by Calculated Risk on 1/26/2016 10:11:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Regional and state unemployment rates were little changed in December. Twenty-five states had unemployment rate decreases from November, 14 states had increases, and 11 states and the District of Columbia had no change, the U.S. Bureau of Labor Statistics reported today.
...
North Dakota had the lowest jobless rate in December, 2.7 percent, followed by Nebraska and South Dakota, 2.9 percent each. New Mexico had the highest rate, 6.7 percent.

Click on graph for larger image.

This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession.

The size of the blue bar indicates the amount of improvement.   The yellow squares are the lowest unemployment rate per state since 1976.

The states are ranked by the highest current unemployment rate. New Mexico, at 6.7%, had the highest state unemployment rate.

The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red).

Currently no state has an unemployment rate at or above 7% (light blue); Only eight states are at or above 6% (dark blue).

by Calculated Risk on 1/26/2016 09:15:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for November ("November" is a 3 month average of September, October and November prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

Note: Case-Shiller reports Not Seasonally Adjusted (NSA), I use the SA data for the graphs.

From S&P: Continued Increases in Home Prices for October According to the S&P/Case-Shiller Home Price Indices

The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a slightly higher year-over-year gain with a 5.3% annual increase in November 2015 versus a 5.1% increase in October 2015. The 10-City Composite increased 5.3% in the year to November compared to 5.0% previously. The 20-City Composite’s year-over-year gain was 5.8% versus 5.5% reported in October.
...
Before seasonal adjustment, the National Index posted a gain of 0.1% month-over-month in November. The 10- City Composite was unchanged and the 20-City Composite reported gains of 0.1% month-over-month in November. After seasonal adjustment, the National Index, along with the 10-City and 20-City Composites, all increased 0.9% month-over-month in November. Fourteen of 20 cities reported increases in November before seasonal adjustment; after seasonal adjustment, all 20 cities increased for the month.
emphasis added

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000).

The Composite 10 index is off 12.9% from the peak, and up 0.9% in November (SA).

The Composite 20 index is off 11.5% from the peak, and up 0.9% (SA) in November.

The National index is off 4.3% from the peak, and up 0.9% (SA) in November.  The National index is up 29.2% from the post-bubble low set in December 2011 (SA).

The second graph shows the Year over year change in all three indices.

The Composite 10 SA is up 5.4% compared to November 2014.

The Composite 20 SA is up 5.8% year-over-year..

The National index SA is up 5.3% year-over-year.

Prices increased (SA) in 20 of the 20 Case-Shiller cities in November seasonally adjusted.  (Prices increased in 14 of the 20 cities NSA)  Prices in Las Vegas are off 39.0% from the peak.

The last graph shows the bubble peak, the post bubble minimum, and current nominal prices relative to January 2000 prices for all the Case-Shiller cities in nominal terms.

As an example, at the peak, prices in Phoenix were 127% above the January 2000 level. Then prices in Phoenix fell slightly below the January 2000 level, and are now up 55% above January 2000 (55% nominal gain in almost 16 years).

These are nominal prices, and real prices (adjusted for inflation) are up about 40% since January 2000 - so the increase in Phoenix from January 2000 until now is about 15% above the change in overall prices due to inflation.

Six cities - Charlotte, Boston, Dallas, Denver, Portland and San Francisco - are above the bubble highs (Seattle is close).    Detroit prices are barely above the January 2000 level.

I'll have more on house prices later.

by Calculated Risk on 1/25/2016 06:27:00 PM

Tuesday:
• 9:00 AM: FHFA House Price Index for November 2015. This was originally a GSE only repeat sales, however there is also an expanded index.  The consensus is for a 0.5% month-to-month increase for this index.

• 9:00 AM: S&P/Case-Shiller House Price Index for November. Although this is the November report, it is really a 3 month average of September, October and November prices.  The consensus is for a 5.7% year-over-year increase in the Comp 20 index for November. The Zillow forecast is for the National Index to increase 5.3% year-over-year in November.

• 10:00 AM: Richmond Fed Survey of Manufacturing Activity for January.

• 10:00 AM ET: Regional and State Employment and Unemployment for December.

From Diana Olick at CNBC: Homebuilder DR Horton's Bet on Entry-Level Houses Paying Off Big

... Texas-based DR Horton's CEO David Auld said on the company's quarterly earnings call. "The Express (brand) has been the driver of market share gains."

Express launched in early 2014, touting no-option, no-frills homes in exchange for prices between $120,000 and $150,000. Prices are now slightly higher, moving with the broader market gains, but still below the nation's median price. The brand has solid footing in Texas, the Carolinas and Florida, but it is now expanding strongly into Southern California. ...

"They are doing the best job of any of the large builders executing at entry level, and I think you have to have that as you go through '16," homebuilding analyst Stephen East of Evercore ISI said on CNBC's "Squawk on the Street."

As we've discussed, future growth for new home sales is partially dependent on more affordable homes.

by Calculated Risk on 1/25/2016 12:55:00 PM

The automakers will report January vehicle sales on Tuesday, February 2nd.

