by Calculated Risk on 5/03/2021 10:39:00 AM

One of the key questions for 2021 is: Will inventory increase as the pandemic subsides, or will inventory decrease further in 2021?

Tracking inventory will be very important this year.

Click on graph for larger image in graph gallery.

This inventory graph is courtesy of Altos Research.

As of April 30th, inventory was at 307 thousand (7 day average), compared to 738 thousand the same week a year ago.  That is a decline of 58%.

A week ago, inventory was at 310 thousand, and was down 58% YoY.  Seasonally, inventory might be at a bottom - this is the same level as three weeks ago at 307 thousand.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 5/03/2021 10:18:00 AM

From the Census Bureau reported that overall construction spending decreased:

Construction spending during March 2021 was estimated at a seasonally adjusted annual rate of $1,513.1 billion, 0.2 percent above the revised February estimate of $1,509.9 billion. The March figure is 5.3 percent above the March 2020 estimate of $1,436.7 billion.
emphasis added

Private spending increased and public spending decreased:

Spending on private construction was at a seasonally adjusted annual rate of $1,169.2 billion, 0.7 percent above the revised February estimate of $1,160.9 billion. ...

In March, the estimated seasonally adjusted annual rate of public construction spending was $343.9 billion, 1.5 percent below the revised February estimate of $349.0 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential spending is 7% above the bubble peak (in nominal terms - not adjusted for inflation).

Non-residential spending is 7% above the previous peak in January 2008 (nominal dollars), but has been weak recently.

Public construction spending is 6% above the previous peak in March 2009, and 31% above the austerity low in February 2014.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 23.3%. Non-residential spending is down 9.1% year-over-year. Public spending is down 4.6% year-over-year.

Construction was considered an essential service in most areas and did not decline sharply like many other sectors, but it seems likely that non-residential will be under pressure. For example, lodging is down 24% YoY, multi-retail down 31.5% YoY, and office down 4.2% YoY.

This was well below consensus expectations of a 2.0% increase in spending, and construction spending for the previous two months was revised down.

by Calculated Risk on 5/03/2021 10:04:00 AM

(Posted with permission). The ISM manufacturing index indicated expansion in April. The PMI® was at 60.7% in April, down from 64.7% in March. The employment index was at 55.1%, down from 59.6% last month, and the new orders index was at 64.3%, down from 68.0%.

From ISM: April 2021 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector grew in April, with the overall economy notching an 11th consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

“The April Manufacturing PMI® registered 60.7 percent, a decrease of 4 percentage points from the March reading of 64.7 percent. This figure indicates expansion in the overall economy for the 11th month in a row after contraction in April 2020. The New Orders Index registered 64.3 percent, declining 3.7 percentage points from the March reading of 68 percent. The Production Index registered 62.5 percent, a decrease of 5.6 percentage points compared to the March reading of 68.1 percent. The Backlog of Orders Index registered 68.2 percent, 0.7 percentage point higher compared to the March reading of 67.5 percent. The Employment Index registered 55.1 percent, 4.5 percentage points lower than the March reading of 59.6 percent. The Supplier Deliveries Index registered 75 percent, down 1.6 percentage points from the March figure of 76.6 percent. The Inventories Index registered 46.5 percent, 4.3 percentage points lower than the March reading of 50.8 percent. The Prices Index registered 89.6 percent, up 4 percentage points compared to the March reading of 85.6 percent. The New Export Orders Index registered 54.9 percent, an increase of 0.4 percentage point compared to the March reading of 54.5 percent. The Imports Index registered 52.2 percent, a 4.5-percentage point decrease from the March reading of 56.7 percent.”
emphasis added

This was well below expectations.

This suggests manufacturing expanded at a slower pace in April than in March.

by Calculated Risk on 5/03/2021 08:30:00 AM

These indicators are mostly for travel and entertainment.    It will interesting to watch these sectors recover as the vaccine is distributed.   

