by Calculated Risk on 9/18/2020 11:39:00 AM

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 14.3% for 2020:Q3 and 5.3% for 2020:Q4. [Sept 18 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2020 is 32.0 percent on September 17, up from 31.7 percent on September 16. [Sept 17 estimate]

It is important to note that GDP is reported at a seasonally adjusted annual rate (SAAR).  A 30% annualized increase in Q3 GDP, is about 6.8% QoQ, and would leave real GDP down about 4.2% from Q4 2019.

The following graph illustrates this decline.

Click on graph for larger image.

This graph shows the percent decline in real GDP from the previous peak (currently the previous peak was in Q4 2019).

This graph is through Q2 2020, and real GDP is currently off 10.2% from the previous peak.  For comparison, at the depth of the Great Recession, real GDP was down 4.0% from the previous peak.

The black arrow shows what a 30% annualized increase in real GDP would look like in Q3.

Even with a 30% annualized increase (about 6.8% QoQ), real GDP will be down about 4.2% from Q4 2019; a larger decline in real GDP than at the depth of the Great Recession.

by Calculated Risk on 9/18/2020 10:14:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were lower in August in 41 states, higher in 2 states, and stable in 7 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. All 50 states and the District had jobless rate increases from a year earlier. The national unemployment rate fell by 1.8 percentage points over the month to 8.4 percent but was 4.7 points higher than in August 2019.
...
Nevada had the highest unemployment rate in August, 13.2 percent, followed by Rhode Island, 12.8 percent, and Hawaii and New York, 12.5 percent each. Nebraska had the lowest rate, 4.0 percent, followed by Utah, 4.1 percent, and Idaho, 4.2 percent.

by Calculated Risk on 9/18/2020 08:28:00 AM

Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.

This data is as of September 15th.

From Fourth Consecutive Week of Forbearance Improvement

Overall, the total number of mortgages in forbearance continued to improve this week, as the number of active plans declined another 26K (-0.7%). This marks the fourth consecutive week of improvement, and declining volumes for 10 of the past 12 weeks.

Click on graph for larger image.

As of September 15, just under 3.7M homeowners remain in COVID-19-related forbearance plans. That’s down more than 22% from the peak of over 4.7M in late May.

These loans represent 7% of the active mortgage universe, unchanged from last week. Together, they represent $781 billion in unpaid principal.

Active forbearances are now down 266K (-7%) over the past 30 days, as servicers continue to proactively assess the 1.7M forbearance plans still set to expire in September for extensions and removals.

Given the large number of plans in which September’s mortgage payment was the last payment covered under forbearance plan, we could see significant removal/extension activity over the next few weeks.
emphasis added

by Calculated Risk on 9/17/2020 06:44:00 PM

The US is now mostly reporting over 700,000 tests per day. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections, so the US still needs to increase the number of tests per day significantly (or take actions to push down the number of new infections).

There were 776,769 test results reported over the last 24 hours.

There were 43,558 positive tests.

Over 14,000 Americans have died from COVID so far in September. See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 5.9% (red line).  NOTE: The percent positive is a seven day average on the graph.

For the status of contact tracing by state, check out testandtrace.com.

And check out COVID Exit Strategy to see how each state is doing.

The second graph shows the 7 day average of positive tests reported.

The dashed line is the June low.

Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph). By June, the percent positive had dropped below 5%.

If people stay vigilant, the number of cases might drop to the June low by the end of September - although this seems unlikely now (that would still be a large number of new cases, but progress).

by Calculated Risk on 9/17/2020 02:54:00 PM

Note: Be careful with diffusion indexes. This shows a rebound off the bottom - some improvement from May to September - but doesn't show the level of activity.

Earlier from the Philly Fed: September 2020 Manufacturing Business Outlook Survey

Manufacturing activity in the region continued to expand this month, according to firms responding to the September Manufacturing Business Outlook Survey. The survey’s current indicators for general activity, new orders, and shipments remained positive for the fourth consecutive month. The employment index improved in September and remained in positive territory for the third consecutive month. Nearly all of the future indexes increased, suggesting more widespread optimism among firms about growth over the next six months.

The diffusion index for current activity fell 2 points to 15.0 in September, its fourth consecutive positive reading after reaching long-term lows in April and May… On balance, the firms reported increases in manufacturing employment for the third consecutive month: The current employment index increased 7 points to 15.7 this month.
emphasis added

This was close to the consensus forecast. 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 (blue, through September), and five Fed surveys are averaged (yellow, through August) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through August (right axis).

