Thursday, February 18, 2021

LA Area Port Traffic: Strong Imports, Weak Exports in January

by Calculated Risk on 2/18/2021 02:12:00 PM

Note1: Import traffic is so heavy - ships are backed up waiting to unload in LA. "some vessels are spending almost as much time at anchor as it takes to traverse the Pacific Ocean."

Note2: The expansion to the Panama Canal was completed in 2016 (As I noted a few years ago), and some of the traffic that used the ports of Los Angeles and Long Beach is probably going through the canal. This might be impacting TEUs on the West Coast.

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

LA Area Port TrafficClick on graph for larger image.

On a rolling 12 month basis, inbound traffic was up 0.9% in January compared to the rolling 12 months ending in December.   Outbound traffic was down 0.7% compared to the rolling 12 months ending the previous month.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

LA Area Port TrafficUsually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year.

Imports were up 11% YoY in December, and exports were down 8% YoY.

Hotels: Occupancy Rate Declined 29.0% Year-over-year

by Calculated Risk on 2/18/2021 11:53:00 AM

U.S. hotel occupancy increased more than 4 percentage points from the previous week, according to STR‘s latest data through Feb. 13.

Feb. 7-13, 2021 (percentage change from comparable week in 2020):

Occupancy: 45.1% (-29.0%)
• Average daily rate (ADR): US$99.21 (-25.7%)
• Revenue per available room (RevPAR): US$44.72 (-47.2%)

Boosted by Valentine’s Day and the long weekend with Presidents Day, U.S. weekend occupancy (Friday/Saturday) came in at 58.5%, which was the highest level in the metric since mid-October. Elevated occupancy during the weekend of Presidents Day occurred during previous recessions as well.
emphasis added
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Hotel Occupancy RateClick on graph for larger image.

The red line is for 2021, black is 2020, blue is the median, and dashed light blue is for 2009 (the worst year since the Great Depression for hotels prior to 2020).

Even when occupancy increases to 2009 levels, hotels will still be hurting.

Seasonally we'd expect that business travel would start to pick up in the new year, but there will probably not be much pickup early in 2021.

Note: Y-axis doesn't start at zero to better show the seasonal change.

Comments on January Housing Starts

by Calculated Risk on 2/18/2021 09:59:00 AM

Earlier: Housing Starts decreased to 1.580 Million Annual Rate in January

Total housing starts in January were below expectations, and starts in November and December were revised down, combined. Single family starts decreased in January, but were still up sharply year-over-year - and excluding the last three months - were at the highest level since 2007. 

However, the volatile multi-family sector is down significantly year-over-year (apartments are under  pressure from COVID).

The housing starts report showed starts were down 6.0% in January compared to December, and starts were down 2.3% year-over-year compared to January 2020.

Single family starts were up 17% year-over-year.  Low mortgage rates and limited existing home inventory have given a boost to single family housing starts.

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

Starts Housing 2019 and 2020Click on graph for larger image.

Starts were down 2.3% in January compared to January 2020.

A key point: Housing starts averaged 1.590 million SAAR in the three months prior to the pandemic. That is about the same as January 2021 (although the mix changed to more single family). 2020 was off to a strong start before the pandemic, and with low interest rates and little competing existing home inventory, starts finished the year strong.

The year-over-year comparison will be difficult again in February - and then the comparisons will be easy in March, April and May.  

Last month I noted "Don't be surprised if starts are down year-over-year sometime over the next two months."   This small year-over-year decline in total starts was not a surprise.

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.

Multifamily Starts and completionsThe 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- then starts picked up a little again late last year, but have fallen off with the pandemic.

Single family Starts and completionsThe 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.

Single family starts are getting back to more normal levels, but I still expect some further increases in single family starts and completions on a rolling 12 month basis.

Housing Starts decreased to 1.580 Million Annual Rate in January

by Calculated Risk on 2/18/2021 08:49:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in January were at a seasonally adjusted annual rate of 1,580,000. This is 6.0 percent below the revised December estimate of 1,680,000 and is 2.3 percent below the January 2020 rate of 1,617,000. Single-family housing starts in January were at a rate of 1,162,000; this is 12.2 percent below the revised December figure of 1,323,000. The January rate for units in buildings with five units or more was 402,000.

