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Lawler: Early Read on Existing Home Sales in December

17 hours ago

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 5.40 million in December, up 0.9% from November’s preliminary pace and up 8.0% from last December’s weak seasonally-adjusted pace. Unadjusted sales should show a significantly higher YOY gain, with the SA/NSA difference reflecting this December’s higher business day count comparted to last December.On the inventory front, local realtor/MLS data, as well as data from other inventory trackers, suggest that the inventory of existing homes for sale at the end of December was down by about 11.1% from a year earlier.Finally, local

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CAR on California December Housing: Sales up 7.4% YoY, Inventory down 26.5%, Lowest Inventory in "nearly seven years"

17 hours ago

The CAR reported: Low interest rates boost housing market in second half of year as home prices post strong gains in December, C.A.R. reportsClosed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 398,880 units in December, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2019 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.December’s sales total was down 1.0 percent from the 402,880 level in November and marked the first time in six months that sales fell below the

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Q4 GDP Forecasts: 1.2% to 2.0%

17 hours ago

From Merrill Lynch On balance retail sales cut our 4Q GDP tracking by 0.2pp to 2.0% qoq saar. [Jan 17 estimate]emphasis addedFrom the NY Fed Nowcasting ReportThe New York Fed Staff Nowcast stands at 1.2% for 2019:Q4 and 1.7% for 2020:Q1. [Jan 17 estimate]And from the Altanta Fed: GDPNowThe GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2019 is 1.8 percent on January 17, unchanged from January 16 after rounding. After this morning’s housing starts report from the U.S. Census Bureau and industrial production release from the Federal Reserve Board of Governors, a decrease in the nowcast of fourth-quarter real personal consumption expenditures growth from 1.6 percent to 1.4 percent was partly offset by an increase in the nowcast of real

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Comments on December Housing Starts

19 hours ago

Earlier: Housing Starts increased to 1.608 Million Annual Rate in DecemberTotal housing starts in December were well above expectations and revisions to prior months were positive. The housing starts report showed starts were up 16.9% in December compared to November, and starts were up 40.8% year-over-year compared to December 2018.These were blow out numbers! This was the highest level for starts since December 2006 (end of the bubble). However, the weather was very nice in December, and the weather probably had a significant impact on the seasonally adjusted housing starts number. The winter months of December and January have the largest seasonal factors, so nice weather can really have an impact. Note that Permits were more inline with expectations (still solid).Single family

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BLS: Job Openings "Fell" to 6.8 Million in November

21 hours ago

Notes: In November there were 6.800 million job openings, and, according to the November Employment report, there were 5.811 million unemployed. So, for the twenty-first consecutive month, there were more job openings than people unemployed. Also note that the number of job openings has exceeded the number of hires since January 2015 (almost 5 years).From the BLS: Job Openings and Labor Turnover Summary The number of job openings fell to 6.8 million (-561,000) on the last business day of November, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.8 million and 5.6 million, respectively. Within separations, the quits rate was unchanged at 2.3 percent and the layoffs and discharges rate was little changed at 1.1 percent.

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Industrial Production Decreased in December

22 hours ago

From the Fed: Industrial Production and Capacity UtilizationIndustrial production declined 0.3 percent in December, as a decrease of 5.6 percent for utilities outweighed increases of 0.2 percent for manufacturing and 1.3 percent for mining. The drop for utilities resulted from a large decrease in demand for heating, as unseasonably warm weather in December followed unseasonably cold weather in November. For the fourth quarter as a whole, total industrial production moved down at an annual rate of 0.5 percent. At 109.4 percent of its 2012 average, total industrial production was 1.0 percent lower in December than it was a year earlier. Capacity utilization for the industrial sector fell 0.4 percentage point in December to 77.0 percent, a rate that is 2.8 percentage points below its long-run

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Housing Starts increased to 1.608 Million Annual Rate in December

23 hours ago

From the Census Bureau: Permits, Starts and CompletionsHousing Starts:Privately‐owned housing starts in December were at a seasonally adjusted annual rate of 1,608,000. This is 16.9 percent above the revised November estimate of 1,375,000 and is 40.8 percent above the December 2018 rate of 1,142,000. Single‐family housing starts in December were at a rate of 1,055,000; this is 11.2 percent above the revised November figure of 949,000. The December rate for units in buildings with five units or more was 536,000.An estimated 1,289,800 housing units were started in 2019. This is 3.2 percent above the 2018 figure of 1,249,900. Building Permits:Privately‐owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,416,000. This is 3.9

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Friday: Housing Starts, Industrial Production, Job Openings

1 day ago

Friday:• At 8:30 AM ET, Housing Starts for December. The consensus is for 1.378 million SAAR, up from 1.365 million SAAR.• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for December. The consensus is for a 0.1% decrease in Industrial Production, and for Capacity Utilization to be decrease to 77.1%.• At 10:00 AM, University of Michigan’s Consumer sentiment index (Preliminary for January). The consensus is for a reading of 99.3.• At 10:00 AM, Job Openings and Labor Turnover Survey for November from the BLS.

