by Calculated Risk on 11/27/2020 08:57:00 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 November 23rd.

From Black Knight: Forbearances Numbers See Another Slight Uptick

Our weekly snapshot of daily forbearance tracking data showed another slight uptick in active forbearance plans through Monday, November 23. It’s worth noting that this week’s data represents a slightly truncated view – normally, we report forbearance numbers through the Tuesday of any given week.

After rising by some 30,000 last week, active forbearances were up another 27,000 from last Tuesday.

We should keep in mind that mild increases like this have been common in the middle of the month. Since the recovery started, the strongest declines have typically been seen early in the month, as expiring forbearance plans are removed. The performance of the last two weeks has continued this trend.
...
Click on graph for larger image.

Despite this week’s increase, the number of active forbearances remains down 7% (-207,00) from last month, roughly equivalent to the declines we’d seen in August and September.

In total, as of November 23, there are now 2.78 million homeowners in active forbearance plans. Together, representing approximately 5.3% of all active mortgages – up from 5.2% from last week – they account for approximately $564 billion in unpaid principal.
emphasis added

by Calculated Risk on 11/26/2020 07:09:00 PM

Note: The data will show a decline over the holiday weekend due to less reporting. Stay Safe!!!

The US is now averaging over 1 million tests per day. Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to be well under 5% (probably close to 1%), 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 971,302 test results reported over the last 24 hours.

There were 125,082 positive tests.

Over 32,000 US deaths have been reported so far in November. 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 12.9% (red line is 7 day average).  The percent positive is calculated by dividing positive results by the sum of negative and positive results (I don't include pending).

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 and daily hospitalizations.

The dashed line is the previous hospitalization maximum.

Note that there were very few tests available in March and April, and many cases were missed, so the hospitalizations was higher relative to the 7-day average of positive tests in July.

• Record Hospitalizations.

by Calculated Risk on 11/26/2020 11:02:00 AM

First, thanks to all the healthcare workers and first responders that have been on the front lines saving lives. And to the essential workers that have kept the economy going. Thank you!

Even with these difficult times, here are five economic reasons to be thankful this Thanksgiving. (Hat Tip to Neil Irwin who started doing this several years ago)

1) Household Debt Burdens are at Record Lows.

Household debt burdens have declined sharply.

The Household debt service ratio (red) was at 13.2% in 2007, and has fallen to a series low of 8.69% in Q2 2020 (most recent data).

Click on graph for larger image.

This graph, based on data from the Federal Reserve, shows the Total Debt Service Ratio (DSR), and the DSR for mortgages (blue) and consumer debt (yellow).

The consumer Debt Service Ratio (yellow) decreased in Q2 2020, and is near a series low.  Note: The financial obligation ratio (FOR) declined in Q2 and is at a series low (not shown).

The DSR for mortgages (blue) is also at a series low (since at least 1980).  This ratio increased rapidly during the housing bubble, and continued to increase until 2007.

With low interest rates, and a high savings rate, this data suggests aggregate household cash flow has improved.

2) New Home sales are at a Cycle High.

This graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

New home sales were at 999 thousand SAAR (Seasonally Adjusted Annual Rate) in October, and 1.002 million SAAR in September (highest sales rate since 2006).

Sales are up almost four-fold from the cycle low of 270 thousand SAAR in February 2011.

Housing has been a strong sector during the pandemic, including new home sales, existing home sales and housing starts.

3) A Falling Unemployment Rate.

The unemployment rate was at 6.9% in October. The unemployment rate is down from 14.7% in April 2020 (the highest since the Great Depression).

Unfortunately the unemployment rate significantly understates the current situation. Not only are 11 million people unemployed, another 3.7 million have left the labor force since February. And there are 2.3 million additional involuntary part time workers than a year ago

Still, this is significant improvement since April.

4) Falling unemployment claims.

This graph shows seasonally adjust continued claims since 1967.

Continued claims decreased to 6.038 million (SA) last week, down from a peak of almost 25 million in May 2020.

This is a huge decline in regular unemployment claims.

