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Friday, June 07, 2024

Wholesale Used Car Prices Declined in May; Down 12.1% Year-over-year

by Calculated Risk on 6/07/2024 04:45:00 PM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Declined in May

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were down in May compared to April. The Manheim Used Vehicle Value Index (MUVVI) fell to 197.3, a decline of 12.1% from a year ago. The seasonal adjustment to the index reduced the impact on the month, resulting in values that declined 0.6% month over month. The non-adjusted price in May decreased by 1.2% compared to April, moving the unadjusted average price down 11.4% year over year.
emphasis added
Manheim Used Vehicle Value Index Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices declined in May (seasonally adjusted) and were down 12.1% year-over-year (YoY).

The "Home ATM" Mostly Closed in Q1

by Calculated Risk on 6/07/2024 01:15:00 PM

Today, in the Real Estate Newsletter: The "Home ATM" Mostly Closed in Q1


During the housing bubble, many homeowners borrowed heavily against their perceived home equity - jokingly calling it the “Home ATM” - and this contributed to the subsequent housing bust, since so many homeowners had negative equity in their homes when house prices declined.

Unlike during the housing bubble, very few homeowners have negative equity now. From CoreLogic this morning: Homeowner Equity Insights – Q1 2024
CoreLogic analysis shows U.S. homeowners with mortgages (roughly 62% of all properties*) have seen their equity increase by a total of $1.5 trillion since the first quarter of 2023, a gain of 9.6% year over year.

In the first quarter of 2024, the total number of mortgaged residential properties with negative equity decreased by 2.1%  from the fourth quarter of 2023, representing 1 million homes, or 1.8% of all mortgaged properties. On a year-over-year basis, negative equity declined by 16.1% from 1.2 million homes, or 2.1% of all mortgaged properties, from the first quarter of 2023.
Mortgage Equity WithdrawalHere is the quarterly increase in mortgage debt from the Federal Reserve’s Financial Accounts of the United States - Z.1 (sometimes called the Flow of Funds report) released today. In the mid ‘00s, there was a large increase in mortgage debt associated with the housing bubble.

In Q1 2024, mortgage debt increased $38 billion, down from $91 billion in Q4, and down from the cycle peak of $467 billion in Q2 2021. Note the almost 7 years of declining mortgage debt as distressed sales (foreclosures and short sales) wiped out a significant amount of debt.

However, some of this debt is being used to increase the housing stock (purchase new homes), so this isn’t all Mortgage Equity Withdrawal (MEW).
There is much more in the article. You can subscribe at

Fed's Flow of Funds: Household Net Worth Increased $5.1 Trillion in Q1

by Calculated Risk on 6/07/2024 12:36:00 PM

The Federal Reserve released the Q1 2024 Flow of Funds report today: Financial Accounts of the United States.

The net worth of households and nonprofits rose to $160.8 trillion during the first quarter of 2024. The value of directly and indirectly held corporate equities increased $3.8 trillion and the value of real estate increased $0.9 trillion.
Household debt increased 2.9 percent at an annual rate in the first quarter of 2024. Consumer credit grew at an annual rate of 1.8 percent, while mortgage debt (excluding charge-offs) grew at an annual rate of 2.1 percent.
Household Net Worth as Percent of GDP Click on graph for larger image.

The first graph shows Households and Nonprofit net worth as a percent of GDP.  

Net worth increased $5.1 trillion in Q1 to an all-time high.  As a percent of GDP, net worth increased in Q1, but is below the peak in 2021.

This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc.) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations.

Household Percent EquityThe second graph shows homeowner percent equity since 1952.

Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.

In Q1 2024, household percent equity (of household real estate) was at 73.8% - up from 73.4% in Q4, 2023. This is close to the highest percent equity since the 1960s.

Note: This includes households with no mortgage debt.

Household Real Estate Assets Percent GDP The third graph shows household real estate assets and mortgage debt as a percent of GDP.  

Mortgage debt increased by $38 billion in Q1.

Mortgage debt is up $2.38 trillion from the peak during the housing bubble, but, as a percent of GDP is at 46.3% - down from Q4 - and down from a peak of 73.3% of GDP during the housing bust.

The value of real estate, as a percent of GDP, increased in Q1 - but is below the peak in Q2 2022, and is well above the average of the last 30 years.

