by Calculated Risk on 1/12/2019 08:11:00 AM

Special Note on Government Shutdown: If the Government shutdown continues, then some additional releases will be delayed. For example, this coming week, the retail sales and housing starts reports will not be released if the government remains shutdown.  (see bottom for key releases already delayed).

The key reports this week are December housing starts and retail sales.

For manufacturing, the December Industrial Production report and the January NY and Philly Fed manufacturing surveys will be released.

----- Monday, Jan 7th -----
No major economic releases scheduled.

----- Tuesday, Jan 8th -----
8:30 AM ET: The Producer Price Index for December from the BLS. The consensus is for a 0.1% decrease in PPI, and a 0.2% increase in core PPI.

8:30 AM: The New York Fed Empire State manufacturing survey for January. The consensus is for a reading of 12.0, up from 10.9.

----- Wednesday, Jan 9th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Retail sales for December is scheduled to be released.  The consensus is for a 0.2% increase in retail sales.

This 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 3.6% on a YoY basis.

10:00 AM: The January NAHB homebuilder survey. The consensus is for a reading of  57, up from 54. Any number above 50 indicates that more builders view sales conditions as good than poor.

2:00 PM: the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

----- Thursday, Jan 10th -----
8:30 AM: Housing Starts for December.

This graph shows single and total housing starts since 1968.

The consensus is for 1.256 million SAAR, unchanged from 1.256 million SAAR.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 220 thousand initial claims, up from 216 thousand the previous week.

8:30 AM: the Philly Fed manufacturing survey for January. The consensus is for a reading of 10.0, up from 9.4.

----- Friday, Jan 11th -----
9:15 AM: The Fed will release Industrial Production and Capacity Utilization for December.

This graph shows industrial production since 1967.

The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to be unchanged at 78.5%.

10:00 AM: University of Michigan's Consumer sentiment index (Final for January). The consensus is for a reading of 97.0.

10:00 AM: State Employment and Unemployment (Monthly) for December 2018

----- List of Key Delayed Releases ----
New Home Sales (Census) for November from the Census Bureau. The consensus was for 560 thousand SAAR, up from 544 thousand in October.

Construction Spending (Census) for November. The consensus was for a 0.3% increase in construction spending.

Light vehicle sales (BEA) for December. The consensus was for light vehicle sales to be 17.2 million SAAR in December, down from 17.4 million in November (Seasonally Adjusted Annual Rate).

Trade Balance report (Census) for November from the Census Bureau. The consensus was the trade deficit would be $53.9 billion.  The U.S. trade deficit was at $55.5 billion in October.

by Calculated Risk on 1/11/2019 05:16:00 PM

From housing economist Tom Lawler:

Normally I do not send out anything about the upcoming Existing Home Sales Report until I have a sufficient number of Realtor/MLS reports to make a statistically sound projection. However, based on reports I have seen so far, it appears as if there is a very good chance that the National Association of Realtors' estimate for existing home sales in December will show a materially larger decline from November's estimate than what appears to be the "consensus" forecast. Based on the limited sample I have right now, I'd estimate (with a high standard error) that existing home sales in December as estimated by the NAR ran at a seasonally adjusted annual rate of just 5.0 million, down 6% from November's estimate. It is also likely that the YOY % change in the median existing SF home price will be below 3%.

CR Note: This is a VERY early estimate from Tom Lawler, and he will have an update (using more data) next week. Based on this estimate, December sales will the lowest level of sales since November 2015 (and that month was impacted by a regulation change),

by Calculated Risk on 1/11/2019 03:14:00 PM

From the WaPo: Congress approves back pay — eventually — for furloughed federal employees. This measure is expected to be signed by the President.

For the January employment report, this means that the BLS will count all Federal employees as employed in the establishment survey - whether on furlough, or working without pay. So don't expect a negative headline jobs number due to the government shutdown (although some non-government employees will likely lose their jobs if the shutdown continues).

However, in the household report, furloughed employees will be counted as unemployed, so the unemployment rate will probably bump up to 4.0% or 4.1% in the January report (to be released February 1st).

by Calculated Risk on 1/11/2019 12:50:00 PM

Merrill Lynch estimate of impact of government shutdown on GDP:

We think a deal to reopen the government will be reached eventually, but only after economic, financial and/or political pain is felt. Every two weeks of a shutdown will trim 0.1pp from growth; additional drag is likely due to delays in spending and investment.