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Hotels: Occupancy Rate Decreases Year-over-year

2 days ago

From HotelNewsNow.com: STR: US hotel results for week ending 11 JanuaryThe U.S. hotel industry reported negative year-over-year results in the three key performance metrics during the week of 5-11 January 2020, according to data from STR.In comparison with the week of 6-12 January 2019, the industry recorded the following:• Occupancy: -3.1% to 51.7%• Average daily rate (ADR): -4.7% to US$120.43• Revenue per available room (RevPAR): -7.7% to US$62.30emphasis addedThe following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. Click on graph for larger image.The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).The early average occupancy rate in

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NAHB: Builder Confidence Decreased to 75 in January

2 days ago

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 75, down from 76 in December. Any number above 50 indicates that more builders view sales conditions as good than poor.From NAHB: Builder Confidence Begins Year Strong as Single-Family Growth Continues Builder confidence in the market for newly-built single-family homes edged one point lower to 75 in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The last two monthly readings mark the highest sentiment levels since July of 1999. Low interest rates and a healthy labor market combined with a need for additional inventory is setting the stage for further home building gains in 2020….The HMI index charting traffic of prospective

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Philly Fed Manufacturing Suggests Activity Increased in January

2 days ago

From the Philly Fed: Current Manufacturing Indicators Suggest Growth in January Manufacturing activity in the region increased this month, according to results from the January Manufacturing Business Outlook Survey. The survey’s indicators for current activity, new orders, shipments, and employment were all positive and increased from their readings in December. The survey’s future activity indexes remained at relatively high readings, suggesting continued optimism about growth for the next six months. The diffusion index for current general activity increased nearly 15 points this month, from a revised reading of 2.4 in December to 17.0 … Manufacturers continued to report expanding employment this month. The employment index increased 3 points to 19.3. emphasis addedThis was well above

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Retail Sales increased 0.3% in December

2 days ago

On a monthly basis, retail sales increased 0.3 percent from November to December (seasonally adjusted), and sales were up 5.8 percent from December 2018.From the Census Bureau report:Advance estimates of U.S. retail and food services sales for December 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $529.6 billion, an increase of 0.3 percent from the previous month, and 5.8 percent above December 2018. Total sales for the 12 months of 2019 were up 3.6 percent from 2018. emphasis added Click on graph for larger image.This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).Retail sales ex-gasoline were up 0.1% in December.The second graph shows the

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Weekly Initial Unemployment Claims Decrease to 204,000

2 days ago

The DOL reported:In the week ending January 11, the advance figure for seasonally adjusted initial claims was 204,000, a decrease of 10,000 from the previous week’s unrevised level of 214,000. The 4-week moving average was 216,250, a decrease of 7,750 from the previous week’s unrevised average of 224,000. emphasis addedThe previous week was unrevised.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 216,250.This was lower than the consensus forecast.

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Thursday: Retail Sales, Unemployment Claims, Philly Fed Mfg, Builder Survey

3 days ago

Thursday:• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 216,000 initial claims, up from 214,000 last week.• Also at 8:30 AM, Retail sales for December is scheduled to be released.  The consensus is for a 0.3% increase in retail sales.• Also at 8:30 AM, the Philly Fed manufacturing survey for January. The consensus is for a reading of 3.4, up from 2.4.• At 10:00 AM, The January NAHB homebuilder survey. The consensus is for a reading of  74, down from 76. Any number above 50 indicates that more builders view sales conditions as good than poor.• At 10:00 AM, Speech by Fed Governor Michelle Bowman, The Outlook for Housing, At the Home Builders Association of Greater Kansas City: 2020 Economic Forecast Breakfast, Kansas City,

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Fed’s Beige Book: Economic Actvity Expanded "Modestly", Labor Market "Tight"

3 days ago

Fed’s Beige Book "This report was prepared at the Federal Reserve Bank of New York based on information collected on or before January 6, 2020."Economic activity generally continued to expand modestly in the final six weeks of 2019. The Dallas and Richmond Districts noted above-average growth, while Philadelphia, St. Louis, and Kansas City reported sub-par growth. Consumer spending grew at a modest to moderate pace, with a number of Districts noting some pickup from the prior reporting period. On balance, holiday sales were said to be solid, with several Districts noting the growing importance of online shopping. Vehicle sales generally expanded moderately, though a handful of Districts reported flat sales. Tourism was mixed, with growth reported in the eastern seaboard Districts but