Q2 GDP Tracking: 1.6% to 3.1%

by Calculated Risk on 6/07/2024 12:15:00 PM

From BofA:

Since last week,1Q GDP tracking is up from 1.3% q/q saar to 1.6% q/q saar and 2Q GDP tracking is down two-tenths to 1.6%. [June 7th estimate]
emphasis added
From Goldman:
Wholesale inventories increased somewhat below consensus expectations and the preliminary report. We lowered our Q2 GDP tracking estimate to +2.1% (qoq ar), reflecting weaker details in yesterday’s trade report. Our domestic final sales estimate remains at +2.0% (qoq ar). [June 7th estimate]
And from the Altanta Fed: GDPNow
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2024 is 3.1 percent on June 7, up from 2.6 percent on June 6. After this morning’s employment situation release from the US Bureau of Labor Statistics and this morning's wholesale trade report from the US Census Bureau, the nowcasts of second-quarter real personal consumption expenditures growth and second-quarter real gross private domestic investment growth increased from 2.4 percent and 5.8 percent, respectively, to 2.8 percent and 7.7 percent. [June 7th estimate]

Comments on May Employment Report

by Calculated Risk on 6/07/2024 09:08:00 AM

The headline jobs number in the May employment report was well above expectations, however March and April payrolls were revised down by 15,000 combined.   The participation rate and employment population ratio decreased, and the unemployment rate increased to 4.0%.

Construction employment increased 21 thousand and is now 613 thousand above the pre-pandemic level. 

Manufacturing employment increased 8 thousand and is now 185 thousand above the pre-pandemic level.

Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate increased in May to 83.6% from 83.5% in April, and the 25 to 54 employment population ratio was unchanged at 80.8% from 80.8% the previous month.

Both are above pre-pandemic levels and near the highest level this millennium.

Average Hourly Wages

WagesThe graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.1% YoY in May.   

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of people employed part time for economic reasons, at 4.4 million, changed little in May. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons decreased in May to 4.42 million from 4.47 million in April. This is slightly above pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 7.4% from 7.4% in the previous month. This is down from the record high in April 2020 of 23.0% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.350 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.250 million the previous month.

This is down from post-pandemic high of 4.174 million, and up from the recent low of 1.050 million.

This is slightly above pre-pandemic levels.

Job Streak

Through May 2024, the employment report indicated positive job growth for 41 consecutive months, putting the current streak in 5th place of the longest job streaks in US history (since 1939).

Headline Jobs, Top 10 Streaks
Year EndedStreak, Months
6 tie194333
6 tie198633
6 tie200033
1Currrent Streak


The headline jobs number in the April employment report was well above expectations, however, March and April payrolls were revised down by 15,000 combined. The participation rate and the employment population ratio decreased, and the unemployment rate increased to 4.0%.  Another strong report.

May Employment Report: 272 thousand Jobs, 4.0% Unemployment Rate

by Calculated Risk on 6/07/2024 08:30:00 AM

From the BLS:

Total nonfarm payroll employment increased by 272,000 in May, and the unemployment rate changed little at 4.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in several industries, led by health care; government; leisure and hospitality; and professional, scientific, and technical services.
The change in total nonfarm payroll employment for March was revised down by 5,000, from +315,000 to +310,000, and the change for April was revised down by 10,000, from +175,000 to +165,000. With these revisions, employment in March and April combined is 15,000 lower than previously reported.
emphasis added
Employment per monthClick on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 272 thousand in May.  Private payrolls increased by 229 thousand, and public payrolls increased 433 thousand.

Payrolls for March and April were revised down 15 thousand, combined.

Year-over-year change employment The second graph shows the year-over-year change in total non-farm employment since 1968.

In May, the year-over-year change was 2.76 million jobs.  Employment was up solidly year-over-year.

The third graph shows the employment population ratio and the participation rate.

Employment Pop Ratio and participation rate The Labor Force Participation Rate decreased to 62.5% in May, from 62.7% in April. This is the percentage of the working age population in the labor force.

The Employment-Population ratio decreased to 60.1% from 60.2% (blue line).

I'll post the 25 to 54 age group employment-population ratio graph later.

unemployment rateThe fourth graph shows the unemployment rate.

The unemployment rate increased to 4.0% in May from 3.9% in April.

This was well above consensus expectations; however, March and April payrolls were revised down by 15,000 combined.  

