by Calculated Risk on 3/29/2012 08:30:00 AM

The DOL reports:

In the week ending March 24, the advance figure for seasonally adjusted initial claims was 359,000, a decrease of 5,000 from the previous week's revised figure of 364,000. The 4-week moving average was 365,000, a decrease of 3,500 from the previous week's revised average of 368,500.

Note: "This week's release reflects the annual revision to the weekly unemployment claims seasonal adjustment factors. The seasonal adjustment factors used for the UI Weekly Claims data from 2007 forward, along with the resulting seasonally adjusted values for initial claims and continuing claims, have been revised."

The following graph shows the 4-week moving average of weekly claims since January 2000.

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 declined to 365,000 (after annual revisions).

The 4-week moving average is at the lowest level since early 2008 (including revisions).

And here is a long term graph of weekly claims:



The ongoing decline in initial weekly claims is good news. After the revisions, this is the lowest level for claims since early 2008 and the trend is down.

All current Employment Graphs

by Calculated Risk on 3/28/2012 08:14:00 PM

From the WSJ: Iran Oil Flow Slows, and Price Fears Rise

By the end of March, with three months until a European Union embargo on Iranian oil takes effect, Iran's exports are expected to fall by about 300,000 barrels a day from last month, to 1.9 million barrels daily, a nearly 14% drop ...

Mounting fears of Iranian disruptions have sent the price U.S. motorists pay at gasoline pumps closer to $4 a gallon.

From Jim Hamilton at Econbrowser: A rational reason for high oil prices

From the WaPo: Gas prices in D.C. surpass $4 a gallon

Two months before the summer driving season officially starts, average gas prices in the Washington region have hit $4, the earliest they have ever reached that milestone ... According to AAA’s national survey of gas prices, a gallon of regular-grade fuel is now averaging $4.15 in the District. ... The national average is $3.91, compared to about $3.70 last month and just below $3.59 this time last year.

Hey - I wish gasoline was back to only $4 per gallon in California!

Note: The graph shows oil prices for WTI; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 3/28/2012 05:05:00 PM

From Margo Beller at CNBC: Improving Housing Market Driving Economy: Jamie Dimon

"I believe we’re very close to the inflection point. People look at prices that are still coming down but all the other signs are flashing green," [CEO Jamie Dimon] said during a job fair in New York for hiring veterans.

... "the shadow inventory everyone talks about is lower today than it was 12 months ago. It will be a lot lower 12 months from now," he said.

Distressed inventory "is actually coming down, not going up. Homes for sale are about half what they were four years ago. You could come up with a pretty bullish case. If the economy grows, housing gets better, quicker."

The comment on inventory declining in half is a bit of an exaggeration - actually listed inventory peaked at just over 4 million in July 2007, and is down about 40% - and inventory will increase seasonally over the next 6 months.

However I agree with Dimon on his key points. The first "bottom" for housing (new home sales, housing starts and residential investment) has already happened, and the second bottom (for prices) is close to an "inflection point".

See my posts from early February: The Housing Bottom is Here and Housing: The Two Bottoms

by Calculated Risk on 3/28/2012 02:09:00 PM

This is a depressing, but important post from Binyamin Appelbaum at the NY Times Economix: The Enduring Consequences of Unemployment

Our economic malaise has spurred a wave of research about the impact of unemployment on individuals and the broader economy. The findings are disheartening. The consequences are both devastating and enduring.

People who lose jobs, even if they eventually find new ones, suffer lasting damage to their earnings potential, their health and the prospects of their children. And the longer it takes to find a new job, the deeper the damage appears to be.
...
A 2009 study, to cite one recent example, found that workers who lost jobs during the recession of the early 1980s were making 20 percent less than their peers two decades later. The study focused on mass layoffs to limit the possibility that the results reflected the selective firings of inferior workers.

Losing a job also is literally bad for your health. A 2009 study found life expectancy was reduced for Pennsylvania workers who lost jobs during that same period. A worker laid off at age 40 could expect to die at least a year sooner than his peers.