Note:  There were 24 selling days in January, down from 26 in January 2015.

From WardsAuto: Forecast: January SAAR Set to Reach 10-Year High

A WardsAuto forecast calls for U.S. automakers to deliver 1.13 million light vehicles in January.

The resulting daily sales rate (DSR) of 47,126 units, a 10-year high for the month, over 24 days represents a 6.8% improvement from like-2015 (26 days) and a 19.2% month-to-month decline from December (28 days).

The 5-year average December-to-January decline is 26%, but the traditional pull-ahead of sales in December was not as strong as expected this time. Lighter deliveries allowed dealers to remain well-stocked with vehicles highest in demand going into January.

The report puts the seasonally adjusted annual rate of sales for the month at 17.3 million units, compared with a year-ago’s 16.6 million and December’s 17.2 million.

Looks like another solid month for car sales.

by Calculated Risk on 1/25/2016 10:35:00 AM

From the Dallas Fed: Texas Manufacturing Activity Falls Sharply

Texas factory activity fell sharply in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index—a key measure of state manufacturing conditions—dropped 23 points, from 12.7 to -10.2, suggesting output declined this month after growing throughout fourth quarter 2015.

Other indexes of current manufacturing activity also indicated contraction in January. The survey’s demand measures—the new orders index and the growth rate of orders index—led the falloff in production with negative readings last month, and these indexes pushed further negative in January. The new orders index edged down to -9.2, and the growth rate of orders index fell to -17.5, its lowest level in a year. The capacity utilization index fell 15 points from 8.1 to -7, and the shipments index also posted a double-digit decline into negative territory, coming in at -11.

Perceptions of broader business conditions weakened markedly in January. The general business activity and company outlook indexes fell to their lowest readings since April 2009, when Texas was in recession. The general business activity index fell 13 points to -34.6, and the company outlook index slipped to -19.5.

Labor market indicators reflected a decline in January after exhibiting strength in November and December 2015. The employment index dropped from 10.9 to -4.2, with 17 percent of firms noting net hiring and 21 percent noting net layoffs. The hours worked index plummeted 23 points to -9.2, suggesting a sharp pullback in employee hours.
emphasis added

Texas manufacturing is in a recession - no surprise with the sharp decline in oil prices.

by Calculated Risk on 1/25/2016 08:11:00 AM

Note: I follow several house price indexes (Case-Shiller, CoreLogic, Black Knight, Zillow, FHFA, FNC and more). Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.

From Black Knight: U.S. home prices rose 0.1% from October, and were up 5.5% on a year-over-year basis

• U.S. home prices rose 0.1% from October, and were up 5.5% on a year-over- year basis

• This puts national home prices up 27% since the bottom of the market at the start of 2012 and just 5.3% off its June 2006 peak

• For the fifth straight month, New York led gains among the states, seeing 1.2% month-over-month appreciation

• Ohio and Connecticut topped the list of 10 most negative price movements among the states, with home prices falling by 0.4% from October in each state

• California home prices declined for the second straight month, though seasonally adjusted numbers suggest continued but slowing growth for the state

The Black Knight HPI increased 0.1% percent in November, and is off 5.3% from the peak in June 2006 (not adjusted for inflation).

The year-over-year increase in the index has been about the same for the last year.

Note: Case-Shiller for November will be released tomorrow.

by Calculated Risk on 1/24/2016 08:51:00 PM

From James Hamilton at Econbrowser: Can lower oil prices cause a recession?. An excerpt:

There are thus some reasons why a decrease in oil prices would be a boost to the U.S. economy and other reasons why it could even be a drag. A number of studies have looked at the effects of oil price decreases and concluded that these have little or no net positive effect on U.S. real GDP growth; see for example this survey. The price of oil fell from $30/barrel in November 1985 to $12 by July of 1986. U.S. real GDP continued growing throughout, logging a 2.9% increase overall for 1986, neither significantly faster nor slower than normal.

But 1986 was a bad time for Texas and the other oil-producing states. Here’s a graph from some analysis I did with Michael Owyang of the Federal Reserve Bank of St. Louis. We estimated for each state’s employment growth a recession-dating algorithm like the one that Econbrowser updates each quarter for the overall U.S. economy (by the way, a new update will be posted this Friday). In the gif [at Econbrowser] you can watch the energy-producing states and their neighbors develop their own regional recession during the mid-1980’s even while national U.S. employment and GDP continued to grow.
...
[R]egardless of whether it’s oil prices that are moving stock prices or the other way around, folks in Texas and North Dakota have plenty of reason to be concerned.

Weekend:
• Schedule for Week of January 24, 2016

Monday:
• At 10:30 AM, the Dallas Fed Manufacturing Survey for January.

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are down 3 and DOW futures are down 33 (fair value).

Oil prices were up sharply over the last week with WTI futures at $32.24 per barrel and Brent at $32.33 per barrel.  A year ago, WTI was at $46, and Brent was at $47 - so prices are down about 30% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $1.82 per gallon (down about $0.20 per gallon from a year ago).

by Calculated Risk on 1/24/2016 10:46:00 AM

Here is a quote from an NPR article this morning: $1.22 A Gallon: Cheap Gas Raises Fears Of Urban Sprawl

"With the fall of gas prices, in a place like Columbus and most Midwestern cities, it really is going to encourage more sprawl," [Cleve Ricksecker, directs two Downtown Columbus Special Improvement Districts] says.

