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Sunday, August 03, 2014

Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama

by Calculated Risk on 8/03/2014 12:09:00 PM

By request, here is an update on an earlier post through the July employment report.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, so a different comparison might be to look at the percentage change.   Of course the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

First, here is a table for private sector jobs. The top two private sector terms were both under President Clinton.  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).

TermPrivate Sector
Jobs Added (000s)
Carter9,041
Reagan 15,360
Reagan 29,357
GHW Bush1,510
Clinton 110,885
Clinton 210,070
GW Bush 1-841
GW Bush 2379
Obama 11,998
Obama 213,687
1Eighteen months into 2nd term

The first graph 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 in 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.

Private Sector Payrolls 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 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.  Eighteen months into Mr. Obama's second term, there are now 5,685,000 more private sector jobs than when he initially took office.

Public Sector Payrolls 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 657,000 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.

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.

TermPublic Sector
Jobs Added (000s)
Carter1,304
Reagan 1-24
Reagan 21,438
GHW Bush1,127
Clinton 1692
Clinton 21,242
GW Bush 1900
GW Bush 2844
Obama 1-713
Obama 2156
1Seventeen months into 2nd term

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).

A big question is when the public sector layoffs will end.  It appears the cutbacks are over at the state and local levels in the aggregate, but it appears cutbacks at the Federal level have slowed.  Right now I'm expecting some increase in public employment in 2014, but nothing like what happened during Reagan's second term.

Saturday, August 02, 2014

Schedule for Week of August 3rd

by Calculated Risk on 8/02/2014 01:01:00 PM

This will be a very light week for economic data.

----- Monday, August 4th -----

Early: Black Knight Mortgage Monitor report for June.

----- Tuesday, August 5th -----

10:00 AM: ISM non-Manufacturing Index for July. The consensus is for a reading of 56.5, up from 56.0 in June. Note: Above 50 indicates expansion.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for June. The consensus is for a 0.6% increase in June orders.

----- Wednesday, August 6th -----

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

U.S. Trade Exports Imports8:30 AM: Trade Balance report for June from the Census Bureau.

Imports  decreased and exports increased in May.

The consensus is for the U.S. trade deficit to be at $45.0 billion in June from $44.4 billion in May.

----- Thursday, August 7th -----

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 305 thousand from 302 thousand.

Early: Trulia Price Rent Monitors for July. This is the index from Trulia that uses asking house prices adjusted both for the mix of homes listed for sale and for seasonal factors.

3:00 PM: Consumer Credit for June from the Federal Reserve.  The consensus is for credit to increase $18.3 billion.

----- Friday, August 8th -----

10:00 AM: Monthly Wholesale Trade: Sales and Inventories for June. The consensus is for a 0.6% increase in inventories.

Unofficial Problem Bank list declines to 451 Institutions

by Calculated Risk on 8/02/2014 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 Aug 1, 2014.

Changes and comments from surferdude808:

Actions by the Federal Reserve were responsible for the two changes to the Unofficial Problem Bank List this week. There was one removal lowering the list count to 451 institutions with assets of $145.7 billion. A year ago, the list held 726 institutions with assets of $260.9 billion.

The Federal Reserve terminated the Written Agreement against Peoples Bank & Trust Co., Troy, MO ($424 million) and they issued a Prompt Corrective Action order against Premier Bank, Denver, CO ($44 million), which has been under a Written Agreement since April 2010.

We expect few changes to the list over the next week and it will not be until August 15th until the OCC provides an update on its enforcement action activity.
CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The list peaked at 1,002 institutions on June 10, 2011, and is now down to 451.

Friday, August 01, 2014

Lawler: More Builder Results and Summary Table

by Calculated Risk on 8/01/2014 08:26:00 PM

From housing economist Tom Lawler:

The Ryland Group reported that net home orders in the quarter ended June 30, 2014 totaled 2,228, up 1.7% from the comparable quarter of 2013. Sales per community last quarter were down 13.8% from a year ago. Home deliveries last quarter totaled 1,700, up 2.5% from the comparable quarter of 2013, at an average sales price of $333,000, up 15.0% from last year. The company’s order backlog at the end of June was 3,860, up 5.5% from last June, at an average order price of $336,000, up 11.3% from a year ago. Ryland owned or controlled 40,966 lots at the end of June, up 11.5% from last June and up 58.3% from two years ago. The company said that concessions averaged 6.7% of sales prices last quarter, down from 7.3% a year earlier but up from 6.4% in the previous quarter.

