by Calculated Risk on 9/15/2021 09:21:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production increased 0.4 percent in August after moving up 0.8 percent in July. Late-month shutdowns related to Hurricane Ida held down the gain in industrial production by an estimated 0.3 percentage point. Although the hurricane forced plant closures for petrochemicals, plastic resins, and petroleum refining, overall manufacturing output rose 0.2 percent. Mining production fell 0.6 percent, reflecting hurricane-induced disruptions to oil and gas extraction in the Gulf of Mexico. The output of utilities increased 3.3 percent, as unseasonably warm temperatures boosted demand for air conditioning.

At 101.6 percent of its 2017 average, total industrial production in August was 5.9 percent above its year-earlier level and 0.3 percent above its pre-pandemic (February 2020) level. Capacity utilization for the industrial sector rose 0.2 percentage point in August to 76.4 percent, a rate that is 3.2 percentage points below its long-run (1972–2020) average.
emphasis added

Click on graph for larger image.

This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and slightly above the level in February 2020.

Capacity utilization at 76.4% is 3.2% below the average from 1972 to 2020.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production increased in August to 101.6. This is 0.3% above the February 2020 level.

The change in industrial production was slightly below consensus expectations.

by Calculated Risk on 9/15/2021 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 0.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 10, 2021. This week’s results include an adjustment for the Labor Day holiday.

... The Refinance Index decreased 3 percent from the previous week and was 3 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 8 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 12 percent lower than the same week one year ago.

“Purchase applications – after adjusting for the impact of Labor Day – increased over 7 percent last week to their highest level since April 2021. Compared to the same week last September, which was right in the middle of a significant upswing in home purchases, applications were down 11 percent – the smallest year-over-year decline in 14 weeks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Both conventional and government purchase applications increased, and the average loan size for a purchase application rose to $396,800. The very competitive purchase market continues to put upward pressure on sales prices.”

Added Kan, “While the 30-year fixed rate was unchanged at just over 3 percent, it was not enough to drive more refinance activity. Refinance applications slipped to their slowest pace since early July, and the refinance share of applications fell to 65 percent, which was also the lowest since July.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) remained unchanged at 3.03 percent, with points decreasing to 0.32 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

With low rates, the index remains elevated.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is down 12% year-over-year unadjusted.

Note: The year ago comparisons for the unadjusted purchase index are now difficult since purchase activity picked up in late May 2020.

Note: Red is a four-week average (blue is weekly).

by Calculated Risk on 9/14/2021 09:00:00 PM

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

• At 8:30 AM ET: The New York Fed Empire State manufacturing survey for September. The consensus is for a reading of 18.6, up from 18.3.

• At 9:15 AM: The Fed will release Industrial Production and Capacity Utilization for August. The consensus is for a 0.5% increase in Industrial Production, and for Capacity Utilization to increase to 76.4%.

by Calculated Risk on 9/14/2021 07:51:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 381,453,265, as of a week ago 374,488,924. Average doses last week: 0.99 million per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	54.0%	53.0%	≥70.0%1
Fully Vaccinated (millions)	179.3	176.0	≥2321
New Cases per Day3	139,897	149,796	≤5,0002
Hospitalized3	90,651	93,201	≤3,0002
Deaths per Day3🚩	1,262	1,147	≤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).  

This is all from the CDC - state data may differ!

KUDOS to the residents of the 11 states that have achieved 60% of total population fully vaccinated: Vermont at 68.7%, Massachusetts, Maine, Connecticut, Rhode Island, Maryland. New Jersey, Washington, New York, New Mexico, New Hampshire at 60.7%.

The following 15 states and D.C. have between 50% and 59.9% fully vaccinated: Oregon at 59.3%, District of Columbia, Virginia, Colorado, Minnesota, California, Hawaii, Delaware, Pennsylvania, Wisconsin, Florida, Nebraska, Iowa, Illinois, Michigan, South Dakota, and Kentucky at 50.2%.

Next up (total population, fully vaccinated according to CDC) are Arizona at 49.8%, Kansas at 49.7%, Ohio at 49.3%, Nevada at 49.3%, Texas at 49.2%, Utah at 48.9% and Alaska at 48.5%.

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 9/14/2021 12:30:00 PM

House Price to Median Income

NOTE: This is the new Newsletter that focuses solely on Real Estate. It is completely Free at this time.  Please subscribe!

The Census Bureau released median income data for 2020 today.

by Calculated Risk on 9/14/2021 11:46:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.3% in August. The 16% trimmed-mean Consumer Price Index rose 0.4% in August. "The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report".

Note: The Cleveland Fed released the median CPI details for July here. "Car and truck rental" were down 65% annualized (reversing some of the previous increase).

