by Calculated Risk on 1/27/2021 09:02:00 PM

On Thursday, from 12:00 - 1:00 (PST), UCI Professor Chris Schwarz returns for the third year to the Irvine Chamber Business Outlook event.

Chris' presentations are great. This is free. Register here

Thursday:
• At 8:30 AM ET, Gross Domestic Product, 4th quarter 2020 (Advance estimate). The consensus is that real GDP increased 4.3% annualized in Q4.

• At 8:30 AM, The initial weekly unemployment claims report will be released.  The consensus is for an decrease to 880 thousand from 900 thousand last week.

• At 10:00 AM, New Home Sales for December from the Census Bureau. The consensus is for 860 thousand SAAR, up from 841 thousand in November.

• At 11:00 AM, the Kansas City Fed manufacturing survey for January. This is the last of regional manufacturing surveys for January.

by Calculated Risk on 1/27/2021 07:39:00 PM

The reason I'm posting COVID data is this matters for the economy. From the FOMC statement today:

"The path of the economy will depend significantly on the course of the virus, including progress on vaccinations."

It appears the 7-day average cases has peaked. Stay safe! I'm looking forward to not posting this data soon.

Note: Bloomberg has great data on vaccinations.

"Vaccinations in the U.S. began Dec. 14 with health-care workers, and so far 25.6 million shots have been given, according to a state-by-state tally by Bloomberg and data from the Centers for Disease Control and Prevention. In the last week, an average of 1.21 million doses per day were administered."

Also check out the graphs at COVID-19 Vaccine Projections The site has several interactive graphs related to US COVID vaccinations including a breakdown of how many have had one shot, and how many have had both shots.

The US is now averaging close to 2 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 under 5% (probably close to 1%), so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1,627,862 test results reported over the last 24 hours.

There were 151,675 positive tests.

Almost 83,000 US deaths have been reported so far in January, surpassing December as the deadliest month. 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 9.3% (red line is 7 day average).  The percent positive is calculated by dividing positive results by total tests (including pending).

And check out COVID Act Now to see how each state is doing. (updated link to new site)

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

It seems likely cases and hospitalizations have peaked, but are declining from a very high level.   

by Calculated Risk on 1/27/2021 02:44:00 PM

Fed Chair Powell press conference video here starting at 2:30 PM ET.

FOMC Statement:

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The path of the economy will depend significantly on the course of the virus, including progress on vaccinations. The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee's maximum employment and price stability goals. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Raphael W. Bostic; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Mary C. Daly; Charles L. Evans; Randal K. Quarles; and Christopher J. Waller.

emphasis added

by Calculated Risk on 1/27/2021 12:24:00 PM

One of the metrics we'd like to follow is a ratio of house prices to incomes. Unfortunately most income data is released with a significantly lag, and there are always questions about which income data to use (the average total income is skewed by the income of a few people).

And for key measures of house prices - like Case-Shiller - we have indexes, not actually prices.

But we can construct a ratio of the house price indexes to some measure of income.

Last October I posted House Prices to National Average Wage Index.  Here is another measure - house prices to the Median Household income.

This graph uses the year end Case-Shiller house price index - and the nominal median household income through 2019 (from the Census Bureau).  2020 median income is estimated at a 5% gain.

Click on graph for larger image.

This graph shows the ratio of house price indexes divided by the Median Household Income through 2020 (the HPI is first multiplied by 1000).

This uses the year end National Case-Shiller index since 1976 (December 2020 estimated).

House price appear elevated, but still well below the levels of the housing bubble.   

by Calculated Risk on 1/27/2021 09:48:00 AM

The Department of Transportation (DOT) reported:

Travel on all roads and streets changed by -11.1% (-28.9 billion vehicle miles) for November 2020 as compared with November 2019. Travel for the month is estimated to be 231.6 billion vehicle miles.

The seasonally adjusted vehicle miles traveled for November 2020 is 244.8 billion miles, a -10.3% (-28.2 billion vehicle miles) decline from November 2019. It also represents -0.7% decline (-1.6 billion vehicle miles) compared with October 2020.

Cumulative Travel for 2020 changed by -13.7% (-410.0 billion vehicle miles). The cumulative estimate for the year is 2,583.1 billion vehicle miles of travel.
emphasis added

Click on graph for larger image.

This graph shows the rolling 12 month total vehicle miles driven to remove the seasonal factors.

Miles driven declined during the great recession, and the rolling 12 months stayed below the previous peak for a record 85 months.

Miles driven declined sharply in March, and really collapsed in April.   

This graph shows the YoY change in vehicle miles driven.

Miles driven have rebounded, but are still down 10.3% YoY (seasonally adjusted).  

by Calculated Risk on 1/27/2021 07:00:00 AM

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

Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 22, 2021.

... The Refinance Index decreased 5 percent from the previous week and was 83 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 16 percent higher than the same week one year ago.