From Merrill Lynch:

4Q GDP tracking remains at 2.8%. We forecast 1Q GDP growth of 2.2%, but downside risks are emerging due to the government shutdown. [Jan 11 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 2.5% for 2018:Q4 and 2.1% for 2019:Q1. [Jan 11 estimate]

And from the Altanta Fed: GDPNow

The current GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2018 remains 2.8 percent on January 10. [Jan 10 estimate]

CR Note: These estimates suggest GDP in the mid-to-high 2s for Q4.

by Calculated Risk on 1/11/2019 11:10:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.4% annualized rate) in December. The 16% trimmed-mean Consumer Price Index also rose 0.2% (2.5% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers fell 0.1% (-0.7% annualized rate) in December. The CPI less food and energy rose 0.2% (2.6% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed released the median CPI details for December here. Motor fuel was down 60% annualized in December.

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.8%, the trimmed-mean CPI rose 2.2%, and the CPI less food and energy rose 2.2%. Core PCE is for November and increased 1.9% year-over-year.

On a monthly basis, median CPI was at 2.4% annualized, trimmed-mean CPI was at 2.5% annualized, and core CPI was at 2.6% annualized.

Using these measures, inflation was about the same in December on a year-over-year basis as in November. Overall, these measures are at or above the Fed's 2% target (Core PCE is below 2%).

by Calculated Risk on 1/11/2019 08:32:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent in December on a seasonally adjusted basis after being unchanged in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.9 percent before seasonal adjustment.

The seasonally adjusted decline in the all items index was caused by a sharp decrease in the gasoline index, which fell 7.5 percent in December. This decline more than offset increases in several indexes including shelter, food, and other energy components. The energy index fell 3.5 percent, as the gasoline and fuel oil indexes fell, but the indexes for natural gas and for electricity increased. The food index increased 0.4 percent in December.

The index for all items less food and energy increased 0.2 percent in December, the same increase as in October and November. Along with the index for shelter, the indexes for recreation, medical care, and household furnishings and operations all increased in December, while the indexes for airline fares, used cars and trucks, and motor vehicle insurance all declined.

The all items index increased 1.9 percent for the 12 months ending December; this was the first time the 12-month change has been under 2.0 percent since August 2017. The index for all items less food and energy rose 2.2 percent over the last 12 months, the same increase as for the 12 months ending November.
emphasis added

I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI. This was at the consensus forecast.

by Calculated Risk on 1/10/2019 07:33:00 PM

Friday:
• At 8:30 AM ET, The Consumer Price Index for November from the BLS. The consensus is for 0.1% decrease in CPI, and a 0.2% increase in core CPI.

by Calculated Risk on 1/10/2019 04:48:00 PM

Here a statement from the BLS: Does the partial government shutdown impact BLS data or release dates?

by Calculated Risk on 1/10/2019 01:02:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate declined to 0.76% in November, from 0.79% in October. The serious delinquency rate is down from 1.12% in November 2017.

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

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

This is the lowest serious delinquency rate for Fannie Mae since August 2007.

Freddie Mac reported that the Single-Family serious delinquency rate in November was 0.70%, down from 0.71% in October. Freddie's rate is down from 0.95% in November 2017.

Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

This is the lowest serious delinquency rate for Freddie Mac since December 2007.

Click on graph for larger image

For Fannie, by vintage, for loans made in 2004 or earlier (3% of portfolio), 2.62% are seriously delinquent. For loans made in 2005 through 2008 (5% of portfolio), 4.50% are seriously delinquent, For recent loans, originated in 2009 through 2018 (92% of portfolio), only 0.33% are seriously delinquent. So Fannie is still working through poor performing loans from the bubble years.

The increase late last year in the delinquency rate was due to the hurricanes - there were no worries about the overall market.

I expect the serious delinquency rate will probably decline to 0.5 to 0.7 percent or so to a cycle bottom.  But this is close.

by Calculated Risk on 1/10/2019 10:48:00 AM

Earlier I wrote: The Impact of the Government Shutdown on the January Employment Report

Here are some clarifications (based on further information from the BLS):

As I wrote before, if the government shutdown continues through this coming week, then the unemployment rate in the January report will be negatively impacted. This is a key week since it is the reference week for the BLS report (contains the 12th of the month). If the shutdown continues through next weekend, Federal employees who are on furlough will be counted as unemployed in the January report (CPS, Household survey).

If the government shutdown continues, then the unemployment rate will probably bump up to 4.0% or 4.1% in the January report.

As far as the headline jobs number from the CES (Establishment survey), the jobs were people who are working without pay will still be counted. For the furloughed employees, it is different. Since they are not being paid, the positions will not be counted - UNLESS - legislation is passed that provides for back pay.    If the legislation is passed, even after the reference week, the furloughed positions will be counted in the CES (headline jobs number). This is what has happened in previous shutdowns.

So, for the unemployment number, it depends on what happens this week.

For the headline jobs number, it depends on what legislation is eventually passed.