These early reports suggest the ISM manufacturing index will likely not change much from the August level.

by Calculated Risk on 9/17/2020 12:21:00 PM

The CAR reported: California housing market continues recovery as median home price breaks $700,000 mark, C.A.R. reports

California’s housing market continued to improve in August as home sales climbed to their highest level in more than a decade as the median home price broke last month’s record and hit another high, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 465,400 units in August, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2020 if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

August’s sales total climbed above the 400,000 level for the second straight month since the COVID-19 crisis depressed the housing market earlier this year, marking the first time since the summer of 2016 that sales increased from the previous month three months in a row. August sales rose 6.3 percent from 437,890 in July and were up 14.6 percent from a year ago, when 406,100 homes were sold on an annualized basis.
...
With fewer for-sale properties being added to the market, housing supply remained significantly below last year’s level. The 50.3 percent drop from a year ago was the biggest decline in active listings since at least January 2008. It was also the ninth consecutive month with active listings falling more than 25 percent from the prior year.
emphasis added

CR Note: Existing home sales are reported when the transaction closes, so this was mostly for contracts signed in June and July. Sales-to-date, through August, are down 6.8% compared to the same period in 2019.

by Calculated Risk on 9/17/2020 11:31:00 AM

Earlier: Housing Starts decreased to 1.416 Million Annual Rate in August

Total housing starts in August were below expectations, however starts in June and July were revised up, combined. The slight weakness in August was due to volatile multi-family sector.

Low mortgage rates and limited existing home inventory have given a boost to housing starts.

The housing starts report showed starts were down 5.1% in August compared to July, and starts were up 2.8% year-over-year compared to August 2019.

Single family starts were up 12.1% year-over-year.

The first graph shows the month to month comparison for total starts between 2019 (blue) and 2020 (red).

Click on graph for larger image.

Starts were up 2.8% in August compared to August 2019.

Last year, in 2019, starts picked up towards the end of the year, so the comparisons were easy in the first seven months of the year..

Starts, year-to-date, are up 5.2% compared to the same period in 2019. This is below my forecast for 2020, but I didn't expect a pandemic!

I expect starts to remain solid, but the growth rate will slow.

Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).

These graphs use a 12 month rolling total for NSA starts and completions.

The blue line is for multifamily starts and the red line is for multifamily completions.

The rolling 12 month total for starts (blue line) increased steadily for several years following the great recession - then mostly moved sideways.  Completions (red line) had lagged behind - then completions caught up with starts- although starts picked up a little again lately.

The last graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.

Note the relatively low level of single family starts and completions.  The "wide bottom" was what I was forecasting following the recession, and now I expect some further increases in single family starts and completions as the crisis abates.

by Calculated Risk on 9/17/2020 08:48:00 AM

The DOL reported:

In the week ending September 12, the advance figure for seasonally adjusted initial claims was 860,000, a decrease of 33,000 from the previous week's revised level. The previous week's level was revised up by 9,000 from 884,000 to 893,000. The 4-week moving average was 912,000, a decrease of 61,000 from the previous week's revised average. The previous week's average was revised up by 2,250 from 970,750 to 973,000.
emphasis added

The previous week was revised up.

This does not include the 658,737 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 868,314 the previous week. (There are some questions on PUA numbers).

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 912,000.

The previous week was revised up.

The second graph shows seasonally adjust continued claims since 1967 (lags initial by one week).

At the worst of the Great Recession, continued claims peaked at 6.635 million, but then steadily declined.

Continued claims decreased to 12,628,000 (SA) from 13,544,000 (SA) last week and will likely stay at a high level until the crisis abates.

Note: There are an additional 14,467,064 receiving Pandemic Unemployment Assistance (PUA) that decreased from 14,656,297 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.

by Calculated Risk on 9/17/2020 08:38:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,416,000. This is 5.1 percent below the revised July estimate of 1,492,000, but is 2.8 percent above the August 2019 rate of 1,377,000. Single-family housing starts in August were at a rate of 1,021,000; this is 4.1 percent above the revised July figure of 981,000. The August rate for units in buildings with five units or more was 375,000.

Building Permits:
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,470,000. This is 0.9 percent below the revised July rate of 1,483,000 and is 0.1 percent below the August 2019 rate of 1,471,000. Single-family authorizations in August were at a rate of 1,036,000; this is 6.0 percent above the revised July figure of 977,000. Authorizations of units in buildings with five units or more were at a rate of 381,000 in August.
emphasis added

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (red, 2+ units) were up downAugust compared to July.   Multi-family starts were down 15% year-over-year in August.

Single-family starts (blue) increased in August, and were up 12% year-over-year.

The second graph shows total and single unit starts since 1968.

The second graph shows the huge collapse following the housing bubble, and then eventual recovery (but still historically low).

Total housing starts in August were below expectations, however starts in June and July were revised up, combined.

I'll have more later …

by Calculated Risk on 9/16/2020 09:00:00 PM

Thursday:
• At 8:30 AM ET, Housing Starts for August. The consensus is for 1.470 million SAAR, down from 1.496 million SAAR.

• Also at 8:30 AM, The initial weekly unemployment claims report will be released. The early consensus is for a 900 thousand initial claims, up from 884 thousand the previous week.

• Also at 8:30 AM, the Philly Fed manufacturing survey for September. The consensus is for a reading of 15.5, down from 17.2.