Beazer Homes reported that net home orders in the quarter ended June 30, 2014 totaled 1,290, down 6.6% from the comparable quarter of 2013. Sales per community were off 3.9% from a year ago. Home deliveries totaled 1,241 last quarter, up 0.6% from the comparable quarter of 2013, at an average sales price of $284,600, up 12.1% from a year ago. The company’s order backlog at the end of June was 2,212, down 6.2% from last June. Beazer owned or controlled 29,783 lots at the end of June, up 10.4% from last June and up 18.7% from two years ago.

Standard Pacific Corporation reported that net home orders in the quarter ended June 30, 2014 totaled 1,524, up 0.5% from the comparable quarter of 2013. Sales per community were down 9.9% from a year ago. Home deliveries last quarter totaled 1,236, up 12.9% from the comparable quarter of 2013, at an average sales price of $479,000, up 20.7% from a year ago. The company’s order backlog at the end of June was 2,304, up 1.4% from the comparable quarter of 2013. The company owned or controlled 35,948 lots at the end of June, up 30.7% from last June and up 68.2% from two years ago.

Below are some summary stats for nine large publicly-traded home builders. Net home orders per community for these combined home builders were unchanged from a year ago.

Last week Census estimated that new SF home sales last quarter were down about 6% from the comparable quarter of 2013 (not seasonally adjusted). Comparing large builder orders to Census data can be tricky, as (1) Census treats sales cancellations differently from reported builder numbers; (2) there appears to be a difference in the timing of the recognition of a “sale;” and (3) market shares can change. Normally the above large builder results would lead me to conclude that there is a good chance Census will revise its home sales estimates for last quarter upward in the next report. Given D.R. Horton’s move last quarter to increase its sales pace by materially increasing sales incentives in many markets, however, it seems likely that the overall market share of these builders increased last quarter. (In addition, Horton’s orders last quarter were boosted by about 290 from an acquisition.). As a result, it’s not clear if the builder results below point to a likely upward revision in Census sales numbers.

  Net OrdersSettlementsAverage Closing Price
Qtr. Ended:06/1406/13% Chg06/1406/13% Chg06/1406/13% Chg
D.R. Horton8,5516,82225.3%7,6766,46418.8%$272,316252,2907.9%
PulteGroup4,7784,885-2.2%3,7984,152-8.5%$328,000294,00011.6%
NVR3,4153,2784.2%2,9432,8782.3%$368,200344,7006.8%
The Ryland Group2,2282,1911.7%1,7001,6592.5%$333,000287,00016.0%
Beazer Homes1,2901,381-6.6%1,2411,2340.6%$284,600253,80012.1%
Standard Pacific1,5241,5160.5%1,2361,09512.9%$479,000397,00020.7%
Meritage Homes1,6471,6370.6%1,3681,3213.6%$368,000330,00011.5%
MDC Holdings1,4191,3515.0%1,1581,183-2.1%$372,000338,4009.9%
M/I Homes1,0161,078-5.8%89478813.5%$306,000281,0008.9%
Total25,86824,1397.2%22,01420,7746.0%$324,282$294,85210.0%

U.S. Light Vehicle Sales decline to 16.4 million annual rate in July

by Calculated Risk on 8/01/2014 02:45:00 PM

Based on an WardsAuto estimate, light vehicle sales were at a 16.4 million SAAR in July. That is up 5% from July 2013, and down 2.5% from the 16.9 million annual sales rate last month.

This was below the consensus forecast of 16.7 million SAAR (seasonally adjusted annual rate).

Vehicle Sales Click on graph for larger image.

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for July (red, light vehicle sales of 16.4 million SAAR from WardsAuto).

Note: AutoData estimates sales at 16.48 million SAAR for July.

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

Vehicle SalesNote: dashed line is current estimated sales rate.

Unlike residential investment, auto sales bounced back fairly quickly following the recession and were a key driver of the recovery - although sales growth will slow this year.