IMPORTANT: Be safe now - if all goes well, everyone could be vaccinated by June.

----- Airlines: Transportation Security Administration -----
The TSA is providing daily travel numbers.

Click on graph for larger image.

This data shows the seven day average of daily total traveler throughput from the TSA for 2019 (Light Blue), 2020 (Blue) and 2021 (Red).

The dashed line is the percent of 2019 for the seven day average.

This data is as of May 2nd.

The seven day average is down 40.6% from the same day in 2019 (59.4% of 2019).  (Dashed line)

There was a slow increase from the bottom, with ups and downs due to the holidays - and TSA data has picked up in 2021, but mostly sideways over the last several weeks.

----- Restaurants: OpenTable -----
The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

IMPORTANT: OpenTable notes: "we’ve updated the data including downloadable dataset from January 1, 2021 onward to compare seated diners from 2021 to 2019, as opposed to year over year." Thanks!

Thanks to OpenTable for providing this restaurant data:

This data is updated through May 1, 2021.

This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."

Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.

Dining picked up during the holidays, then slumped with the huge winter surge in cases.  Dining was picking up again, but has moved up and down over the last couple of weeks.  Florida and Texas are above 2019 levels.

----- Movie Tickets: Box Office Mojo -----
This data shows domestic box office for each week and the median for the years 2016 through 2019 (dashed light blue).  

Blue is 2020 and Red is 2021.  

The data is from BoxOfficeMojo through Apr 29th.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.

Movie ticket sales were at $61 million last week,  down about 79% from the median for the week.

----- Hotel Occupancy: STR -----
This graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2021, black is 2020, blue is the median, and dashed light blue is for 2009 (the worst year since the Great Depression for hotels - before 2020).

Occupancy is now above the horrible 2009 levels.

This data is through April 24th. Hotel occupancy is currently down 17% compared to same week in 2019). Note: Occupancy was up year-over-year, since occupancy declined sharply at the onset of the pandemic. However, occupancy is still down significantly from normal levels.

Notes: Y-axis doesn't start at zero to better show the seasonal change.

----- Gasoline Supplied: Energy Information Administration -----
This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019.

Blue is for 2020.  Red is for 2021.

As of April 23rd, gasoline supplied was off about 3.4% (about 96.6% of the same week in 2019).

Gasoline supplied was up year-over-year, since at one point, gasoline supplied was off almost 50% YoY in 2020.

----- Transit: Apple Mobility -----
This graph is from Apple mobility. From Apple: "This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities." This is just a general guide - people that regularly commute probably don't ask for directions.

There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set "relative to its weekday-specific average over January–February", and is not seasonally adjusted, so we can't tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer.

This data is through May 1st for the United States and several selected cities.

The graph is the running 7 day average to remove the impact of weekends.

IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.

According to the Apple data directions requests, public transit in the 7 day average for the US is at 68% of the January 2020 level. It is at 67% in Chicago, and 60% in Houston - and moving up recently.

----- New York City Subway Usage -----
Here is some interesting data on New York subway usage (HT BR).

This graph is from Todd W Schneider. This is weekly data since 2015. 

Most weeks are between 30 and 35 million entries, and currently there more than 10 million subway turnstile entries per week - and increasing.

This data is through Friday, April 30th.

Schneider has graphs for each borough, and links to all the data sources.

He notes: "Data updates weekly from the MTA’s public turnstile data, usually on Saturday mornings".

by Calculated Risk on 5/02/2021 11:00:00 PM

A few brief excerpts from a Goldman Sachs research note on housing:

Strong demand for housing looks sustainable. Even before the pandemic, demographic tailwinds and historically-low mortgage rates had pushed demand to high levels. ... consumer surveys indicate that household buying intentions are now the highest in 20 years. ... mortgage lending standards have remained fairly tight. With demographic trends still strong, mortgage rates very low, housing affordability still high, and household wealth as a share of income at the highest level in US history, demand should remain strong.