And a particularly depressing paper, published in 2008, reported that children also suffer permanent damage when parents lose jobs.

As Appelbaum notes, much of this research was related to earlier recessions and does not address the issue of duration of unemployment.

Here is a repeat of a graph of duration of unemployment based on the most recent employment report:

Click on graph for larger image.

This graph shows the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

One of the defining characteristics of the 2007 recession is the large number of workers unemployed for an extended period (the red line on the graph). The consequences of long term unemployment are probably worse than the studies Appelbaum mentioned.

by Calculated Risk on 3/28/2012 10:28:00 AM

The Financial Times is reporting: US, France and UK consider oil release

Asked by reporters ... whether France would join a US-UK move to release strategic stocks, [French energy minister] Eric Besson replied: “It is the US that has asked for it. France is favourable to the suggestion.”

The minister added: “We are waiting now for the conclusions of the International Energy Agency”.
excerpt with permission

The article notes that the head of the IEA has recently said that a release is not warranted because there is no disruption in supply.

More from Reuters: France discussing strategic oil release with UK, US

France's Energy Minister Eric Besson told journalists after the weekly ministers' meeting that the United States had asked France to join it in a possible emergency inventory release.

Such a release could happen "in a matter of weeks", Le Monde daily said on Wednesday, citing presidential sources.

According to Bloomberg, Brent Crude futures are at $123.99 per barrel, and West Texas Intermediate (WTI) is at $105.37 per barrel.

by Calculated Risk on 3/28/2012 08:38:00 AM

From the MBA: Refinance Applications Drop for Sixth Consecutive Week

Mortgage applications decreased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 23, 2012. ...

The Refinance Index decreased 4.6 percent from the previous week. The Refinance Index has decreased for six consecutive weeks, falling to its lowest level since December, and is 24.2 percent lower than its 2012 peak observed in February. The decline in the Refinance Index this week was driven largely by a 12.0 percent drop in government refinance activity, while conventional refinance applications fell by less, decreasing 3.4 percent from the previous week. The seasonally adjusted Purchase Index increased 3.3 percent from one week earlier.
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 4.23 percent, the highest rate since November 2011, from 4.19 percent

Now that the automated systems are available, we will probably see an increase in HARP refinance activity going forward.

by Calculated Risk on 3/27/2012 11:12:00 PM

From the WSJ: Greece's Fringe Parties Surge Amid Bailout Ire

The election, not yet scheduled but expected in April or May, is shaping up as a public revolt against Greece's political establishment, which has backed the austerity policies that are the price of financial life support from Europe and the International Monetary Fund. Mainstream politicians are increasingly painted as leading Greece into a debt trap, then impoverishing it in trying to escape.

As a result, Greece's major parties, which have promised Europe they will enact yet another round of deep public-spending cuts by summer, are struggling for support.

Half the electorate plans to vote for radical opposition groups, ranging from Soviet-style Communists to anti-immigrant neo-Nazis ...

This sounds like a "just vote no" election.

Earlier on House Prices:
• Case Shiller: House Prices fall to new post-bubble lows in January
• Real House Prices and Price-to-Rent Ratio decline to late '90s Levels
• All current house price graphs

by Calculated Risk on 3/27/2012 07:06:00 PM

From CNBC: 'Best Spring in Five Years' for Housing: Toll CEO

It's been the "best spring in five years," [Toll Brothers CEO Douglas Yearley told CNBC]. In 2012 "our orders are up significantly and continue to be up significantly. I'm optimistic right now."
...
"25 percent of our communities have seen a price increase since Jan 1. That’s encouraging. There are places where we don’t have pricing power (but) we’re not dropping prices. We haven’t dropped prices in over a year."
...
Phoenix is hot for housing, having gone from 14 to 16 months of supply down to four or five months. "In the last month, Phoenix is back in a big way," Yearley said.
...
"We're bumping along the bottom in certain locations but we're clearly off the bottom in other locations," Yearley said.

