by Calculated Risk on 10/02/2021 08:11:00 AM

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

Other key indicators include the September ISM Services index and the August trade deficit.

----- Monday, October 4th -----
No major economic releases scheduled.

----- Tuesday, October 5th -----
8:00 AM ET: Corelogic House Price index for August

8:30 AM: Trade Balance report for August from the Census Bureau.  The consensus is for the deficit to be $70.5 billion in August, from $70.1 billion in July.

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.

10:00 AM: the ISM Services Index for September.

----- Wednesday, October 6th -----
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 September. This report is for private payrolls only (no government). The consensus is for 430,000 jobs added, up from 374,000 in August.

----- Thursday, October 7th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 345 thousand initial claims, down from 362 thousand last week.

----- Friday, October 8th -----
8:30 AM: Employment Report for September.   The consensus is for 460 thousand jobs added, and for the unemployment rate to decrease to 5.1%.

There were 235 thousand jobs added in August, and the unemployment rate was at 5.2%.

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".

by Calculated Risk on 10/01/2021 06:30:00 PM

Wards Auto released their estimate of light vehicle sales for September this evening. Wards Auto estimates sales of 12.18 million SAAR in September 2021 (Seasonally Adjusted Annual Rate), down 6.7% from the August sales rate, and down 25.2% from September 2020. 

This was well below the consensus estimate of 13.4 million SAAR.

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) and Wards Auto's estimate for September (red).

The impact of COVID-19 was significant, and April 2020 was the worst month.

After April 2020, sales increased, and were close to sales in 2019 (the year before the pandemic).  

However, sales have decreased recently due to supply issues.

by Calculated Risk on 10/01/2021 04:12:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 393,756,866, as of a week ago 388,567,109, or 0.74 million doses per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	55.7%	55.1%	≥70.0%1
Fully Vaccinated (millions)	184.9	183.0	≥2321
New Cases per Day3	104,649	118,371	≤5,0002
Hospitalized3	71,944	81,647	≤3,0002
Deaths per Day3	1,489	1,523	≤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 13 states and D.C. that have achieved 60% of total population fully vaccinated: Vermont at 69.5%, Connecticut, Maine, Rhode Island, Massachusetts, New Jersey, Maryland, New York, New Mexico, New Hampshire, Washington, Oregon, Virginia, and District of Columbia at 60.2%.

The following 21 states have between 50% and 59.9% fully vaccinated: Colorado at 59.4%, California, Minnesota, Hawaii, Pennsylvania, Delaware, Florida, Wisconsin, Texas, Nebraska, Iowa, Illinois, Michigan, Kentucky, South Dakota, Arizona, Kansas, Nevada, Alaska, Utah and Ohio at 50.3%.

Next up (total population, fully vaccinated according to CDC) are North Carolina 49.9%, Montana at 48.5%, Indiana at 48.4% and Missouri at 48.0% .

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 10/01/2021 02:16:00 PM

Today, in the Newsletter: As Forbearance Ends

Excerpt:

An analysis from CoreLogic today suggests “Nearly three-in-four loans in forbearance are expected to reach the 18-month maximum limit at the end of September.”
...
In Forbearance Will Not Lead to a Huge Wave of Foreclosures, I presented some data from Black Knight and argued “that most homeowners in forbearance have sufficient equity in their homes, and there will not be a huge wave of foreclosures like following the housing bubble.” But there will be some increase in foreclosure activity. I’ll track the data over the next few months, but this isn’t a huge concern.

by Calculated Risk on 10/01/2021 12:42:00 PM

Here is a table of some of the forecasts over the last two months. The significant downgrades during the quarter were primarily due to analysts initially underestimating the recent COVID wave, and also the impact of supply chain disruptions.

