by Calculated Risk on 8/29/2021 10:17:00 AM

Note: Back in early 2016, I noted that energy expenditures as a percentage of PCE had hit an all time low. Here is an update through the recently released July PCE report.

Below is a graph of expenditures on energy goods and services as a percent of total personal consumption expenditures through July 2021.

This is one of the measures that Professor Hamilton at Econbrowser looks at to evaluate any drag on GDP from energy prices.

Click on graph for larger image.

Data source: BEA.

The huge spikes in energy prices during the oil crisis of 1973 and 1979 are obvious. As is the increase in energy prices during the 2001 through 2008 period.

In general, energy expenditures as a percent of PCE have been trending down for years.

At the beginning of the pandemic, energy expenditures as a percentage of PCE, fell to a record low of 3.3% in May 2020.

In July 2021, energy expenditures as a percentage of PCE had rebounded and were at 4.0% of PCE.  This is slightly above the pre-pandemic level in early 2020.

by Calculated Risk on 8/28/2021 06:46:00 PM

The BEA released the Personal Income and Outlays, July 2021 report yesterday.   The report showed that government transfer payments were still almost $1.0 trillion (on SAAR basis) above the February 2020 level (pre-pandemic)  Note: Seasonal adjustment doesn't make sense with one time payments, but that is how the data is presented.  

This table shows the amount of unemployment insurance and "Other" transfer payments since January 2020 (pre-crisis level).  The increase in "Other" was mostly due to parts of the relief acts including direct payments.

Note: Not in the table below, but Social Security and Medicare payments haven't increased significantly from the pre-recession levels.  Social Security increased from $1,065 billion SAAR in Jan 2020 to $1,113 billion SAAR in July 2021.  Medicare increased from $807 billion to $821 billion.  Medicaid increased significantly from $603 billion to $760 billion.

But most of the increase in transfer payments - compared to the levels prior to the crisis - is from unemployment insurance and "other" (includes direct payments). 

Selected Transfer Payments Billions of dollars, SAAR
	Other	Unemployment Insurance
Jan-20	$511	$26
Feb-20	$506	$26
Mar-20	$516	$67
Apr-20	$3,393	$435
May-20	$1,373	$1,287
Jun-20	$743	$1,396
Jul-20	$750	$1,366
Aug-20	$697	$612
Sep-20	$950	$325
Oct-20	$714	$296
Nov-20	$580	$285
Dec-20	$604	$319
Jan-21	$2,317	$574
Feb-21	$735	$558
Mar-21	$4,706	$566
Apr-21	$1,344	$516
May-21	$802	$492
Jun-21	$736	$433
Jul-21	$907	$381

by Calculated Risk on 8/28/2021 08:11:00 AM

The key report this week is the August employment report on Friday.

Other key indicators include the August ISM manufacturing and services indexes, August auto sales, Case-Shiller house prices for June, and the July trade deficit.

----- Monday, August 30th -----
10:00 AM: Pending Home Sales Index for July. The consensus is for a 0.4% increase in the index.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for August. This is the last of the regional Fed manufacturing surveys for August.

----- Tuesday, August 31st -----
9:00 AM: S&P/Case-Shiller House Price Index for June.

This graph shows the year-over-year change in the seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

The consensus is for a 18.6% year-over-year increase in the Comp 20 index for June.

9:00 AM: FHFA House Price Index for June. This was originally a GSE only repeat sales, however there is also an expanded index.

9:45 AM: Chicago Purchasing Managers Index for August.

----- Wednesday, September 1st -----
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 August. This report is for private payrolls only (no government). The consensus is for 638,000 payroll jobs added in August, up from 330,000 added in July.

10:00 AM: ISM Manufacturing Index for August. The consensus is for the ISM to be at 58.5, down from 59.5 in July.

10:00 AM: Construction Spending for July. The consensus is for a 0.3% increase in construction spending.

Late: Light vehicle sales for August. The consensus is for light vehicle sales to be 15.0 million SAAR in August, up from 14.75 million in July (Seasonally Adjusted Annual Rate).

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

----- Thursday, September 2nd -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for a decrease slightly to 350 thousand from 353 thousand last week.

8:30 AM: Trade Balance report for July 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 for the U.S. trade deficit to be at $70.9 billion in July, from $75.7 billion in June.

----- Friday, September 3rd -----
8:30 AM: Employment Report for August.   The consensus is for 728 thousand jobs added, and for the unemployment rate to decrease to 5.2%.

There were 943 thousand jobs added in July, and the unemployment rate was at 5.4%.

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, but currently is not as severe as the worst of the "Great Recession".

10:00 AM: ISM Services Index for August.

by Calculated Risk on 8/27/2021 06:08:00 PM

I'm launching a newsletter focused solely on real estate.  This newsletter will be ad free.

Recent articles include:
• Forbearance, Delinquencies and Foreclosure: Will the end of the foreclosure moratorium, combined with the expiration of a large number of forbearance plans, lead to a surge in foreclosures and impact house prices, as happened following the housing bubble?

• How Much will the Fannie & Freddie Conforming Loan Limit Increase for 2022?

• New Home Sales Increase to 708,000 Annual Rate in July

• Existing-Home Sales Increased to 5.99 million in July

• Housing Starts decreased to 1.534 Million Annual Rate in July

• Housing and Demographics: The Next Big Shift

This will usually be published several times a week, and will provide more in-depth analysis of the housing market.

The blog will continue as always!

You can subscribe at https://calculatedrisk.substack.com/ (Currently all content is available for free, but please subscribe).

by Calculated Risk on 8/27/2021 03:52:00 PM

The 7-day average hospitalizations is the highest since February 3rd.