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Small Business Optimism Index "Dips" in December

3 days ago

CR Note: This was released yesterday. Most of this survey is noise, but there is some information, especially on the labor market and the "Single Most Important Problem".From the National Federation of Independent Business (NFIB): December 2019 Report: Small Business Optimism Dips in DecemberSmall business optimism ended the year historically strong, with a reading of 102.7, down 2 points from November. ..Net job creation had faded from February’s 0.52 workers per firm to September’s 0.10, but is back in strong territory. Finding qualified workers remains the top issue for 23 percent reporting this as their number one problem, 4 points below August’s record high. emphasis added Click on graph for larger image.This graph shows the small business optimism index since 1986.The index

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NY Fed: Manufacturing "Business activity grew to a small degree in New York State"

3 days ago

From the NY Fed: Empire State Manufacturing Survey Business activity grew to a small degree in New York State, according to firms responding to the January 2020 Empire State Manufacturing Survey. The headline general business conditions index was little changed at 4.8. …The index for number of employees held steady at 9.0, indicating that employment expanded for the fifth consecutive month. The average workweek index came in at 1.3, a sign that the average workweek was essentially unchanged…Indexes assessing the six-month outlook suggested that optimism about future conditions remained restrained. emphasis addedThis was slightly higher than the consensus forecast.

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MBA: Mortgage Applications Increased in Latest Weekly Survey

3 days ago

From the MBA: Mortgage Applications Increase in Latest MBA Weekly SurveyMortgage applications increased 30.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 10, 2020. Last week’s results included an adjustment for the New Year’s Day holiday…. The Refinance Index increased 43 percent from the previous week and was 109 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 16 percent from one week earlier. The unadjusted Purchase Index increased 51 percent compared with the previous week and was 8 percent higher than the same week one year ago….“The mortgage market saw a strong start to 2020. Applications increased across the board, and

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Wednesday: PPI, NY Fed Mfg Survey, Beige Book

4 days ago

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, The Producer Price Index for December from the BLS. The consensus is for a 0.2% increase in PPI, and a 0.2% increase in core PPI.• At 8:30 AM, The New York Fed Empire State manufacturing survey for January. The consensus is for a reading of 4.0, up from 3.5.• At 2:00 PM, the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

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Cleveland Fed: Key Measures Show Inflation Above 2% YoY in December, Core PCE below 2%

4 days ago

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 0.2% (2.1% annualized rate) in December. The 16% trimmed-mean Consumer Price Index rose 0.1% (1.8% annualized rate) during the month. 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.Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.2% (2.7% annualized rate) in December. The CPI less food and energy rose 0.1% (1.4% annualized rate) on a seasonally adjusted basis.Note: The Cleveland Fed released the median CPI details for

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Leading Index for Commercial Real Estate Increased in December

4 days ago

From Dodge Data Analytics: Dodge Momentum Index Moves Higher in DecemberThe Dodge Momentum Index increased 1.5% in December to 156.2 (2000=100) from the revised November reading of 153.9. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. Both components of the Momentum Index rose over the month – the institutional component gained 2.3%, while the commercial component rose 0.9%.For the full year, the Momentum Index averaged 141.9, a decline of 3.7% from 2018’s average. In 2019, the commercial component was 2.3% lower than the previous year, while the institutional component dropped 5.9%.

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BLS: CPI increased 0.2% in December, Core CPI increased 0.1%

4 days ago

From the BLS: The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in December on a seasonally adjusted basis after rising 0.3 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.3 percent before seasonal adjustment….The index for all items less food and energy rose 0.1 percent in December after increasing 0.2 percent in November….The all items index increased 2.3 percent for the 12 months ending December, the largest 12-month increase since the period ending October 2018. The index for all items less food and energy also rose 2.3 percent over the last 12 months, the same increase as the periods ending October and November.emphasis addedCore inflation was slightly lower than

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Tuesday: CPI

5 days ago

From Matthew Graham at Mortgage News Daily: Mortgage Rates Face More Volatility Later This WeekMortgage rates didn’t do much today, and that’s good enough news considering the average lender is closer to the lower end of the rate range since early October. The only counterpoint would be that there isn’t much distance between the highs and the lows during that time (not a bad thing, just a bit of context). In other words, rates are "pretty close" to the lowest levels of the past several months, but they’re also not too far from the highest levels. [Most Prevalent Rates For Top Tier Scenarios 30YR FIXED 3.75%]emphasis addedTuesday:• At 6:00 AM, NFIB Small Business Optimism Index for December.• At 8:30 AM, The Consumer Price Index for December from the BLS. The consensus is for 0.2%