I'll have more later ...

Thursday, June 06, 2024

Friday: Employment Report, Q1 Flow of Funds

by Calculated Risk on 6/06/2024 07:47:00 PM

Mortgage Rates Note: Mortgage rates are from and are for top tier scenarios.

• At 8:30 8:30 AM ET, Employment Report for May.   The consensus is for 180,000 jobs added, and for the unemployment rate to be unchanged at 3.9%.

12:00 PM: Q1 Flow of Funds Accounts of the United States from the Federal Reserve.

May Employment Preview

by Calculated Risk on 6/06/2024 04:01:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for May. The consensus is for 180,000 jobs added, and for the unemployment rate to be unchanged at 3.9%.

There were 175,000 jobs added in April, and the unemployment rate was at 3.9%.

From Goldman Sachs economist Spencer Hill
We estimate nonfarm payrolls rose by 160k in May, somewhat below consensus ... We estimate that the unemployment rate was unchanged on a rounded basis at 3.9%.
emphasis added
From BofA:
The May employment report is likely to show a healthy but better-balanced labor market. Nonfarm payrolls likely rose by 200k ...Strong hiring is likely to result in the unemployment rate edging down a tenth to 3.8%, and wage growth will likely remain at 3.9% y/y.
ADP Report: The ADP employment report showed 152,000 private sector jobs were added in May.  This was below consensus forecasts and suggests job gains slightly below consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index increased to 51.1%, up from 48.6% the previous month.   This would suggest about 15,000 jobs lost in manufacturing. The ADP report indicated 20,000 manufacturing jobs lost in May.

The ISM® services employment index increased to 47.1%, from 45.9%.   This would suggest few jobs added in the service sector. Combined this suggests few jobs added in May, far below consensus expectations.

Unemployment Claims: The weekly claims report showed about the same number of initial unemployment claims during the reference week at 216,000 in May compared to 212,000 in April.  This suggests a similar number of layoffs in May compared to April.

Conclusion: My guess is employment gains will be below consensus expectations.

1st Look at Local Housing Markets in May

by Calculated Risk on 6/06/2024 01:34:00 PM

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in May

A brief excerpt:

NOTE: The tables for active listings, new listings and closed sales all include a comparison to May 2019 for each local market (some 2019 data is not available).

This is the first look at several early reporting local markets in May. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in May were mostly for contracts signed in March and April when 30-year mortgage rates averaged 6.82% and 6.99%, respectively (Freddie Mac PMMS). This is down from the 7%+ mortgage rates in the August through November period (although rates are now back above 7% again).
Closed Existing Home SalesIn May, sales in these markets were up 3.3% YoY. Last month, in April, these same markets were up 8.2% year-over-year Not Seasonally Adjusted (NSA).

Sales in all of these markets are down compared to May 2019.
This is a year-over-year increase NSA for these early reporting markets. There were the same number of working days in May 2024 compared to May 2023, so the year-over-year change in the seasonally adjusted sales will be about the same as the NSA data suggests.
This was just a few early reporting markets. Many more local markets to come!
There is much more in the article. Reports Active Inventory Up 35.5% YoY

by Calculated Risk on 6/06/2024 11:41:00 AM

What this means: On a weekly basis, reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For April, reported inventory was up 35.2% YoY, but still down almost 34% compared to April 2017 to 2019 levels. 

 Now - on a weekly basis - inventory is up 35.5% YoY. has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data for Week Ending June 1, 2024
Active inventory increased, with for-sale homes 35.5% above year-ago levels

For the 30th straight week, there were more homes listed for sale versus the prior year, giving homebuyers more options. This past week, the inventory of homes for sale grew by 35.5% compared with last year. This growth in inventory is primarily driven by housing markets in the South, which saw a 47.2% year-over-year increase in inventory in May.

New listings—a measure of sellers putting homes up for sale—were up this week, by 2.1% from one year ago

Seller activity continued to climb annually last week but decelerated relative to the previous week’s growth. Newly listed homes grew by 2.1% compared with a year ago, a slowdown from the 3.6% growth rate in the previous week.
Realtor YoY Active ListingsHere is a graph of the year-over-year change in inventory according to

Inventory was up year-over-year for the 30th consecutive week.  

However, inventory is still historically low.

New listings remain below typical pre-pandemic levels although up year-over-year.