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Thursday, October 14, 2021

House Prices to National Average Wage Index

by Calculated Risk on 10/14/2021 01:07:00 PM

Today, in the Newsletter: House Prices to National Average Wage Index


This graph shows the ratio of house price indexes divided by the National Average Wage Index (the Wage index for 2020 was released yesterday). This uses the annual average National Case-Shiller index since 1976 (and an estimate for 2021). ...

As of 2021, house prices were well above the median historical ratio - and not far below the bubble peak. 
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Hotels: Occupancy Rate Down 9.6% Compared to Same Week in 2019

by Calculated Risk on 10/14/2021 10:40:00 AM

Note: Since occupancy declined sharply at the onset of the pandemic, CoStar is comparing to 2019.

Lifted by the long Columbus Day weekend, U.S. hotel performance rose to a level similar to late summer, according to STR‘s latest data through October 9.

October 3-9, 2021 (percentage change from comparable week in 2019*):

Occupancy: 63.9% (-9.6%)
• Average daily rate (ADR): US$134.63 (+2.4%)
• Revenue per available room (RevPAR): US$86.02 (-7.4%)

*Due to the steep, pandemic-driven performance declines of 2020, STR is measuring recovery against comparable time periods from 2019.
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, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

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

The Summer months had decent occupancy with solid leisure travel, and occupancy was only off about 7% in July and August compared to 2019.

Usually weekly occupancy increases to around 70% in the weeks following Labor Day due to renewed business travel.   However, this year, so far, business travel has been lighter than leisure travel in 2021.

Weekly Initial Unemployment Claims Decrease to 293,000

by Calculated Risk on 10/14/2021 08:36:00 AM

The DOL reported:

In the week ending October 9, the advance figure for seasonally adjusted initial claims was 293,000, a decrease of 36,000 from the previous week's revised level. This is the lowest level for initial claims since March 14, 2020 when it was 256,000. The previous week's level was revised up by 3,000 from 326,000 to 329,000. The 4-week moving average was 334,250, a decrease of 10,500 from the previous week's revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week's average was revised up by 750 from 344,000 to 344,750.
emphasis added
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 334,250.

The previous week was revised up.

Regular state continued claims decreased to 2,593,000 (SA) from 2,727,000 (SA) the previous week.

Weekly claims were lower than the consensus forecast.

Wednesday, October 13, 2021

Thursday: Unemployment Claims, PPI

by Calculated Risk on 10/13/2021 08:14:00 PM

• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 315 thousand initial claims, down from 326 thousand last week.

• Also at 8:30 AM, The Producer Price Index for September from the BLS. The consensus is for a 0.6% increase in PPI, and a 0.5% increase in core PPI.

October 13th COVID-19: Progress

by Calculated Risk on 10/13/2021 05:09:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 404,371,247, as of a week ago 398,675,414, or 0.81 million doses per day.

COVID Metrics
Percent fully Vaccinated56.6%56.1%≥70.0%1
Fully Vaccinated (millions)187.9186.4≥2321
New Cases per Day386,18197,773≤5,0002
Deaths per Day31,2521,452≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%).
2my goals to stop daily posts,
37 day average for Cases, Currently Hospitalized, and Deaths
🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths
✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  

KUDOS to the residents of Vermont that have achieved 70% of total population fully vaccinated: Vermont at 70.3%.

KUDOS also to the residents of the 14 states and D.C. that have achieved 60% of total population fully vaccinated: Connecticut at 69.6%, Maine, Rhode Island, Massachusetts, New Jersey, Maryland, New York, New Mexico, New Hampshire, Washington, Oregon, Virginia, District of Columbia,  Colorado, and California at 60.0%.

The following 20 states have between 50% and 59.9% fully vaccinated: Minnesota at 58.9%, Pennsylvania, Hawaii, Delaware, Florida, Wisconsin, Nebraska, Iowa, Illinois, Michigan, Kentucky, South Dakota, Texas, Arizona, Kansas, Nevada, Alaska, Utah, North Carolina and Ohio at 51.0%.

Next up (total population, fully vaccinated according to CDC) are Montana at 49.3%, Indiana at 49.1%, Missouri at 48.7%, Oklahoma at 48.6% and South Carolina at 48.5%.

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

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

FOMC Minutes: "the process of tapering could commence ... in either mid-November or mid-December"

by Calculated Risk on 10/13/2021 02:05:00 PM

From the Fed: FOMC Minutes, Minutes of the Federal Open Market Committee, September 21–22, 2021. Excerpt on asset purchases:

A number of participants assessed that the standard of substantial further progress toward the goal of maximum employment had not yet been attained but that, if the economy proceeded roughly as they anticipated, it may soon be reached. On the basis of the cumulative performance of the labor market since December 2020, a number of other participants indicated that they believed that the test of "substantial further progress" toward maximum employment had been met. Some of these participants also suggested that labor supply constraints were the main impediments to further improvement in labor market conditions rather than lack of demand. They noted that adding monetary policy accommodation at this time would not address such constraints or that the costs of continuing asset purchases might be beginning to exceed their benefits. All participants agreed that it would be appropriate for the current meeting's postmeeting statement to relay the Committee's judgment that, if progress continued broadly as expected, a moderation in the pace of asset purchases may soon be warranted.