The 7-day average deaths is the highest since March 16th.

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 366,838,484, as of a week ago 360,634,287. Average doses last week: 0.89 million per day. 

COVID Metrics
	Today	Yesterday	Week Ago	Goal
Percent fully Vaccinated	52.0%	51.9%	51.2%	≥70.0%1
Fully Vaccinated (millions)	172.6	172.2	170.0	≥2321
New Cases per Day3🚩	144,138	143,835	140,242	≤5,0002
Hospitalized3🚩	88,009	87,585	79,393	≤3,0002
Deaths per Day3🚩	906	860	803	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37 day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  

KUDOS to the residents of the 7 states that have achieved 60% of total population fully vaccinated: Vermont at 67.7%, Massachusetts, Maine, Connecticut, Rhode Island, Maryland and New Jersey at 61.0%.

The following 17 states and D.C. have between 50% and 59.9% fully vaccinated: Washington at 59.8%, New Hampshire, New York State, New Mexico, Oregon, District of Columbia, Virginia, Colorado, Minnesota, California, Hawaii, Delaware, Pennsylvania, Wisconsin, Florida, Nebraska, Iowa, Illinois, and Michigan at 50.3%.

Next up (total population, fully vaccinated according to CDC) are South Dakota at 48.8%, Ohio at 48.1%, Kentucky at 48.0%, Kansas at 47.8%, Arizona at 47.5%, Utah at 47.3%, Nevada at 47.3%, and Alaska at 47.0%.

Click on graph for larger image.

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

by Calculated Risk on 8/27/2021 01:28:00 PM

Will the end of the foreclosure moratorium, combined with the expiration of a large number of forbearance plans, lead to a surge in foreclosures and impact house prices, as happened following the housing bubble?

I'm launching a newsletter focused solely on real estate.  This newsletter will be ad free.

The current article discusses forbearance, delinquencies and foreclosure.

This will usually be published several times a week, and will provide more in-depth analysis of the housing market.  

The blog will continue as always!

You can subscribe at https://calculatedrisk.substack.com/ (Currently all content is available for free, but please subscribe).

by Calculated Risk on 8/27/2021 12:05:00 PM

From Goldman Sachs:

Following this morning’s data, we left our Q3 GDP tracking estimate unchanged at +5.5% (qoq ar). [August 27 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 3.8% for 2021:Q3. [August 27 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2021 is 5.1 percent on August 27, down from 5.7 percent on August 25. [August 27 estimate]

by Calculated Risk on 8/27/2021 10:29:00 AM

Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.

This data is as of August 24th.

From Andy Walden at Black Knight: Familiar Midmonth Uptick in Forbearances

Continuing the same mid-month trend we also noted last week, the number of active forbearance plans edged slightly higher once again.

According to Black Knight’s McDash Flash forbearance tracker, there are now 1.76 million borrowers who remain in COVID-19 related forbearance plans as of August 24, including 1.9% of GSE, 5.8% of FHA/VA and 4.1% of portfolio held and privately securitized mortgages.

The overall number of active forbearances rose by 12,000 since last Tuesday, driven primarily by a 10,000 increase in plans among portfolio/PLS loans. FHA/VA volumes also rose – though a more modest 3,000 – with GSE plans seeing the week’s only decline (-1,000).

Click on graph for larger image.

This puts plan volumes down 132,000 from the same time last month for a 7% decline. More than 150,000 plans are slated for review for extension or removal through the final week of August, so there is still some opportunity for modest improvement yet this month.

That number ramps up to nearly 670,000 for September, though, with 415,000 of those plans set to reach their final expiration next month based on current allowable forbearance term lengths.
emphasis added

by Calculated Risk on 8/27/2021 10:18:00 AM

From Fed Chair Powell at Jackson Hole Symposium: Monetary Policy in the Time of Covid (Watch speech here). Excerpt:

That brings me to a concluding word on the path ahead for monetary policy. The Committee remains steadfast in our oft-expressed commitment to support the economy for as long as is needed to achieve a full recovery. The changes we made last year to our Statement on Longer-Run Goals and Monetary Policy Strategy are well suited to address today's challenges.

We have said that we would continue our asset purchases at the current pace until we see substantial further progress toward our maximum employment and price stability goals, measured since last December, when we first articulated this guidance. My view is that the "substantial further progress" test has been met for inflation. There has also been clear progress toward maximum employment. At the FOMC's recent July meeting, I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year. The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the Delta variant. We will be carefully assessing incoming data and the evolving risks. Even after our asset purchases end, our elevated holdings of longer-term securities will continue to support accommodative financial conditions.

The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test. We have said that we will continue to hold the target range for the federal funds rate at its current level until the economy reaches conditions consistent with maximum employment, and inflation has reached 2 percent and is on track to moderately exceed 2 percent for some time. We have much ground to cover to reach maximum employment, and time will tell whether we have reached 2 percent inflation on a sustainable basis.
emphasis added

by Calculated Risk on 8/27/2021 08:37:00 AM

The BEA released the Personal Income and Outlays, July 2021 report:

Personal income increased $225.9 billion (1.1 percent) in July according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $198.0 billion (1.1 percent) and personal consumption expenditures (PCE) increased $42.2 billion (0.3 percent).

Real DPI increased 0.7 percent in July and Real PCE decreased 0.1 percent; goods decreased 1.6 percent and services increased 0.6 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.
emphasis added

The July PCE price index increased 4.2 percent year-over-year and the July PCE price index, excluding food and energy, increased 3.6 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through July 2021 (2012 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was above expectations, and personal spending was at expectations,  and the increase in PCE was at expectations.