Building Permits:
Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,881,000. This is 10.4 percent above the revised December rate of 1,704,000 and is 22.5 percent above the January 2020 rate of 1,536,000. Single-family authorizations in January were at a rate of 1,269,000; this is 3.8 percent above the revised December figure of 1,223,000. Authorizations of units in buildings with five units or more were at a rate of 557,000 in January.
emphasis added
Total Housing Starts and Single Family Housing StartsClick 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) increased in January compared to December.   Multi-family starts were down 33% year-over-year in January.

Single-family starts (blue) decreased in January, and were up 17% year-over-year.   

Total Housing Starts and Single Family Housing StartsThe 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 January were well below expectations, and starts in November and December were revised down, combined.

I'll have more later …

Weekly Initial Unemployment Claims increased to 861,000

by Calculated Risk on 2/18/2021 08:38:00 AM

The DOL reported:

In the week ending February 13, the advance figure for seasonally adjusted initial claims was 861,000, an increase of 13,000 from the previous week's revised level. The previous week's level was revised up by 55,000 from 793,000 to 848,000. The 4-week moving average was 833,250, a decrease of 3,500 from the previous week's revised average. The previous week's average was revised up by 13,750 from 823,000 to 836,750.
emphasis added
This does not include the 516,299 initial claims for Pandemic Unemployment Assistance (PUA) that was up from 341,872 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 decreased to 833,250.

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.

Regular state continued claims decreased to 4,494,000 (SA) from 4,558,000 (SA) the previous week and will likely stay at a high level until the crisis abates.

Note: There are an additional 7,685,389 receiving Pandemic Unemployment Assistance (PUA) that decreased from 7,943,448 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.  And an additional 4,061,305 receiving Pandemic Emergency Unemployment Compensation (PEUC) down from 4,779,341.

Weekly claims were much higher than the consensus forecast, and the previous week was revised up sharply.

Wednesday, February 17, 2021

Phoenix Real Estate in January: Sales Up 11.8% YoY, Active Inventory Down 58% YoY

by Calculated Risk on 2/17/2021 09:20:00 PM

The Arizona Regional Multiple Listing Service (ARMLS) reports ("Stats Report"):

1) Overall sales were at 7,066 in January, up 11.8% from 6,328 in January 2020.

2) Active inventory was at 4,867, down 58% from 11,602 in January 2020.

3) Months of supply decreased to 1.34 in January from 2.54 in January 2020. This is very low.

Sales are reported at the close of escrow, so these sales were mostly signed in November and December.

Thursday: Housing Starts, Unemployment Claims, Philly Fed Mfg

by Calculated Risk on 2/17/2021 09:12:00 PM

• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for a decrease to 780 thousand from 793 thousand last week.

• Also at 8:30 AM, Housing Starts for January. The consensus is for 1.655 million SAAR, down from 1.669 million SAAR.

• Also at 8:30 AM, the Philly Fed manufacturing survey for February. The consensus is for a reading of 19.8, down from 26.5.

February 17 COVID-19 Test Results and Vaccinations

by Calculated Risk on 2/17/2021 07:18:00 PM

SPECIAL NOTE: The Covid Tracking Project will end daily updates on March 7th. Heroes that filled a critical void! Quality government data will likely be available soon.

From Bloomberg on vaccinations as of Feb 16th.

"In the U.S., more Americans have now received at least one dose than have tested positive for the virus since the pandemic began. So far, 56.1 million doses have been given, according to a state-by-state tally. In the last week, an average of 1.67 million doses per day were administered."
Here is the CDC COVID Data Tracker. This site has data on vaccinations, cases and more.

The US is averaged 1.5 million tests per day over the last week. 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 has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1,338,441 test results reported over the last 24 hours.

There were 66,089 positive tests.

Almost 48,000 US deaths have been reported in February. See the graph on US Daily Deaths here.

This data is from the COVID Tracking Project.

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

COVID-19 Positive Tests per DayClick on graph for larger image.

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

The dashed line is the previous peak for hospitalizations (almost back to the summer peak level).

The percent positive over the last 7 days was 5.2%.  The percent positive is calculated by dividing positive results by total tests (including pending).

Both cases and hospitalizations have peaked, but are still above the previous peaks.  

Lawler: Early Read on Existing Home Sales in January

by Calculated Risk on 2/17/2021 04:29:00 PM

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 6.48 million in January, down 4.1% from December’s preliminary pace and up 19.6% from last January’s seasonally adjusted pace. Unadjusted sales should show a smaller YOY gain, reflecting this January’s lower business day count relative to last January’s.

