by Calculated Risk on 8/13/2015 08:39:00 AM

On a monthly basis, retail sales were up 0.6% from June to July (seasonally adjusted), and sales were up 2.4% from July 2014.

From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for July, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $446.5 billion, an increase of 0.6 percent from the previous month, and up 2.4 percent above July 2014. ... The May 2015 to June 2015 percent change was revised from -0.3 percent to virtually unchanged.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline increased 0.6%.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales ex-gasoline increased by 4.5% on a YoY basis (2.4% for all retail sales including gasoline).

The increase in July was above the consensus expectations of a 0.5% increase, and sales in May and June were revised up. A solid report.

by Calculated Risk on 8/12/2015 07:27:00 PM

From the WSJ: Surge in Commercial Real-Estate Prices Stirs Bubble Worries

The valuations of office buildings sold in London, Hong Kong, Osaka and Chicago hit record highs in the second quarter of this year and reached post-1999 highs in New York, Los Angeles, Berlin and Sydney, according to industry tracker Real Capital Analytics.

I haven't seen the wild speculative CRE lending like in 2005 and 2006, so I'm not concerned.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to be unchanged at 270 thousand.

• Also at 8:30 AM, Retail sales for July will be released. The consensus is for retail sales to increase 0.5% in July, and to increase 0.4% ex-autos.

• At 10:00 AM, Manufacturing and Trade: Inventories and Sales (business inventories) report for June. The consensus is for a 0.3% increase in inventories.

• At 11:00 AM, the New York Fed will release the Q2 2015 Household Debt and Credit Report

by Calculated Risk on 8/12/2015 03:32:00 PM

During the recession, I started following the Sacramento market to look for changes in the mix of houses sold (equity, REOs, and short sales). For a few years, not much changed. But in 2012 and 2013, we saw some significant changes with a dramatic shift from distressed sales to more normal equity sales.

This data suggests healing in the Sacramento market and other distressed markets are showing similar improvement.  Note: The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

In July, total sales were up 12.3% from July 2014, and conventional equity sales were up 16.3% compared to the same month last year.

In July, 9.1% of all resales were distressed sales. This was down from 10.7% last month, and down from 12.3% in July 2014.  This is the lowest percentage of distressed sales since they started breaking out distressed sales).

The percentage of REOs was at 4.7% in July, and the percentage of short sales was 4.4%.

Here are the statistics.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales.

There has been a sharp increase in conventional (equity) sales that started in 2012 (blue) as the percentage of distressed sales declined sharply.

Active Listing Inventory for single family homes decreased 10.8% year-over-year (YoY) in July.  This was the third consecutive monthly YoY decrease in inventory in Sacramento (a big recent change).

Cash buyers accounted for 16.5% of all sales (frequently investors).

Summary: This data suggests a healing market with fewer distressed sales, more equity sales, and less investor buying.

by Calculated Risk on 8/12/2015 02:07:00 PM

From the WSJ: Budget Deficit Totaled $488 Billion For Year Ended July, Down 9% From Year Earlier

The U.S. budget deficit rose in July but stood around 9% below its year-earlier level, the Treasury Department said on Wednesday.

The budget outlook has improved this year as economic growth has boosted revenues, but outlays were significantly higher in July from a year earlier, in part due to calendar timing differences. The U.S. ran a $149 billion deficit in July, a month in which the government typically runs a deficit.
...
The Congressional Budget Office last week said it expected the U.S. would run a $425 billion deficit for the fiscal year that ends Sept. 30, down more than 12% from its earlier forecast of $486 billion and from the prior year’s $483 billion deficit.

The most recent CBO projection was for the fiscal 2015 budget deficit to be 2.7% of GDP. Right now it looks like fiscal 2015 will be under 2.4% (a significant improvement).

by Calculated Risk on 8/12/2015 10:08:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was little changed at 5.2 million on the last business day of June, the U.S. Bureau of Labor Statistics reported today. The number of hires and separations were little changed at 5.2 and 4.9 million, respectively. ...
...
Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. ... There were 2.7 million quits in June, little changed from May.
emphasis added

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for June, the most recent employment report was for July.

Click on graph for larger image.


Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Jobs openings decreased in June to 5.249 million from 5.357 million in May.

The number of job openings (yellow) are up 11% year-over-year compared to June 2014.

Quits are up 11% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

This is another solid report.  It is a good sign that job openings are over 5 million - just off the all time high set last month - and that quits are increasing solidly year-over-year.

by Calculated Risk on 8/12/2015 07:01:00 AM

From the MBA: Mortgage Applications Flat in Latest MBA Weekly Survey

Mortgage applications increased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 7, 2015. ...

The Refinance Index increased 3 percent from the previous week to its highest level since May 2015. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 20 percent higher than the same week one year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.13 percent, with points decreasing to 0.31 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index.

Even with the increase in activity, refinance activity is very low.

2014 was the lowest year for refinance activity since year 2000, and refinance activity will probably stay low for the rest of 2015.


The second graph shows the MBA mortgage purchase index.  

According to the MBA, the unadjusted purchase index is 20% higher than a year ago.

by Calculated Risk on 8/11/2015 07:19:00 PM

From the WSJ: U.S. Oil Falls to Six-Year Low

Light, sweet crude for September delivery fell $1.88, or 4.2%, to settle at $43.08 a barrel on the New York Mercantile Exchange. ... U.S. oil to its lowest settlement since March 11, 2009, when the U.S. economy was still reeling from the financial crisis.

