by Calculated Risk on 4/21/2015 10:54:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Regional and state unemployment rates were little changed in March. Twenty-three states and the District of Columbia had unemployment rate decreases from February, 12 states had increases, and 15 states had no change, the U.S. Bureau of Labor Statistics reported today.
...
The largest over-the-month decrease in employment occurred in Texas (-25,400), followed by Oklahoma (-12,900) and Pennsylvania (-12,700). The largest over-the-month increases in employment occurred in California (+39,800), Florida (+30,600), and Massachusetts and Washington (+10,500 each).
...
Nebraska had the lowest jobless rate in March, 2.6 percent. Nevada had the highest rate among the states, 7.1 percent. The District of Columbia had a rate of 7.7 percent.

Click on graph for larger image.

This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession.

The size of the blue bar indicates the amount of improvement.   The yellow squares are the lowest unemployment rate per state since 1976.

The states are ranked by the highest current unemployment rate. Nevada, at 7.1%, had the highest state unemployment rate although D.C was higher.

The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 10 states with an unemployment rate at or above 11% (red).

Currently no state has an unemployment rate at or above 8% (light blue); Only one state and D.C. are still at or above 7% (dark blue).

by Calculated Risk on 4/21/2015 09:25:00 AM

A few excerpts from a note by Goldman Sachs economist David Mericle:

How much should we make of the firmer [inflation] recent prints? In our view, not much. The new car and apparel categories are the largest core goods categories, and are also the most sensitive to import prices. Auto import prices have begun to fall over the last few months, and we expect a decline in consumer prices to follow. Apparel import prices, in contrast, only flattened recently and remain up roughly 1% over the past year. This is not so surprising: the dollar's recent appreciation has not been primarily against the currencies of countries from which the US imports clothing, such as China. But the roughly one-third decline in cotton prices since mid-2014 is likely to result in a larger decline in apparel prices, and we expect that the full impact has yet to be felt. Our equity analysts expect apparel prices to fall for the remainder of 2015, and the 12% drop in raw cotton prices in the March PPI suggests further declines could come soon. ...

What about services, which account for three-quarters of the core? Soft health care inflation has been a key contributor to lower core inflation. Slower growth of public payments for health care services and likely spillovers to private insurers suggest that health care inflation is unlikely to exceed core inflation going forward. While health care inflation should normalize from the current sub-1% rate eventually, soft wage growth in the health care industry suggests little immediate upward pressure. Shelter inflation has been among the firmest components of the core, and the low rental vacancy rate suggests this trend is likely to continue in the near term. But we see limited further upside: the National Multi Housing Council's Market Tightness Index is less elevated, and data from REIS indicate that new construction should raise the vacancy rate.

More broadly, we do not view the recent data as a sign that pass-through is now behind us. Pass-through is a two-stage process. Dollar appreciation should result first in lower import prices, and then in gradually lower consumer prices. Similarly, while commodity prices are reflected in consumer energy goods and services prices fairly quickly, core prices then respond to energy costs with a lag. ... [W]hile the first stage of oil price pass-through appears largely complete, import prices likely have further to fall. ...
Overall, we expect that further pass-through will cause year-on-year core PCE inflation to fall by another 0.1-0.2 percentage points by the September FOMC meeting (at which point the July data will be available).
...
Does pass-through disinflation matter for liftoff? ... It appears that Fed officials increasingly view pass-through disinflation as something to be waited out, rather than as something to be ignored.

This is an argument for the Fed raising rates in September (as opposed to June) or even later.

by Calculated Risk on 4/20/2015 08:19:00 PM

CoreLogic released the Southern California report today for March (CoreLogic acquired DataQuick).

The data shows 18,156 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in March.

That was up 35.6% from 13,650 sales in February, and up 5.0% from 17,638 sales in March last year.

Note: Currently CoreLogic hasn't released the short sales and foreclosure data that DataQuick used to release.

by Calculated Risk on 4/20/2015 05:03:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Slide Sideways Again

Mortgage rates figure if they can't be pushing down to new record lows, they might as well pass the time by shooting for different records. This time around, it's the record for FLATNESS! We calculate an average 30yr fixed conventional rate every day based on the sweet-spots on multiple lender rate sheets. This gives us an 'effective rate' to track that typically falls between the two most common rate quotes in the market. For instance, the current computed rate is 3.66% and the two most common quotes are 3.625% and 3.75%. On 9 out of the past 10 days, that effective rate has moved an average of 0.01% per day. In terms of day-to-day rate movement over time, this is about as flat as it gets!

Here is a table from Mortgage News Daily:

Home Loan Rates

View More Refinance Rates

by Calculated Risk on 4/20/2015 11:01:00 AM

Note: LA area ports were impacted by labor negotiations that were settled on February 21st.

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report for February since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic was up 2.6% compared to the rolling 12 months ending in February.   Outbound traffic was down 2.0% compared to 12 months ending in February.

Inbound traffic had been increasing, and outbound traffic had been mostly moving sideways or slightly down.  The recent downturn in exports might be more than just the labor issues (strong dollar, weakness in China).

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March (depending on the timing of the Chinese New Year).

Imports were up 36% year-over-year in March, exports were down 20% year-over-year.