This still hasn't shown up in the Census Bureau new home sales reports - but it will. Lennar reported sales up 33% year-over-year, Hovanian reported sales up 30% - however KB Home reported a decline in sales, though, as Tom Lawler noted today "KB Home’s surprise YOY drop in net orders for the quarter ended February 29th was company specific, and may have been related to its “preferred mortgage lender” issue."

Also the major homebuilders have probably gained share, so the increase will not be as sharp as some builders are reporting - but I expect to see a further increase in sales in the Census Bureau monthly report.

by Calculated Risk on 3/27/2012 06:29:00 PM

From the transcript:

CHAIRMAN BERNANKE: Well, we are in a recovery. The economy's been growing-- for almost three years. And we've had some good news lately. We've-- seen the unemployment rate come down. We've seen more jobs be created. And-- consumer and household-- and business sentiment have all improved, so that's all positive, but--

DIANE SAWYER: Strong?

CHAIRMAN BERNANKE: --we do have a long way to go. I-- I would say that we-- you know, it's-- it's far too early to declare victory. We have-- still 8.3% unemployment, that's-- that's too high. We've got a lot of people been un-- out of work for more than six months.
...
DIANE SAWYER: Another quantitative easing on the table, always possible?

CHAIRMAN BERNANKE: Well, we don't take any options off the table. We don't know what's gonna happen in the future and we have to be prepared to respond to however the economy evolves. But again we have 17 people around the table. We look at the economy-- comprehensively and-- and review it-- at every meeting and we try to assess, you know, how much progress we're making and what else we can do that will help us achieve both the growth we want, the reduction in unemployment we want, but also maintain the price stability, the low inflation which is the other part of our mandate.
...
DIANE SAWYER: I-- I want to just make sure I cover housing. And we're seeing these mixed signals on housing, housing prices still low, but we are seeing some-- up-tick in new house sales and also existing house sales. Have we hit bottom on housing?

CHAIRMAN BERNANKE: Well, housing remains-- a big concern for us. Normally in a recovery you would see housing growing much more quickly, construction-- housing related industries. So far housing is-- kinda still pretty flat. We have seen a few signs-- of-- of progress-- a few extra permits for construction. We see more construction in multi-family-- housing. More people are moving into apartment buildings for example. So there's a bit of-- a bit of a green shoot there if you-- if you will. But-- you know, we're not really yet in a full-fledged housing recovery. And you know, that will be part of-- the full recovery of the economy.

by Calculated Risk on 3/27/2012 02:58:00 PM

From ATA: ATA Truck Tonnage Increased 0.5% in February

The American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index rose 0.5% in February after falling 4.6% in January. (January’s decrease was more than the preliminary 4% drop we reported on February 28th.) The latest gain put the SA index at 119.3 (2000=100), up from January’s level of 118.7. Compared with February 2011, the SA index was up 5.5%, better than January’s 3.1% increase.
...
“Fleets told us that February was decent and that played out in the numbers,” ATA Chief Economist Bob Costello said. Costello noted that February’s month-to-month increase was sixth in the last seven months.

“I’m still expecting continued truck tonnage growth going forward. Rising manufacturing activity and temperate consumer spending should be helped a little from an improving housing market,” he said.

Click on graph for larger image.

Here is a long term graph that shows ATA's For-Hire Truck Tonnage index.

The dashed line is the current level of the index. The index is above the pre-recession level and up 5.5% year-over-year. From ATA:

Trucking serves as a barometer of the U.S. economy, representing 67.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9 billion tons of freight in 2010. Motor carriers collected $563.4 billion, or 81.2% of total revenue earned by all transport modes.

All current Transportation Graphs
Earlier on House Prices:
• Case Shiller: House Prices fall to new post-bubble lows in January
• Real House Prices and Price-to-Rent Ratio decline to late '90s Levels
• All current house price graphs