“Mortgage rates were mixed last week, with the 30-year fixed rate rising to its highest level since November 2020 at 2.95 percent, and all other rates in the survey posting a decline. In a sign that borrowers are increasingly more sensitive to higher rates, large declines in government purchase applications and refinance applications pulled overall activity lower. The refinance index has now declined for two straight weeks, but is still 83 percent higher than last year,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications also decreased last week, but the impressive trend of year-over-year growth since the second half of 2020 has continued in early 2021. Activity was up 16 percent from a year ago, and the average purchase loan amount hit another record high of $395,200. Since hitting a recent low in April 2020, the average purchase loan amount has steadily risen – in line with the accelerating home-price appreciation occurring in most of the country because of strong demand and extremely low inventory levels.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.95 percent from 2.92 percent, with points decreasing to 0.32 from 0.37 (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 since 1990.

The refinance index has been volatile recently depending on rates.

With near record low rates, the index remains up significantly from last year.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 16% year-over-year unadjusted.

Note: Red is a four-week average (blue is weekly).

by Calculated Risk on 1/26/2021 09:11:00 PM

On Thursday, from 12:00 - 1:00 (PST), UCI Professor Chris Schwarz returns for the third year to the Irvine Chamber Business Outlook event.

Chris' presentations are great. This is free. Register here

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

• At 8:30 AM, Durable Goods Orders for December. The consensus is for a 0.9% increase in durable goods.

• At 2:00 PM, FOMC Meeting Announcement. No change to policy is expected at this meeting.

• At 2:30 PM, Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

by Calculated Risk on 1/26/2021 07:52:00 PM

Note: Bloomberg has great data on vaccinations.

"Vaccinations in the U.S. began Dec. 14 with health-care workers, and so far 23.5 million shots have been given, according to a state-by-state tally by Bloomberg and data from the Centers for Disease Control and Prevention. In the last week, an average of 1.25 million doses per day were administered."

Also check out the graphs at COVID-19 Vaccine Projections The site has several interactive graphs related to US COVID vaccinations including a breakdown of how many have had one shot, and how many have had both shots.

It is possible the 7-day average cases has peaked. Stay safe! I'm looking forward to not posting this data in a few months. 

The US is now averaging close to 2 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 under 5% (probably close to 1%), so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1.7 million test results reported over the last 24 hours.

There were 144 thousand positive tests.

Almost 79,000 US deaths have been reported so far in January surpassing December as the deadliest month. 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 8.4% (red line is 7 day average).  The percent positive is calculated by dividing positive results by total tests (including pending).

And check out COVID Act Now to see how each state is doing. (updated link to new site)

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

It is possible cases and hospitalizations have peaked, but are declining from a very high level.   

by Calculated Risk on 1/26/2021 04:18:00 PM

The Case-Shiller house price indexes for November were released today. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close.

From Matthew Speakman at Zillow: November Case-Shiller Results & December Forecast: Gathering Speed

Growth in home prices continued to climb in November, gathering speed before the end of the year and setting the stage for a full out sprint in 2021.
...
Buoyed by record-low mortgage rates, which continued to plumb new depths back in November, a wave of eager would-be homebuyers poured into the market, further stoking the competition for homes that has been red-hot since the late spring. Homes flew off the market as a result and prices shot upward at their fastest pace in years. Even as the pandemic accelerated its rapid spread across the country, this fervent market competition has shown few, if any, signs of cooling and is unlikely in the near future. Combined, annual growth in home prices should continue its sharp upward trajectory in the months to come.

Monthly growth in December as reported by Case-Shiller is expected to slow slightly from [November] in all three main indices, while annual growth is expected to accelerate across the board. S&P Dow Jones Indices is expected to release data for the December S&P CoreLogic Case-Shiller Indices on Tuesday, February 23.
emphasis added

The Zillow forecast is for the year-over-year change for the Case-Shiller National index to be at 10.3% in December, up from 9.5% in November.

The Zillow forecast is for the 20-City index to be up 9.8% YoY in December from 8.9% in November, and for the 10-City index to increase to be up 9.5% YoY compared to 8.4% YoY in November.

by Calculated Risk on 1/26/2021 02:41:00 PM

From the BLS: Regional and State Employment and Unemployment Summary

Unemployment rates were lower in December in 19 states, higher in 12 states and the District of Columbia, and stable in 19 states, the U.S. Bureau of Labor Statistics reported today. Forty-five states and the District had jobless rate increases from a year earlier, one state had a decrease, and four states had little or no change. The national unemployment rate, 6.7 percent, was unchanged over the month but was 3.1 percentage points higher than in December 2019.

In December 2020, nonfarm payroll employment increased in 15 states, decreased in 11 states, and was essentially unchanged in 24 states and the District of Columbia. Over the year, nonfarm payroll employment decreased in 48 states and the District and was essentially unchanged in 2 states.
...
Hawaii and Nevada had the highest unemployment rates in December, 9.3 percent and 9.2 percent, respectively. Nebraska and South Dakota had the lowest rates, 3.0 percent each.

Hawaii and Nevada are being impacted by the lack of tourism.