by Calculated Risk on 11/06/2009 09:24:00 AM

The [un]employment report headline numbers were ugly, but the internals are even less encouraging ...

Employment-Population Ratio

Click on graph for larger image in new window.

This graph shows the employment-population ratio; this is the ratio of employed Americans to the adult population.

Note: the graph doesn't start at zero to better show the change.

The general upward trend from the early '60s was mostly due to women entering the workforce.

This measure fell in October to 58.5%, the lowest level since the early '80s.

The Labor Force Participation Rate fell to 65.1% (the percentage of the working age population in the labor force). This is also the lowest since the mid-80s.

When the job market starts to recover, many of these people will reenter the workforce and look for employment - and that will keep the unemployment rate elevated for some time.

Part Time for Economic Reasons

From the BLS report:

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in October at 9.3 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of workers only able to find part time jobs (or have had their hours cut for economic reasons) is at a record 9.284 million.

Note: the U.S. population is significantly larger today (about 308 million) than in the early '80s (about 228 million) when the number of part time workers almost reached 7 million. Still - even adjusted for population - part time workers is at record levels.

Seasonal Retail Hiring

The old saying is "Watch what they do, not what they say". Yesterday there were some reports that retail sales were up slightly year-over-year. But retailers are hiring seasonal workers at the same pace as last year ...

Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.

This really shows the collapse in retail hiring in 2008.

Retailers only hired 63.5 thousand workers (NSA) net in October. This is essentially the same as in 2008 (59.1 thousand NSA), and suggests retailers are being very cautious with their seasonal hiring.

Earlier employment post today:

Employment Report: 190K Jobs Lost, 10.2% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.

by Calculated Risk on 11/06/2009 08:30:00 AM

From the BLS:

The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm payroll employment continued to decline (-190,000), the U.S. Bureau of Labor Statistics reported today. The largest job losses over the month were in construction, manufacturing, and retail trade.

Click on graph for larger image.

This graph shows the unemployment rate and the year over year change in employment vs. recessions.

Nonfarm payrolls decreased by 190,000 in October. The economy has lost almost 5.5 million jobs over the last year, and 7.3 million jobs¹ during the 22 consecutive months of job losses.

The unemployment rate increased to 10.2 percent. This is the highest unemployment rate in 26 years.

Year over year employment is strongly negative.

The second graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).

For the current recession, employment peaked in December 2007, and this recession was a slow starter (in terms of job losses and declines in GDP).

However job losses have really picked up earlier this year, and the current recession is the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early '80s recession with a peak of 10.8 percent was worse).

The economy is still losing jobs at about a 2.2 million annual rate, and the unemployment rate is finally above 10%. This is a very weak employment report - just not as bad as earlier this year. Much more to come ...

¹Note: The total jobs lost does not include the preliminary benchmark payroll revision of minus 824,000 jobs. (This is the preliminary estimate of the annual revision that will be announced early in 2010).

by Calculated Risk on 11/06/2009 12:31:00 AM

See the poll in the right sidebar ...

Catherine Rampell at the NY Times Economix offers a Jobs Report Preview

Ms. Rampell suggests three things to look for:

1) The unemployment rate may hit 10 percent.
...
2) Job losses continue to mount, but more slowly.
...
3) Hours worked stagnate.

There will be many more interesting details such as the employment-population ratio, part time workers, how many people are unemployed more than 26 weeks (for unemployment benefits), and how many part time workers were hired for seasonal retail jobs - just to mention a few.

by Calculated Risk on 11/05/2009 09:24:00 PM

From CNBC: Boomers in Denial About Retirement Savings

Wells Fargo just released the results of its Retirement Fitness survey and looked hard at the investment habits of pre-retirees ages 50 to 59. What did they find?

“There is a sense of denial among the pre-retirees,” said Lynne Ford, head of Wells Fargo Retail Retirement.

Even after suffering significant losses last year, many remain overly optimistic about their investment returns and the ability of their savings to fund their expenses after they stop working.
...
On average, these pre-retirees expected they would need $800,000 to fund their retirement. However, most had only saved about $300,000.

I expect many of these pre-retirees will start saving more soon, and this is part of the reason I expect the saving rate to increase to 8% or so over the next couple of years. And for a more humorous take:

by Calculated Risk on 11/05/2009 05:20:00 PM

Press Release: Fannie Mae Reports Third-Quarter 2009 Results

Fannie Mae (FNM/NYSE) reported a net loss of $18.9 billion in the third quarter of 2009, compared with a loss of $14.8 billion in the second quarter of 2009. ... Third-quarter results were largely due to $22.0 billion of credit related expenses, reflecting the continued build of the company’s combined loss reserves and fair value losses associated with the increasing number of loans that were acquired from mortgage backed securities trusts in order to pursue loan modifications.
...
As a result, on November 4, 2009, the Acting Director of the Federal Housing Finance Agency (FHFA) submitted a request for $15.0 billion from Treasury on the company’s behalf.
...
The seriously delinquent loans in our single-family book of business, which we define as those loans 90 or more days delinquent or in the process of foreclosure, increased and aged during the third quarter. This was caused by a greater number of loans that transitioned to seriously delinquent status, while the proportion of already seriously delinquent loans that cured or transitioned to completed foreclosures declined. Factors contributing to the increase in serious delinquencies included: high unemployment that hampered the ability of many delinquent borrowers to cure their delinquencies; Home Affordable Modifications in trial periods, which remain classified as delinquent; our directive that servicers delay foreclosure sales until other alternatives, including Home Affordable Modification, have been exhausted; and, the slowdown in the legal process for foreclosures in a number of states.
...
Total nonperforming loans in our guaranty book of business were $198.3 billion, compared with $171.0 billion on June 30, 2009, and $119.2 billion on December 31, 2008. The carrying value of our foreclosed properties was $7.3 billion, compared with $6.2 billion on June 30, 2009, and $6.6 billion on December 31, 2008.
emphasis added

by Calculated Risk on 11/05/2009 03:26:00 PM

Apparently to reduce the sting from the [un]employment report ...

From CNNMoney: Congress approves more benefits for jobless

The closely watched legislation would extend jobless benefits in all states by 14 weeks. Those that live in states with unemployment greater than 8.5% would receive an additional six weeks. ... The measure would apply to those whose benefits run out by Dec. 31, which is nearly two million people, according to Senate estimates. Those whose checks have already stopped would be able to reapply for another round.

There probably will be another bill for those who exhaust their benefits after the end of the year.

President Obama will apparently sign the bill into law Friday morning ...

by Calculated Risk on 11/05/2009 12:44:00 PM

From HotelNewsNow.com: Anaheim-Santa Ana leads occupancy increases in STR weekly numbers

Overall, in year-over-year measurements, the industry’s occupancy fell 7.2 percent to end the week at 51.8 percent, average daily rate dropped 7.2 percent to US$98.99, and revenue per available decreased 13.8 percent to US$51.28.

Click on graph for larger image in new window.

This graph shows the occupancy rate by week for each of the last four years (2006 through 2009 labeled by start of month).

Notes: the scale doesn't start at zero to better show the change. Thanksgiving was late in 2008, so the dip doesn't line up with the previous years.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

The above graph shows two key points:

This is a two year slump for the hotel industry. Although occupancy is off 7.2% compared to 2008, occupancy is off about 14% compared to 2006 and 2007.

There is a distinct seasonal pattern for the occupancy rate. The occupancy rate is higher in the summer (because of leisure travel), and lower on certain holidays.

The HotelNewsNow press release also has this graph on occupancy variance compared to 2008.

For most of the year business travel (mid-week) has been off more than leisure travel (weekends).

Perhaps there has been an increase in mid-week travel, and this is something to watch.

by Calculated Risk on 11/05/2009 11:20:00 AM

From Fannie Mae: Fannie Mae Announces Deed for Lease™ Program

Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.
...
The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.

Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.

This is part of the "single family public housing" program.

by Calculated Risk on 11/05/2009 08:33:00 AM

The DOL reports weekly unemployment insurance claims decreased to 512,000:

In the week ending Oct. 31, the advance figure for seasonally adjusted initial claims was 512,000, a decrease of 20,000 from the previous week's revised figure of 532,000. The 4-week moving average was 523,750, a decrease of 3,000 from the previous week's revised average of 526,750.
...
The advance number for seasonally adjusted insured unemployment during the week ending Oct. 24 was 5,749,000, a decrease of 68,000 from the preceding week's revised level of 5,817,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims decreased this week by 3,000 to 523,750, and is now 135,000 below the peak in April. The significant decline from the peak strongly suggests that initial weekly claims have peaked for this cycle.

However, the level is still very high suggesting continuing job losses.

by Calculated Risk on 11/04/2009 10:06:00 PM

Repeating the errors from the S&L crisis ...

Last Friday, the Chicago Tribune reported: Regulators seize FBOP banks

The Park National shutdown occurred after several Illinois congressmen, including Reps. Bobby Rush and Danny Davis and Sen. Roland Burris, called the FDIC asking it to delay closing the bank for at least a week, said Marilyn Katz, a bank spokeswoman.
emphasis added

Tonight from the WSJ: Bank Crackdown Draws Criticism

Politicians are putting pressure on regulators to go easy on small community banks across the U.S. ...

"A self-fulfilling prophecy of community bank failures, shrinking credit availability and a slower economic recovery can all result from a regulatory overreaction to the current crisis," said the letter, which also was signed by Rep. Walt Minnick (D., Idaho).
...
Rep. Tom Price (R., Ga.) told [FDIC Chairwoman] Ms. Bair he wasn't "convinced that the FDIC isn't contributing to the awful problems that we're having" in his state, where 20 banks have failed in 2009. The banks "dot every 'i' and they cross every 't' and then the knock comes on the door on Friday afternoon," he told her.

This is backwards. By moving slowly, the FDIC is tainting all small banks and making it more difficult for them to raise capital (ht Pat). In addition, healthy banks are holding on to capital to try to buy assets from the FDIC at a discount, compared to the cost of a similar new loan.

The sooner the FDIC completes the process of closing failed banks, the better for the remaining banks and the economy.