Note: There are an additional 9,147,753 receiving Pandemic Unemployment Assistance (PUA) that increased from 8,681,647 the previous week. This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.

An additional 4,509,284 are receiving Pandemic Emergency Unemployment Compensation (PEUC) that increased from 4,376,847 the previous week. These last two programs are set to expire on December 26th - so there is more disaster relief needed soon.

5) Science!

And finally, thanks to all the infectious disease experts and epidemiologists that have provided guidance on how to mitigate the risks of COVID (washing hands, wearing masks, social distancing, etc).

And thanks to the volunteers at the COVID Tracking Project. Data is essential in understanding what is happening. See: Data Heroes of Covid Tracking Project Are Still Filling U.S. Government Void

And thanks to the scientists developing therapeutics and vaccines.   There is now a light at the end of the tunnel.  Thank you.

A Happy and Safe Thanksgiving to All!

by Calculated Risk on 11/25/2020 07:33:00 PM

Note: Week-over-week case growth has slowed, and will probably show a decline over the holiday weekend. However, it is likely that cases will pickup again the following week. Stay Safe!!!

The US is now averaging over 1 million tests per day. Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to be well under 5% (probably close to 1%), 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 1,329,565 test results reported over the last 24 hours.

There were 182,537 positive tests.

Almost 31,000 US deaths have been reported so far in November. 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 13.7% (red line is 7 day average).  The percent positive is calculated by dividing positive results by the sum of negative and positive results (I don't include pending).

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 and daily hospitalizations.

The dashed line is the previous hospitalization maximum.

Note that there were very few tests available in March and April, and many cases were missed, so the hospitalizations was higher relative to the 7-day average of positive tests in July.

• 7-day average cases are at a new record.

• 7-day average deaths at highest level since May.

• Record Hospitalizations.

by Calculated Risk on 11/25/2020 02:05:00 PM

From the Fed: Minutes of the Federal Open Market Committee, November 4-5, 2020. A few excerpts:

Participants continued to see the uncertainty surrounding the economic outlook as quite elevated, with the path of the economy highly dependent on the course of the virus; on how individuals, businesses, and public officials responded to it; and on the effectiveness of public health measures to address it. Participants cited several downside risks that could threaten the recovery. While another broad economic shutdown was seen as unlikely, participants remained concerned about the possibility of a further resurgence of the virus that could undermine the recovery. The majority of participants also saw the risk that current and expected fiscal support for households, businesses, and state and local governments might not be sufficient to sustain activity levels in those sectors, while a few participants noted that additional fiscal stimulus that was larger than anticipated could be an upside risk. Some participants commented that the recent surge in virus cases in Europe and the reimposition of restrictions there could lead to a slowdown in economic activity in the euro area and have negative spillover effects on the U.S. recovery. Some participants raised concerns regarding the longer-run effects of the pandemic, including sectoral restructurings that could slow employment growth or an acceleration of technological disruptions that could be limiting the pricing power of some firms.
emphasis added

by Calculated Risk on 11/25/2020 01:14:00 PM

New home sales for October were reported at 999,000 on a seasonally adjusted annual rate basis (SAAR). Sales for the previous three months were revised up.

This was above consensus expectations of 975,000, and was the third highest sales rate since 2006 (behind August and September - that were both revised up). Clearly low mortgages rates, low existing home supply, and low sales in March and April (due to the pandemic) have led to a strong increase in sales.  Favorable demographics (something I wrote about many times over the last decade) and a surging stock market have probably helped new home sales too.

Earlier: New Home Sales at 999,000 Annual Rate in October.

Click on graph for larger image.

This graph shows new home sales for 2019 and 2020 by month (Seasonally Adjusted Annual Rate).

New home sales were up 41.5% year-over-year (YoY) in October.   Year-to-date (YTD) sales are up 20.6% (This is even above my optimistic forecast for 2020!).