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. 

On a year-over-year basis, the median CPI rose 2.4%, the trimmed-mean CPI rose 3.2%, and the CPI less food and energy rose 4.0%. Core PCE is for July and increased 3.6% year-over-year.

by Calculated Risk on 9/14/2021 10:18:00 AM

The BLS reported this morning:

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 5.8 percent over the last 12 months to an index level of 268.387 (1982-84=100). For the month, the index rose 0.2 percent prior to seasonal adjustment.

CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). The calculation dates have changed over time (see Cost-of-Living Adjustments), but the current calculation uses the average CPI-W for the three months in Q3 (July, August, September) and compares to the average for the highest previous average of Q3 months. Note: this is not the headline CPI-U, and is not seasonally adjusted (NSA).

• In 2020, the Q3 average of CPI-W was 253.412.

The 2020 Q3 average was the highest Q3 average, so we only have to compare Q3 this year to last year.

Click on graph for larger image.

This graph shows CPI-W since January 2000. The red lines are the Q3 average of CPI-W for each year.

Note: The year labeled for the calculation, and the adjustment is effective for December of that year (received by beneficiaries in January of the following year).

CPI-W was up 5.8% year-over-year in August, and although this is early - we need the data for September - my current guess is COLA will probably be around 5.8% this year, the largest increase since 5.8% in 2008 - and it is possible this will be the largest increase since 1982 (7.4%).

Contribution and Benefit Base

The contribution base will be adjusted using the National Average Wage Index. This is based on a one year lag. The National Average Wage Index is not available for 2020 yet, but wages probably increased again in 2020. If wages increased the same as in 2019, then the contribution base next year will increase to around $148,200 in 2022, from the current $142,800.

Remember - this is an early look. What matters is average CPI-W, NSA, for all three months in Q3 (July, August and September).

by Calculated Risk on 9/14/2021 08:32:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in August on a seasonally adjusted basis after rising 0.5 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 5.3 percent before seasonal adjustment.

The indexes for gasoline, household furnishings and operations, food, and shelter all rose in August and contributed to the monthly all items seasonally adjusted increase. The energy index increased 2.0 percent, mainly due to a 2.8-percent increase in the gasoline index. The index for food rose 0.4 percent, with the indexes for food at home and food away from home both increasing 0.4 percent.

The index for all items less food and energy rose 0.1 percent in August, its smallest increase since February 2021. Along with the indexes for household operations and shelter, the indexes for new vehicles, recreation, and medical care also rose in August. The indexes for airline fares, used cars and trucks, and motor vehicle insurance all declined over the month.

The all items index rose 5.3 percent for the 12 months ending August, a smaller increase than the 5.4-percent rise for the period ending July. The index for all items less food and energy rose 4.0 percent over the last 12 months, also a smaller increase than the period ending July.
emphasis added

CPI and core CPI were both below expectations. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 9/13/2021 09:47:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 380,241,903, as of a week ago 374,488,924.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	53.8%	53.0%	≥70.0%1
Fully Vaccinated (millions)	178.7	176.0	≥2321
New Cases per Day3	117,622	152,402	≤5,0002
Hospitalized3	87,848	93,421	≤3,0002
Deaths per Day3	1,077	1,213	≤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 11 states that have achieved 60% of total population fully vaccinated: Vermont at 68.6%, Massachusetts, Maine, Connecticut, Rhode Island, Maryland. New Jersey, Washington, New York, New Mexico, New Hampshire at 60.5%.

The following 15 states and D.C. have between 50% and 59.9% fully vaccinated: Oregon at 59.2%, District of Columbia, Virginia, Colorado, Minnesota, California, Hawaii, Delaware, Pennsylvania, Wisconsin, Florida, Nebraska, Iowa, Illinois, Michigan, South Dakota, and Kentucky at 50.0%.

Next up (total population, fully vaccinated according to CDC) are Arizona at 49.7%, Kansas at 49.5%, Ohio at 49.2%, Nevada at 49.1%, Texas at 49.0%, Utah at 48.8% and Alaska at 48.3%.

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 9/13/2021 09:00:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Flat to Start The Week

Mortgage rates were fairly flat to start the new week. This leaves the average lender in the high 2% range for top tier conventional 30yr fixed scenarios (i.e. 20%+ equity, 740+ FICO, owner-occupied, single-family, detached homes). This is just a bit higher than the all-time lows seen at the beginning of the year when rates were in the mid-2% range. [30 year fixed 2.94%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for August.

• At 8:30 AM, The Consumer Price Index for August from the BLS. The consensus is for a 0.4% increase in CPI, and a 0.3% increase in core CPI.