Sales have average close to 16.5 million over the last five months following a weak winter due to severe weather.

Construction Spending decreased in June

by Calculated Risk on 8/01/2014 02:19:00 PM

Earlier the Census Bureau reported that overall construction spending decreased in June:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during June 2014 was estimated at a seasonally adjusted annual rate of $950.2 billion, 1.8 percent below the revised May estimate of $967.8 billion. The June figure is 5.5 percent above the June 2013 estimate of $900.3 billion.
Both private and public spending declined in June:
Spending on private construction was at a seasonally adjusted annual rate of $685.5 billion, 1.0 percent below the revised May estimate of $692.0 billion. Residential construction was at a seasonally adjusted annual rate of $355.9 billion in June, 0.3 percent below the revised May estimate of $357.0 billion. Nonresidential construction was at a seasonally adjusted annual rate of $329.5 billion in June, 1.6 percent below the revised May estimate of $335.0 billion. ...

In June, the estimated seasonally adjusted annual rate of public construction spending was $264.7 billion, 4.0 percent below the revised May estimate of $275.7 billion.
emphasis added
Private Construction Spending Click on graph for larger image.

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

Private residential spending is 47% below the peak in early 2006, and up 56% from the post-bubble low.

Non-residential spending is 20% below the peak in January 2008, and up about 46% from the recent low.

Public construction spending is now 19% below the peak in March 2009 and about 1.6% above the post-recession low.

Private Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is now up 7%. Non-residential spending is up 11% year-over-year. Public spending is down 3% year-over-year.

Looking forward, all categories of construction spending should increase in 2014. Residential spending is still very low, non-residential is starting to pickup, and public spending has probably hit bottom.

Comments on Employment Report

by Calculated Risk on 8/01/2014 11:04:00 AM

Earlier: July Employment Report: 209,000 Jobs, 6.2% Unemployment Rate

A few key points:
• At the current pace (through July), the economy will add 2.75 million jobs this year (2.64 million private sector jobs). Right now 2014 is on pace to be the best year for both total and private job growth since 1999.

• Wage growth is still subdued, from the BLS: "In July, average hourly earnings for all employees on private nonfarm payrolls edged up by 1 cent to $24.45. Over the past 12 months, average hourly earnings have risen by 2.0 percent."

• Inflation is not a concern this year. The BEA reported this morning that the PCE price index is up 1.6% year-over-year, and core PCE prices are up 1.5%.

• With the unemployment rate at 6.2%, there is still little upward pressure on wages. Wages should pick up as the unemployment rate falls over the next couple of years, but currently with low inflation and little wage pressure, the Fed can and will be patient.

A few numbers:

Total employment increased 209,000 from June to July, and is now 639,000 above the previous peak.  Total employment is up 9.349 million from the employment recession low.

Private payroll employment increased 198,000 from June to July, and private employment is now 1,105,000 above the previous peak (the unprecedented large number of government layoffs has held back total employment). Private employment is up 9.895 million from the low.

Through the first seven months of 2014, the economy has added 1,609,000 payroll jobs - up from 1,370,000 added during the same period in 2013 - even with the severe weather early this year.   My expectation at the beginning of the year was the economy would add between 2.4 and 2.7 million payroll jobs this year.  I might have been too low!

Overall this was another solid employment report.

Employment-Population Ratio, 25 to 54 years old

Employment Population Ratio, 25 to 54Since the overall participation rate declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate has mostly moved sideways (with a downward drift started around '00) - and with ups and downs related to the business cycle.

The 25 to 54 participation rate decreased in July to 80.8%, and the 25 to 54 employment population ratio decreased to 76.6% from 76.7%.  As the recovery continues, I expect the participation rate for this group to increase - although the participation rate has been trending down for this group since the '90s.

Year-over-year Change in Employment

Year-over-year change employmentThis graph shows the year-over-year change in total non-farm employment since 1968.

In July, the year-over-year change was 2.570 million jobs, and it generally appears the pace of hiring is increasing.