Participants also expressed their views on how slowing in the pace of purchases might proceed. In particular, participants commented on an illustrative path, developed by the staff and reflecting participants' discussions at the Committee's July meeting, that gave the speed and composition associated with a tapering of asset purchases. The illustrative tapering path was designed to be simple to communicate and entailed a gradual reduction in the pace of net asset purchases that, if begun later this year, would lead the Federal Reserve to end purchases around the middle of next year. The path featured monthly reductions in the pace of asset purchases, by $10 billion in the case of Treasury securities and $5 billion in the case of agency mortgage-backed securities (MBS). Participants generally commented that the illustrative path provided a straightforward and appropriate template that policymakers might follow, and a couple of participants observed that giving advance notice to the general public of a plan along these lines may reduce the risk of an adverse market reaction to a moderation in asset purchases. Participants noted that, in keeping with the outcome-based standard for initiating a tapering of asset purchases, the Committee could adjust the pace of the moderation of its purchases if economic developments were to differ substantially from what they expected. Several participants indicated that they preferred to proceed with a more rapid moderation of purchases than described in the illustrative examples.

No decision to proceed with a moderation of asset purchases was made at the meeting, but participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate. Participants noted that if a decision to begin tapering purchases occurred at the next meeting, the process of tapering could commence with the monthly purchase calendars beginning in either mid-November or mid-December.
emphasis added

3rd Look at Local Housing Markets in September

by Calculated Risk on 10/13/2021 01:18:00 PM

Today, in the Newsletter: 3rd Look at Local Housing Markets in September

This update adds data for Albuquerque, Atlanta, Colorado, Georgia, Jacksonville, Minnesota, New Hampshire, Portland, and South Carolina (Bold in tables).


One of the key factors for house prices is supply, and tracking local inventory reports will help us understand what is happening with supply.
Here is a summary of active listings for these housing markets in September. For the these markets, inventory was down 1.7% in September MoM from August, and down 27.8% YoY.
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Cleveland Fed: Median CPI and Trimmed-mean CPI both increased 0.5% in September

by Calculated Risk on 10/13/2021 11:18:00 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 0.5% in September. The 16% trimmed-mean Consumer Price Index also increased 0.5% in September. "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".

Note: The Cleveland Fed released the median CPI details for September here. "Fuel oil and other fuels" were up 44% annualized.

Note that Owners' Equivalent Rent and Rent of Primary Residence account for almost 1/3 of median CPI, and these measures were up 5.1% annualized in September.

Inflation Measures 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 3.5%, and the CPI less food and energy rose 4.0%. Core PCE is for August and increased 3.6% year-over-year.

Cost of Living Adjustment increases 5.9% in 2022, Contribution Base increased to $147,000

by Calculated Risk on 10/13/2021 08:55:00 AM

With the release of the CPI report this morning, we now know the Cost of Living Adjustment (COLA), and the contribution base for 2022.

From Social Security: Social Security Announces 5.9 Percent Benefit Increase for 2022

Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 5.9 percent in 2022, the Social Security Administration announced today.

The 5.9 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022. Increased payments to approximately 8 million SSI beneficiaries will begin on December 30, 2021. (Note: some people receive both Social Security and SSI benefits). The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.

Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $147,000 from $142,800.
Currently CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). Here is a discussion from Social Security on the current calculation (5.9% increase) and a list of previous Cost-of-Living Adjustments.

The contribution and benefit base will be $147,000 in 2022.

The National Average Wage Index increased to $55,628.60 in 2020, up 2.83% from $54,099.99 in 2019 (used to calculate contribution base).

BLS: CPI increased 0.4% in September, Core CPI increased 0.2%

by Calculated Risk on 10/13/2021 08:31:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in September on a seasonally adjusted basis after rising 0.3 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 5.4 percent before seasonal adjustment.

The indexes for food and shelter rose in September and together contributed more than half of the monthly all items seasonally adjusted increase. The index for food rose 0.9 percent, with the index for food at home increasing 1.2 percent. The energy index increased 1.3 percent, with the gasoline index rising 1.2 percent.

The index for all items less food and energy rose 0.2 percent in September, after increasing 0.1 percent in August. Along with the index for shelter, the indexes for new vehicles, household furnishings and operations, and motor vehicle insurance also rose in September. The indexes for airline fares, apparel, and used cars and trucks all declined over the month.

The all items index rose 5.4 percent for the 12 months ending September, compared to a 5.3-percent rise for the period ending August. The index for all items less food and energy rose 4.0 percent over the last 12 months, the same increase as the period ending August. The energy index rose 24.8 percent over the last 12 months, and the food index increased 4.6 percent over that period.
emphasis added
CPI was above expectations, and core CPI was below expectations. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.