009)		389	276,313,429
Subtractions
	Action Terminated	141	(55,759,559)
	Unassisted Merger	32	(6,697,723)
	Voluntary Liquidation	4	(10,584,114)
	Failures	154	(184,269,578)
	Asset Change		(5,411,792)
Still on List at 6/30/2014		58	13,590,663
Additions after 8/7/2009		478	135,599,760
End (6/30/2014)		468	149,190,423
Intraperiod Deletions1
	Action Terminated	478	206,393,188
	Unassisted Merger	158	71,031,845
	Voluntary Liquidation	10	2,324,142
	Failures	227	111,634,071
	Total	873	391,383,246
1Institution not on 8/7/2009 or 6/30/2014 list but appeared on a weekly list.