Right now it looks possible that 2014 will be the best year since 1999 for both total nonfarm and private sector employment growth.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 7.5 million, was unchanged in July. 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 persons working part time for economic reasons decreased slightly in July to 7.511 million from 7.544 million in June.  This suggests significantly slack still in the labor market.  These workers are included in the alternate measure of labor underutilization (U-6) that increased to 12.2% in July from 12.1% in June.

Unemployed over 26 Weeks

Unemployed Over 26 Weeks This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 3.155 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 3.081 in June. This is generally trending down, but is still very high.

Long term unemployment remains one of the key labor problems in the US.

State and Local Government

State and Local GovernmentThis graph shows total state and government payroll employment since January 2007. State and local governments lost jobs for four straight years. (Note: Scale doesn't start at zero to better show the change.)

In July 2014, state and local governments added 11,000 jobs.  State and local government employment is now up 151,000 from the bottom, but still 593,000 below the peak.

It is pretty clear that state and local employment is now increasing.  Federal government layoffs have slowed (unchanged in July), but Federal employment is still down 22,000 for the year.

ISM Manufacturing index increased in July to 57.1

by Calculated Risk on 8/01/2014 10:00:00 AM

The ISM manufacturing index suggests faster expansion in July than in June. The PMI was at 57.1% in July, up from 55.3% in June. The employment index was at 58.2%, up from 52.8% in June, and the new orders index was at 63.4%, up from 58.9% in June.

From the Institute for Supply Management: July 2014 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector expanded in July for the 14th consecutive month, and the overall economy grew for the 62nd consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. "The July PMI® registered 57.1 percent, an increase of 1.8 percentage points from June's reading of 55.3 percent, indicating expansion in manufacturing for the 14th consecutive month. The New Orders Index registered 63.4 percent, an increase of 4.5 percentage points from the 58.9 percent reading in June, indicating growth in new orders for the 14th consecutive month. The Production Index registered 61.2 percent, 1.2 percentage points above the June reading of 60 percent. Employment grew for the 13th consecutive month, registering 58.2 percent, an increase of 5.4 percentage points over the June reading of 52.8 percent. Inventories of raw materials registered 48.5 percent, a decrease of 4.5 percentage points from the June reading of 53 percent, contracting after five months of consecutive growth. Comments from the panel are generally positive, while some indicate concern over global geopolitical situations."
emphasis added
ISM PMIClick on graph for larger image.

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

This was just solidly above expectations of 55.9%.  The employment and new orders indexes were strong.

Final July Consumer Sentiment at 81.8

by Calculated Risk on 8/01/2014 09:55:00 AM

Consumer Sentiment
Click on graph for larger image.

The final Reuters / University of Michigan consumer sentiment index for July was at 81.8, down from 82.5 in June, and up from the preliminary July reading of 81.3.

This was close to the consensus forecast of 81.5. Sentiment has generally been improving following the recession - with plenty of ups and downs - and a big spike down when Congress threatened to "not pay the bills" in 2011.

July Employment Report: 209,000 Jobs, 6.2% Unemployment Rate

by Calculated Risk on 8/01/2014 08:30:00 AM

From the BLS:

Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was little changed at 6.2 percent, the U.S. Bureau of Labor Statistics reported today.
...
The change in total nonfarm payroll employment for May was revised from +224,000 to +229,000, and the change for June was revised from +288,000 to +298,000. With these revisions, employment gains in May and June were 15,000 higher than previously reported.
Payroll jobs added per monthClick on graph for larger image.

The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed to show the underlying payroll changes).

This was the sixth month in a row with more than 200 thousand jobs added, and employment is now up 2.57 million year-over-year.

Total employment is now 639 thousand above the pre-recession peak.

unemployment rateThe second graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate was increased in July to 62.9%. This is the percentage of the working age population in the labor force.   A large portion of the recent decline in the participation rate is due to demographics.

The Employment-Population ratio was unchanged at 59.0% (black line).

I'll post the 25 to 54 age group employment-population ratio graph later.

Employment Pop Ratio, participation and unemployment ratesThe third graph shows the unemployment rate.

The unemployment rate increased in July to 6.2%.

Although below expectations, this was another solid employment report - including the positive revisions to prior months.  2014 is on pace to be the best year for employment gains since 1999.

I'll have much more later ...