Local realtor reports, as well as reports from national inventory trackers, suggest that the YOY decline in the inventory of existing homes for sale was larger in January than in December, though what that means for the NAR inventory estimate is unclear. As I’ve noted before, the inventory measure in most publicly-released local realtor/MLS reports excludes listings with pending contracts, but that is not the case for many of the reports sent to the NAR (referred to as the “NAR Report!”), Since the middle of last Spring inventory measures excluding pending listings have fallen much more sharply than inventory measures including such listings, and this latter inventory measure understates the decline in the effective inventory of homes for sale over the last several months.

Finally, local realtor/MLS reports suggest the median existing single-family home sales price last month was up by about 13.7% from last January.

(Note that this month’s EHS report will include benchmark seasonal adjustment revisions.)

CR Note: The National Association of Realtors (NAR) is scheduled to release January existing home sales on Friday, February 19, 2021 at 10:00 AM ET. The consensus is for 6.60 million SAAR.

NY Fed Q4 Report: "Total Household Debt Increased in Q4 2020, Newly Originated Mortgages Reach Record High"

by Calculated Risk on 2/17/2021 11:19:00 AM

From the NY Fed: Total Household Debt Increased in Q4 2020, Newly Originated Mortgages Reach Record High

The Federal Reserve Bank of New York's Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The report shows that total household debt increased by $206 billion (1.4%) to $14.56 trillion in the fourth quarter of 2020, driven in part by a steep increase in mortgage originations. The total debt balance is now $414 billion higher than the year prior.
Mortgage balances—the largest component of household debt—surpassed $10 trillion in the fourth quarter, increasing by $182 billion to $10.04 trillion at the end of December. While credit card balances increased by $12 billion over the quarter, they were $108 billion lower than they had been at the end of 2019, the largest year over year decline since the series began in 1999. This overall decline is consistent with continued weakness in consumer spending and revolving balance paydowns by card holders.

Auto and student loan balances increased by $14 billion and $9 billion, respectively. In total, non-housing balances (including credit card, auto loan, student loan, and other debts) increased by $37 billion during the fourth quarter but remained below end-2019 levels.

Newly originated mortgages reached a record high and auto loan originations reached their second highest quarterly volume since 2000. Mortgage originations, which include refinances, were at $1.2 trillion, surpassing in nominal terms the volumes seen during the historic refinance boom in 2003Q3. Auto loan originations, which includes both loans and leases, were down slightly from the record high seen in the third quarter but were at the second highest level for the series, at $162 billion.
emphasis added
Total Household Debt Click on graph for larger image.

Here are two graphs from the report:

The first graph shows aggregate consumer debt increased in Q4.  Household debt previously peaked in 2008, and bottomed in Q3 2013.

From the NY Fed:
Aggregate household debt balances increased by $206 billion in the fourth quarter of 2020, a 1.4% rise from 2020Q3, and now stand at $14.56 trillion. Balances are $414 billion higher than at the end of 2019.
Delinquency Status The second graph shows the percent of debt in delinquency.

The overall delinquency rate decreased in Q4.  From the NY Fed:
Aggregate delinquency rates have continued to decline in the fourth quarter and continuing what was seen in the second and third, reflecting an uptake in forbearances (provided by both the CARES Act and voluntarily offered by lenders), which protect borrowers’ credit records from the reporting of skipped or deferred payments. As of late December, 3.2% of outstanding debt was in some stage of delinquency, a 0.2 percentage point decrease from the third quarter, and 1.6 percentage points lower than the rate observed in the fourth quarter of 2019 and before the Covid pandemic hit the United States. Of the $462 billion of debt that is delinquent, $349 billion is seriously delinquent (at least 90 days late or “severely derogatory”, which includes some debts that have been removed from lenders’ books but upon which they continue to attempt collection).

The uptake in forbearances continues to be visible in the delinquency transition rates for mortgages. The share of mortgages that transitioned to early delinquency ticked down to a low 0.4%, as the option to enter forbearance remained. Meanwhile, 54% of loans in early delinquency transitioned to current. Foreclosures remain on pause for most loans due to the CARES-provisioned moratorium, and the fourth quarter saw only 14,000 new foreclosure starts.
There is much more in the report.