by Calculated Risk on 2/07/2010 11:59:00 AM
Sunday, February 07, 2010
Weekly Summary and a Look Ahead
People will be watching the so called PIGS (Portugal, Ireland, Greece and Spain) this week for any updates on a possible sovereign debt crisis. And don't forget Eastern Europe and the Baltic states too, especially Latvia.
The Economist has a preview on Greece:
TAX-COLLECTORS and customs officers in Greece have already walked out in protest against planned austerity measures by the government. On Wednesday February 10th it will be the turn of civil servants, doctors and other state workers. A much bigger strike is expected later in the month and past experience suggests that protests could turn nasty. Yet unless Greece gets a grip on its public finances, the government will struggle to finance its loans. Similar anxieties are emerging elsewhere in Europe.On Tuesday, the NFIB Small Business Optimism for January will be released, the Job Openings and Labor Turnover Survey (JOLTS) survey for December, and Wholesale Inventories report for December.
On Wednesday, the Census Bureau will release the December Trade Balance report (consensus is for a trade deficit of about $36 billion, the same as last month) and the MBA will release the weekly Mortgage Applications report. Also Wednesday will be a busy day for Fed Speak.
On Thursday, the Retail Sales report for January will be released. Consensus is for a 0.4% increase (Bloomberg consensus 0.3%), and 0.6% ex-autos. The weekly initial unemployment claims report will be closely watched, and the consensus is for a decline to under 460,000. Business inventories will also be released on Thursday.
Consumer sentiment will be released on Friday, and the West Coast port traffic will probably also be released this week - and of course more bank failures.
And a summary of last week ...

This graph shows the unemployment rate and the year over year change in employment vs. recessions.
Nonfarm payrolls decreased by 20,000 in January and the unemployment rate decreased to 9.7%. The economy has lost almost 4.0 million jobs over the last year, and 8.42 million jobs since the beginning of the current employment recession.

For the current employment recession, employment peaked in December 2007, and this is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only the early '80s recession with a peak of 10.8 percent was worse).

The Employment-Population ratio ticked up slightly to 58.4% in January, after plunging since the start of the recession. This is about the same level as in 1983.
Note: the above graph doesn't start at zero to better show the change.

According to the BLS, there are a record 6.31 million workers who have been unemployed for more than 26 weeks (and still want a job). This is a record 4.1% of the civilian workforce. (note: records started in 1948)
The number of long term unemployed, and the dramatic plunge in Employment-Population ratio, are two of the key stories of this recession.

This is the lowest level since October and below the levels of last July. Obviously sales were boosted significantly by the "Cash-for-clunkers" program in August and some in July.
The current level of sales are still very low, and are still below the lowest point for the '90/'91 recession (even with a larger population).

Note: graph starts at 60% to better show the change.
The Census report also showed the homeowner vacancy rate increase to 2.7%, and the rental vacancy rate was at 10.7% (see graphs here).
This data suggests there are about 1.8 million excess vacant housing units in the U.S. (above the normal levels). For analysis, see: Housing Stock and Flow

Private residential construction spending is now 61.5% below the peak of early 2006.
Private non-residential construction spending is 22.0% below the peak of October 2008.
Best wishes to all.