And on inventory: since new home sales are reported when the contract is signed - even if the home hasn't been started - new home sales are not limited by inventory (except if no lots are available).  Inventory for new home sales is important in that it means there will be more housing starts if inventory is low (like right now) - and fewer starts if inventory is too high (not now).

by Calculated Risk on 11/25/2020 10:24:00 AM

The BEA released the Personal Income and Outlays report for October:

Personal income decreased $130.1 billion (0.7 percent) in October according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $134.8 billion (0.8 percent) and personal consumption expenditures (PCE) increased $70.9 billion (0.5 percent).

Real DPI decreased 0.8 percent in October and Real PCE increased 0.5 percent. The PCE price index was unchanged from September. The PCE price index excluding food and energy was also unchanged.
emphasis added

The October PCE price index increased 1.2 percent year-over-year and the October PCE price index, excluding food and energy, increased 1.4 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through October 2020 (2012 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was much lower than expected,  and the increase in PCE was above expectations.

Note the red line for Q3 (the quarterly level of PCE).   This was 3.3% below the Q4 2019 level for PCE.

Also note: If real PCE in November and December are just at the same level as in October, PCE will increase at a 6% annual rate in Q4.   

by Calculated Risk on 11/25/2020 10:12:00 AM

The Census Bureau reports New Home Sales in October were at a seasonally adjusted annual rate (SAAR) of 999 thousand.

The previous three months were revised up.

Sales of new single-family houses in October 2020 were at a seasonally adjusted annual rate of 999,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.3 percent below the revised September rate of 1,002,000, but is 41.5 percent above the October 2019 estimate of 706,000.
emphasis added

Click on graph for larger image.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

This is the third highest sales rate since 2006 (just below the last two months).

The second graph shows New Home Months of Supply.

The months of supply was unchanged in October at 3.3 months from 3.3 months in September.

The all time record high was 12.1 months of supply in January 2009. The all time record low is 3.3 months in September and October 2020.

This is below the normal range (about 4 to 6 months supply is normal).

"The seasonally-adjusted estimate of new houses for sale at the end of September was 284,000. This represents a supply of 3.6 months at the current sales rate."

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

The third graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale is low, and the combined total of completed and under construction is lower than normal.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In October 2020 (red column), 80 thousand new homes were sold (NSA). Last year, 55 thousand homes were sold in October.

The all time high for October was 105 thousand in 2005, and the all time low for October was 23 thousand in 2010.

This was slightly above expectations and sales in the three previous months were revised up. I'll have more later today.

by Calculated Risk on 11/25/2020 08:44:00 AM

From the BEA: Gross Domestic Product, Third Quarter 2020 (Second Estimate); Corporate Profits, Third Quarter 2020 (Preliminary Estimate)

Real gross domestic product (GDP) increased at an annual rate of 33.1 percent in the third quarter of 2020, according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 31.4 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month that also showed an increase in real GDP of 33.1 percent. With the second estimate, upward revisions to nonresidential fixed investment, residential investment, and exports were offset by downward revisions to state and local government spending, private inventory investment, and personal consumption expenditures (PCE). Imports, which are a subtraction in the calculation of GDP, were revised up
emphasis added

Here is a Comparison of Second and Advance Estimates. PCE growth was revised down slightly to 40.6% from 40.7%. Residential investment was revised up from 59.3% to 62.3%. This was at the consensus forecast.

by Calculated Risk on 11/25/2020 08:38:00 AM

The DOL reported:

In the week ending November 21, the advance figure for seasonally adjusted initial claims was 778,000, an increase of 30,000 from the previous week's revised level. The previous week's level was revised up by 6,000 from 742,000 to 748,000. The 4-week moving average was 748,500, an increase of 5,000 from the previous week's revised average. The previous week's average was revised up by 1,500 from 742,000 to 743,500.
emphasis added

This does not include the 311,675 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 319,694 the previous week.

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 increased to 748,500.

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 6,037,690 (SA) from 6,452,002 (SA) last week and will likely stay at a high level until the crisis abates.

Note: There are an additional 9,147,753 receiving Pandemic Unemployment Assistance (PUA) that increased from 8,681,647 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. 

An additional 4,509,284 are receiving Pandemic Emergency Unemployment Compensation (PEUC) that increased from 4,376,847 the previous week. These last two programs are set to expire on December 26th.

This was worse than expected.