Sprawl can mean more traffic jams and air pollution. But he says only a spike in the price of gas would change the equation when people are making decisions about where to live and work.

Lower gasoline prices make exurbia more attractive (people have short memories), and we might see a shift to people buying homes with longer commutes.

In 2008, I wrote a post: Temecula: 15% of homes REO or in Foreclosure. I noted that Temecula was being hit hard by both the housing bust and high gasoline prices:

I remember visiting a friend in Temecula about 3 years ago. We were standing in his front yard, and he started telling me what his neighbors did for a living. "A mortgage broker lives there. A real estate agent there. That guy is in construction. Another mortgage broker there" ... and on and on. Over half of the households on his block were dependent on the housing market in way or another.

So it is no surprise that the housing bust is hitting Temecula hard.

But look at Temecula on this map. San Diego is far to the south - living in Escondido is a tough enough commute to work in San Diego. And Orange County is an even more difficult drive to the west. Imagine what $5 gasoline will do.

Here is that map. Now times are good in exurbia. The housing bust is over and gasoline prices are below $2 per gallon:


View Larger Map

by Calculated Risk on 1/23/2016 08:11:00 AM

The key reports this week are the first estimate of Q4 GDP, December New Home sales, and the Case-Shiller House Price Index for November.

The FOMC is meeting on Tuesday and Wednesday, and no change in policy is expected at this meeting.

----- Monday, January 25th -----
10:30 AM: Dallas Fed Manufacturing Survey for January.

----- Tuesday, January 26th -----
9:00 AM: FHFA House Price Index for November 2015. This was originally a GSE only repeat sales, however there is also an expanded index.  The consensus is for a 0.5% month-to-month increase for this index.

9:00 AM: S&P/Case-Shiller House Price Index for November. Although this is the November report, it is really a 3 month average of September, October and November prices.

This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the October 2015 report (the Composite 20 was started in January 2000).

The consensus is for a 5.7% year-over-year increase in the Comp 20 index for November. The Zillow forecast is for the National Index to increase 5.3% year-over-year in November.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for January.

10:00 AM ET: Regional and State Employment and Unemployment for December.

----- Wednesday, January 27th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

10:00 AM: New Home Sales for December from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the November sales rate.

The consensus is for a increase in sales to 500 thousand Seasonally Adjusted Annual Rate (SAAR) in December from 490 thousand in November.

2:00 PM: FOMC Meeting Announcement.  The FOMC is expected to make no change to policy at this meeting.

----- Thursday, January 28th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 285 thousand initial claims, down from 293 thousand the previous week.

8:30 AM: Durable Goods Orders for December from the Census Bureau. The consensus is for a 0.2% increase in durable goods orders.

10:00 AM: Pending Home Sales Index for December. The consensus is for a 0.8% increase in the index.

10:00 AM: the Q4 Housing Vacancies and Homeownership from the Census Bureau.

11:00 AM: the Kansas City Fed manufacturing survey for January.

----- Friday, January 29th -----
8:30 AM ET: Gross Domestic Product, 4th quarter 2015 (Advance estimate). The consensus is that real GDP increased 0.9% annualized in Q4.

9:45 AM: Chicago Purchasing Managers Index for January. The consensus is for a reading of 45.5, up from 42.9 in December.

10:00 AM: University of Michigan's Consumer sentiment index (final for January). The consensus is for a reading of 93.0, down from the preliminary reading 93.3.

by Calculated Risk on 1/22/2016 04:57:00 PM

With lower gasoline prices, driving has really picked up!

The Department of Transportation (DOT) reported today:

Travel on all roads and streets changed by 4.3% (10.4 billion vehicle miles) for November 2015 as compared with November 2014.

Travel for the month is estimated to be 253.2 billion vehicle miles.

The seasonally adjusted vehicle miles traveled for November 2015 is 264.0 billion miles, a 3.4% (8.8 billion vehicle miles) increase over November 2014. It also represents less than a 0.1% increase (13 million vehicle miles) compared with October 2015.

The following graph shows the rolling 12 month total vehicle miles driven to remove the seasonal factors.

The rolling 12 month total is moving up - mostly due to lower gasoline prices - after moving sideways for several years.


Click on graph for larger image.

In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Miles driven (rolling 12) had been below the previous peak for 85 months - an all time record - before reaching a new high for miles driven in January.

The second graph shows the year-over-year change from the same month in the previous year.

 In November 2015, gasoline averaged $2.26 per gallon according to the EIA.  That was down significantly from November 2014 when prices averaged $3.00 per gallon.  Gasoline prices have continued to decline, and vehicle miles will probably up sharply year-over-year in December and January.

Gasoline prices aren't the only factor - demographics are also important. However, with lower gasoline prices, miles driven - on a rolling 12 month basis - is setting new highs each month.