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Chicago Fed: Summary of 2019 Results and 2020 Forecasts

5 days ago

It is always interesting to see the consensus outlook. The Chicago Fed held an Economic Outlook Symposium in December with more than 140 economists and analysts, and they just published the 2020 Forecasts.   Note that the consensus always misses turning points, but I don’t expect a recession in 2020 either.The consensus is for real GDP to increase 1.7% Q4 over Q4 in 2020 (my view is GDP growth will be a little higher than the consensus). The consensus is the unemployment rate will be at 3.7% in Q4 2020 (my view is the unemployment rate will be lower).The consensus is that housing starts will increase slightly to 1.28 million in 2020 (my view is starts will be somewhat higher).Unfortunately they didn’t forecast employment growth – I expect employment growth to slow further in 2020.

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Paul Volcker on the "Existential test" facing America

5 days ago

Fifteen years ago, in February 2005, I excerpted from a speech by former Fed Chair Paul Volcker at Stanford. That prescient speech about housing and excessive borrowing is available on YouTube. Some of Volcker’s comments were: "Altogether, the circumstances seem as dangerous and intractable as I can remember. … Homeownership has become a vehicle for borrowing and leveraging as much as a source of financial security."I shared Volcker’s concerns back then.Sadly Paul Volcker passed away in December.   Just a few months before his death, he wrote an "afterword to the forthcoming paperback edition of his autobiography". Here are a few excerpts (via the Financial Times): By the late summer of 2018, it was already clear that the US and the world order it had helped establish during my lifetime

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Employment: December Diffusion Indexes

5 days ago

I haven’t posted this in a few months.The BLS diffusion index for total private employment was at 57.0 in December, down from 65.7 in November.For manufacturing, the diffusion index was at 44.7, down from 65.8 in November.Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS.  From the BLS: Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.Overall both total private and manufacturing job growth were not widespread in December.Both indexes generally trended down in 2019 – except for a spike

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Sunday Night Futures

5 days ago

Weekend:• Schedule for Week of January 12, 2020• The Record Job Streak: A few CommentsMonday:• No major economic releases scheduled.From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 5 and DOW futures are up 50 (fair value).Oil prices were down over the last week with WTI futures at $59.02 per barrel and Brent at $64.98 barrel.  A year ago, WTI was at $48, and Brent was at $57 – so oil prices are up about 20% year-over-year. Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.57 per gallon. A year ago prices were at $2.24 per gallon, so gasoline prices are up 33 cents per gallon year-over-year.

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The Record Job Streak: A few Comments

6 days ago

A few comments on the current headline jobs streak.  Also, the job streak if we adjust by temporary decennial Census hiring, and the possible impact of the annual revision (to be released with the January employment report).The employment report has shown positive job growth for a record 111 months.Headline Jobs, Top 10 StreaksYear EndingStreak, Months201911111990482007461979451943331986332000331967291995251974241Streak still going!However, if we adjust for Decennial Census hiring and firing (data here) the streak of consecutive positive jobs reports is actually 118 months long. It makes sense to adjust for the Census hiring and firing since that was preplanned and unrelated to the business cycle.If the job streak continues into 2020, then the headline streak will probably end in June

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Schedule for Week of January 12, 2020

7 days ago

The key reports this week are December housing starts, CPI and retail sales.For manufacturing, the December Industrial Production report and the January NY and Philly Fed manufacturing surveys will be released.—– Monday, Jan 13th —–No major economic releases scheduled.—– Tuesday, Jan 14th —–6:00 AM: NFIB Small Business Optimism Index for December.8:30 AM: The Consumer Price Index for December from the BLS. The consensus is for 0.2% increase in CPI, and a 0.2% increase in core CPI.—– Wednesday, Jan 15th —–7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.8:30 AM ET: The Producer Price Index for December from the BLS. The consensus is for a 0.2% increase in PPI, and a 0.2% increase in core PPI.8:30

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AAR: December Rail Carloads down 9.2% YoY, Intermodal Down 9.6% YoY

8 days ago

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission. 2019 was a challenging year for U.S. rail traffic. Total carloads fell 4.9% (668,075 carloads) and intermodal fell 5.1% (740,240 containers and trailers) from 2018. Total carloads of 12.97 million in 2019 were the fewest for any year since sometime prior to 1988, which is when our data begin. Intermodal volume of 13.73 million units in 2019 was the second most ever, behind 2018….In December 2019, intermodal was down 9.6% from December 2018 — the 11th straight year-over-year monthly decline and the biggest percentage decline for any month since October 2009. … In December 2019, total carloads were down 9.2% from December 2018, their 11th consecutive monthly decline and

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