The labor issues are now resolved - the ships have disappearing from the outer harbor - and the distortions from the labor issues will mostly be behind us in April.

by Calculated Risk on 4/20/2015 08:35:00 AM

The Chicago Fed released the national activity index (a composite index of other indicators): Index shows economic growth slowed in March

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to –0.42 in March from –0.18 in February.

Two of the four broad categories of indicators that make up the index decreased from February, and three of the four categories made negative contributions to the index in March.

The index’s three-month moving average, CFNAI-MA3, decreased to –0.27 in March from –0.12 in February. March’s CFNAI-MA3 suggests that growth in national economic activity was somewhat below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.
emphasis added

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity was somewhat below 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.

by Calculated Risk on 4/19/2015 08:24:00 PM

From the NY Times: Greece Flashes Warning Signals About Its Debt

By the standards of his frenzied schedule here last week, the meeting on Friday between Yanis Varoufakis, the Greek finance minister, and Lee C. Buchheit, the dean of international debt lawyers, was a quiet one.
...
But the get-together with Mr. Buchheit carried critical meaning, according to experts here. After all, it was Mr. Buchheit who helped broker Greece’s most recent debt refinancing, in 2012.
...
Unless the creditors agree soon to release the next allotment of bailout money, Greece could have trouble making a $763 million payment to the I.M.F. on May 12. It almost certainly would not be able to meet the €11 billion in payments to the European Central Bank in June and July.

Monday:
• 8:30 AM ET: Chicago Fed National Activity Index for March. This is a composite index of other data.

Weekend:
• Schedule for Week of April 19, 2015

• Existing Home Sales: Lawler vs. the Consensus

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are up slightly and DOW futures are up 25 (fair value).

Oil prices were up sharply over the last week with WTI futures at $56.09 per barrel and Brent at $63.45 per barrel.  A year ago, WTI was at $104, and Brent was at $107 - so prices are down over 40% year-over-year.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are up to $2.46 per gallon (down about $1.20 per gallon 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 4/19/2015 09:43:00 AM

The NAR will report March Existing Home Sales on Wednesday, April 22nd. The consensus, according to Bloomberg, is that the NAR will report sales of 5.04 million. Housing economist Tom Lawler estimates the NAR will report sales of 5.18 million on a seasonally adjusted annual rate (SAAR) basis, up from 4.88 million SAAR in February.

Housing economist Tom Lawler has been sending me his predictions of what the NAR will report for 5 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 five years, the consensus average miss was 150 thousand with a standard deviation of 160 thousand.  Lawler's average miss was 70 thousand with a standard deviation of 45 thousand.

Note: Many analysts now change their "forecast" after Lawler's estimate is posted, so the consensus has improved 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	4.59
Apr-14	4.67	4.70	4.65
May-14	4.75	4.81	4.89
Jun-14	4.99	4.96	5.04
Jul-14	5.00	5.09	5.15
Aug-14	5.18	5.12	5.05
Sep-14	5.09	5.14	5.17
Oct-14	5.15	5.28	5.26
Nov-14	5.20	4.90	4.93
Dec-14	5.05	5.15	5.04
Jan-15	5.00	4.90	4.82
Feb-15	4.94	4.87	4.88
Mar-15	5.04	5.18	---
1NAR initially reported before revisions.

by Calculated Risk on 4/18/2015 10:56:00 AM

The key economic reports this week are March new home sales on Thursday and existing home sales on Wednesday.

----- Monday, April 20th -----
8:30 AM ET: Chicago Fed National Activity Index for March. This is a composite index of other data.

----- Tuesday, April 21st -----
10:00 AM: Regional and State Employment and Unemployment (Monthly), March 2015

----- Wednesday, April 22nd -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

9:00 AM: FHFA House Price Index for February 2015. This was originally a GSE only repeat sales, however there is also an expanded index.

10:00 AM: Existing Home Sales for March from the National Association of Realtors (NAR).

The consensus is for sales of 5.03 million on seasonally adjusted annual rate (SAAR) basis. Sales in February were at a 4.88 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 5.18 million SAAR.

A key will be the reported year-over-year increase in inventory of homes for sale.

During the day: The AIA's Architecture Billings Index for March (a leading indicator for commercial real estate).

----- Thursday, April 23rd -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 290 thousand from 294 thousand.

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 a decrease in sales to 510 thousand Seasonally Adjusted Annual Rate (SAAR) in March from 539 thousand in February.

----- Friday, April 24th -----
8:30 AM: Durable Goods Orders for February from the Census Bureau. The consensus is for a 0.6% increase in durable goods orders.

by Calculated Risk on 4/17/2015 07:29:00 PM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for February 2015. In the past month, the indexes increased in 46 states, decreased in one, and remained stable in three, for a one-month diffusion index of 90. Over the past three months, the indexes increased in 49 states and decreased in one (West Virginia), for a three-month diffusion index of 96.

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In February, 49 states had increasing activity (including minor increases). This measure has been moving up and down, and is in the normal range for a recovery.


Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and is almost all green again.

It seems likely that several oil producing states will turn red sometime in 2015 - possibly Texas, North Dakota, Alaska or Oklahoma.