Brent crude, the global benchmark, fell $1.23, or 2.4%, to $49.18 a barrel on ICE Futures Europe. It is within $3 of its six-year low set in January.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.58 per gallon, well above the 6 year low of $2.02 per gallon set in January.

There are several reasons why gasoline prices are still so high, including: 1) it takes time for declines in oil prices to reach the pump, 2) there is a seasonal component (this is the driving season), and 3) supply issues in California. However, gasoline prices should follow oil prices down over the next several weeks.

Wednesday:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 10:00 AM, Job Openings and Labor Turnover Survey for June from the BLS. Jobs openings increased in May to 5.363 million from 5.334 million in April. The number of job openings were up 16% year-over-year, and Quits were up 8% year-over-year.

• At 2:00 PM, the Monthly Treasury Budget Statement for July.

by Calculated Risk on 8/11/2015 02:39:00 PM

By request, here is a repeat of animations of the U.S population by age and distribution, from 1900 through 2060. The population data and estimates are from the Census Bureau (actual through 2010 and projections through 2060).

Note: For distribution, here are the same graphs using a slider (the user can look at individual slides).

There are many interesting points - the Depression baby bust, the baby boom, the 2nd smaller baby bust following the baby boom, the "echo" boom" and more. What jumps out at me are the improvements in health care. And also that the largest cohorts will all soon be under 40. Heck, in the last frame (2060), any remaining Boomers will be in those small (but growing) 95 to 99, and 100+ cohorts.

The first graph is by distribution (updates every 2 seconds).

The second graph is by age. Population is in thousands (not labeled)! Prior to 1940, the oldest group in the Census data was "75+".  From 1940 through 1985, the oldest group was "85+".  Starting in 1990, the oldest group is 100+.

by Calculated Risk on 8/11/2015 11:24:00 AM

This provisional data for 2014 was released in June and shows a possible impact of the great recession ... and recovery.

From the National Center for Health Statistics: Births: Preliminary Data for 2014. The NCHS reports:

The 2014 preliminary number of U.S. births was 3,985,924, an increase of 1% from 2013. ...

The general fertility rate was 62.9 births per 1,000 women aged 15–44, up 1% from 2013, and the first increase in the fertility rate since 2007.

Here is a long term graph of annual U.S. births through 2014 ...

Click on graph for larger image.

Births had declined for five consecutive years prior to increasing in 2013.  Births are about 7.7% below the peak in 2007 (births in 2007 were at the all time high - even higher than during the "baby boom"). I suspect certain segments of the population were under stress before the recession started - like construction workers - and even more families were in distress in 2008 through 2012. And this led to fewer babies.

Notice that the number of births started declining a number of years before the Great Depression started. Many families in the 1920s were under severe stress long before the economy collapsed. By 1933 births were down by almost 23% from the early '20s levels.

Of course economic distress isn't the only reason births decline - look at the huge decline following the baby boom that was driven by demographics. But it is not surprising that the number of births slow or decline during tough economic times - but that is over now.

The second graph is from the NCHS report and shows births per 1,000 women by teen age group. From the NCHS:

The preliminary birth rate for teenagers in 2014 was 24.2 births per 1,000 women aged 15–19—yet another historic low for the nation. The rate was down 9% from 2013 (26.5) and has declined more than 7% annually since 2007. Since the most recent peak in 1991 (61.8), the rate has declined a total of 61%. In 2014, the preliminary number of births to women aged 15–19 was 249,067, down 9% from 2013 and 44% from 2007 (444,899)

Far fewer teens births is great news (and is probably related to the much higher enrollment rates).

Another key trends ... women are waiting longer to have babies:

The preliminary birth rate for women aged 20–24 in 2014 was 79.0 births per 1,000 women, down 2% from the rate in 2013 (80.7), reaching yet another record low for the nation. The rate for women in this age group has declined steadily since 2007 at more than 4% a year. ... The rate for women aged 25–29 was 105.7 births per 1,000 women, essentially unchanged from 2013 (105.5).. Since 2008, the rate for women in this age group has declined more than 1% a year. The number of births to women in their late 20s increased 2% from 2013 to 2014.

The preliminary birth rate for women aged 30–34 in 2014 was 100.8 births per 1,000 women, up 3% from the rate in 2013 (98.0). The rate for this group has increased steadily since 2011. The number of births to women in their early 30s also increased in 2014, by 4%. The rate for women aged 35–39 was 50.9 births per 1,000 women, up 3% from 2013 (49.3). The rate for this group has increased steadily since 2010. The number of births to women in their late 30s increased 5% in 2014

Waiting longer to have children makes sense (see: Demographics and Behavior) and we should expect a baby boom in a few years as the largest cohorts move into the 25 to 34 years old age groups.

P.S. I expect that as families have babies, they will tend to buy homes (as opposed to rent)!   The demographics are favorable for renting now, but eventually the demographics will be more positive for home ownership.

by Calculated Risk on 8/11/2015 09:51:00 AM

From the National Federation of Independent Business (NFIB): NFIB Small Business Optimism Index increased 1.3 points in July

The Small Business Optimism Index rose 1.3 points to 95.4. After giving up over 4 points in June, the Index clawed back 1.3 points in July, a familiar theme now, which has produced the most grudging gains in the Index’s history – and still not above the 42 year average of 98. ...

Job creation was flat in July. On balance, owners added a net 0.05 workers per firm in recent months, better than June’s -0.01 reading, but still close to the zero line.
emphasis added

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index increased to 95.4 in July from 94.1 in June.