The supply picture offers no quick fixes to the shortage of available homes ... The resulting picture is one of a persistent supply-demand imbalance in the years ahead. ... [Our] model suggests that rising prices will only gradually reduce affordability enough to dampen demand and mitigate the supply-demand imbalance. As a result, the model projects double-digit price gains both this year and next.

by Calculated Risk on 5/02/2021 06:29:00 PM

Weekend:
• Schedule for Week of May 2, 2021

• Q1 2021 GDP Details on Residential and Commercial Real Estate

Monday:
• At 10:00 AM ET, ISM Manufacturing Index for April. The consensus is for the ISM to be at 65.0, up from 64.7 in March.

• Also at 10:00 AM, Construction Spending for March. The consensus is for a 2.0% increase in construction spending.

• All day, Light vehicle sales for April. The expectation is for light vehicle sales to be 17.9 million SAAR in April, unchanged from 17.85 million in March (Seasonally Adjusted Annual Rate).

• At 2:00 PM, Senior Loan Officer Opinion Survey on Bank Lending Practices for April.

• At 2:20 PM, Speech, Fed Chair Jerome Powell, Community Development, At the National Community Reinvestment Coalition’s 2021 Just Economy Conference (via livestream)

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 10, and DOW futures are up 68 (fair value).

Oil prices were up over the last week with WTI futures at $63.56 per barrel and Brent at $66.73 per barrel. A year ago, WTI was at $20, and Brent was at $18 - so WTI oil prices are UP sharply year-over-year (oil prices collapsed at the beginning of the pandemic).

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.89 per gallon. A year ago prices were at $1.75 per gallon, so gasoline prices are up $1.14 per gallon year-over-year.

by Calculated Risk on 5/02/2021 08:11:00 AM

The BEA released the underlying details for the Q1 advance GDP report on Friday.

The BEA reported that investment in non-residential structures decreased at a 4.8% annual pace in Q1. This was the sixth consecutive quarterly decline (weakness in non-residential structures started before the pandemic).  

Investment in petroleum and natural gas structures increased sharply in Q1 compared to Q4, but was still down 40% year-over-year.  

Click on graph for larger image.

The first graph shows investment in offices, malls and lodging as a percent of GDP.

Investment in offices (blue) decreased in Q1, and was down 4.5% year-over-year.

Investment in multimerchandise shopping structures (malls) peaked in 2007 and was down about 28% year-over-year in Q1 - and at a record low as a percent of GDP.   The vacancy rate for malls is still very high, so investment will probably stay low for some time.

Lodging investment decreased in Q1, and lodging investment was down 22% year-over-year.

All three sectors - offices, malls, and hotels - are being hurt significantly by the pandemic.

The second graph is for Residential investment components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single family structures, multifamily structures, home improvement, Brokers’ commissions and other ownership transfer costs, and a few minor categories (dormitories, manufactured homes).

Even though investment in single family structures has increased from the bottom, single family investment is still low, and still barely above the bottom for previous recessions as a percent of GDP.

Investment in single family structures was $375 billion (SAAR) (about 1.7% of GDP), and up 22% year-over-year.

Investment in multi-family structures increased slightly in Q1.

Investment in home improvement was at a $325 billion Seasonally Adjusted Annual Rate (SAAR) in Q3 (about 1.5% of GDP).  Home improvement spending has been strong during the pandemic.

Note that Brokers' commissions (black) increased sharply as existing home sales increased in the second half of 2020, and was up 26% year-over-year in Q1.

by Calculated Risk on 5/01/2021 08:09:00 PM

Note: I'm looking forward to not posting this daily! I've been posting this data daily for over a year, and I'll stop once all three of these criteria are met:
1) 70% of the population over 18 has had at least one dose of vaccine, and
2) new cases are under 5,000 per day, and
3) hospitalizations are below 3,000.

According to the CDC, 243.5 million doses have been administered. 39.8% of the population over 18 is fully vaccinated, and 55.8% of the population over 18 has had at least one dose (144.2 million people over 18 have had at least one dose).

And check out COVID Act Now to see how each state is doing. 

20,279 US deaths were reported in April due to COVID - the fewest since March 2020.

Click on graph for larger image.

This graph shows the daily (columns) 7 day average (line) of positive tests reported.

Note: The ups and downs during the Winter surge were related to reporting delays due to the Thanksgiving and Christmas holidays.

This data is from the CDC.

The 7-day average is 50,514, down from 51,782 yesterday, and down from the recent peak of 69,881 on April 13, 2021. This is the lowest since October 11, 2020, but well above the post-summer surge low of 34,668.

The second graph shows the number of people hospitalized.

This data is also from the CDC.

The CDC cautions that due to reporting delays, the area in grey will probably increase.

The current 7-day average is 36,304, down from 36,716 reported yesterday, but well above the post-summer surge low of 23,000.

by Calculated Risk on 5/01/2021 08:11:00 AM

The key report scheduled for this week is the April employment report.

Other key reports include April vehicle sales, and the March trade balance.

For manufacturing, the April ISM manufacturing index will be released.

----- Monday, May 3rd -----
10:00 AM: ISM Manufacturing Index for April. The consensus is for the ISM to be at 65.0, up from 64.7 in March.

10:00 AM: Construction Spending for March. The consensus is for a 2.0% increase in construction spending.

All day: Light vehicle sales for April. The expectation is for light vehicle sales to be 17.9 million SAAR in April, unchanged from 17.85 million in March (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the sales rate for the previous month.

2:00 PM: Senior Loan Officer Opinion Survey on Bank Lending Practices for April.

2:20 PM, Speech, Fed Chair Jerome Powell, Community Development, At the National Community Reinvestment Coalition’s 2021 Just Economy Conference (via livestream)

----- Tuesday, May 4th -----
8:00 AM ET: Corelogic House Price index for March.

8:30 AM: Trade Balance report for March from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The consensus is the trade deficit to be $74.0 billion.  The U.S. trade deficit was at $71.1 Billion in February.

----- Wednesday, May 5th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for April. This report is for private payrolls only (no government). The consensus is for 830,000 payroll jobs added in April, up from 517,000 added in March.

10:00 AM: the ISM Services Index for April.   The consensus is for a reading of 64.3, up from 63.7.

----- Thursday, May 6th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for a decrease to 525 thousand from 553 thousand last week.

----- Friday, May 7th -----
8:30 AM: Employment Report for April.   The consensus is for 978,000 jobs added, and for the unemployment rate to decrease to 5.7%.

There were 916,000 jobs added in March, and the unemployment rate was at 6.0%.

This graph shows the job losses from the start of the employment recession, in percentage terms.

The current employment recession was by far the worst recession since WWII in percentage terms, and is now slightly better than the worst of the "Great Recession".

by Calculated Risk on 4/30/2021 04:27:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency decreased to 2.58% in March, from 2.76% in February. The serious delinquency rate is up from 0.66% in March 2020.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure".

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59% following the housing bubble, and peaked at 3.32% in August 2020 during the pandemic.

Click on graph for larger image

By vintage, for loans made in 2004 or earlier (2% of portfolio), 5.66% are seriously delinquent (down from 5.90% in February). For loans made in 2005 through 2008 (2% of portfolio), 9.65% are seriously delinquent (down from 10.01%), For recent loans, originated in 2009 through 2021 (96% of portfolio), 2.13% are seriously delinquent (down from 2.29%). So Fannie is still working through a few poor performing loans from the bubble years.

Mortgages in forbearance are counted as delinquent in this monthly report, but they will not be reported to the credit bureaus.

This is very different from the increase in delinquencies following the housing bubble.   Lending standards have been fairly solid over the last decade, and most of these homeowners have equity in their homes - and they will be able to restructure their loans once they are employed.

Note: Freddie Mac reported earlier.