	Merrill	Goldman	GDPNow
7/30/21	7.0%	9.0%	6.1%
8/20/21	4.5%	5.5%	6.1%
9/10/21	4.5%	3.5%	3.7%
9/17/21	4.5%	4.5%	3.6%
9/24/21	4.5%	4.5%	3.7%
10/1/21	4.1%	4.25%	2.3%

From BofA Merrill Lynch:

Following this week's data, 3Q GDP tracking dropped to 4.1% qoq saar from 4.5% previously. The August deterioration in the goods trade deficit was the main driver. [Oct 1 estimate]
emphasis added

From Goldman Sachs:

Following this morning’s data, we left our Q3 GDP tracking estimate unchanged at +4¼% (qoq ar). [Oct 1 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 2.3 percent on October 1, down from 3.2 percent on September 27. After recent releases from the US Bureau of Economic Analysis, the US Census Bureau, and the Institute for Supply Management, the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real gross private domestic investment growth decreased from 2.2 percent and 15.9 percent, respectively, to 1.4 percent and 12.9 percent, respectively, while the nowcast of the contribution of the change in real net exports to third-quarter real GDP growth increased from -1.36 percentage points to -1.27 percentage points. [Oct 1 estimate]

by Calculated Risk on 10/01/2021 10:21:00 AM

From the Census Bureau reported that overall construction spending was "virtually unchanged":

Construction spending during August 2021 was estimated at a seasonally adjusted annual rate of $1,584.1 billion, virtually unchanged from the revised July estimate of $1,584.0 billion. The August figure is 8.9 percent above the August 2020 estimate of $1,455.0 billion. During the first eight months of this year, construction spending amounted to $1,034.5 billion, 7.0 percent above the $966.7 billion for the same period in 2020.
emphasis added

Private spending decreased and public spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $1,242.2 billion, 0.1 percent below the revised July estimate of $1,243.7 billion. ...

In August, the estimated seasonally adjusted annual rate of public construction spending was $341.9 billion, 0.5 percent above the revised July estimate of $340.3 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 16% above the bubble peak (in nominal terms - not adjusted for inflation).

Non-residential spending is 10% above the bubble era peak in January 2008 (nominal dollars), but has been weak recently.

Public construction spending is 9% above the peak in March 2009, but weak recently.

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

On a year-over-year basis, private residential construction spending is up 24.3%. Non-residential spending is down 2.3% year-over-year. Public spending is unchanged year-over-year.

Construction was considered an essential service during the early months of the pandemic in most areas, and did not decline sharply like many other sectors.  However, some sectors of non-residential have been under pressure. For example, lodging is down 30.7% YoY, multi-retail down 2.0% YoY (from very low levels), and office down 4.2% YoY.

This was below consensus expectations of a 0.3% increase in spending, however construction spending for the previous two months was revised up slightly.

by Calculated Risk on 10/01/2021 10:05:00 AM

(Posted with permission). The ISM manufacturing index indicated expansion in September. The PMI® was at 61.1% in September, up from 59.9% in August. The employment index was at 50.2%, up from 49.0% last month, and the new orders index was at 66.7%, unchanged from 66.7%.

From ISM: Manufacturing PMI® at 61.1% September 2021 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector grew in September, with the overall economy notching a 16th 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 September Manufacturing PMI® registered 61.1 percent, an increase of 1.2 percentage points from the August reading of 59.9 percent. This figure indicates expansion in the overall economy for the 16th month in a row after contraction in April 2020. The New Orders Index registered 66.7 percent, unchanged from the August reading. The Production Index registered 59.4 percent, a decrease of 0.6 percentage point compared to the August reading of 60 percent. The Prices Index registered 81.2 percent, up 1.8 percentage points compared to the August figure of 79.4 percent. The Backlog of Orders Index registered 64.8 percent, 3.4 percentage points lower than the August reading of 68.2 percent. The Employment Index returned to growth with a reading at 50.2 percent, 1.2 percentage points higher compared to the August reading of 49 percent. The Supplier Deliveries Index registered 73.4 percent, up 3.9 percentage points from the August figure of 69.5 percent. The Inventories Index registered 55.6 percent, 1.4 percentage points higher than the August reading of 54.2 percent. The New Export Orders Index registered 53.4 percent, a decrease of 3.2 percentage points compared to the August reading of 56.6 percent. The Imports Index registered 54.9 percent, an 0.6-percentage point increase from the August reading of 54.3 percent.”
emphasis added

This was above expectations, and this suggests manufacturing expanded at a slightly faster pace in September than in August.

by Calculated Risk on 10/01/2021 08:36:00 AM

The BEA released the Personal Income and Outlays report for August:

Personal income increased $35.5 billion (0.2 percent) in August according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $18.9 billion (0.1 percent) and personal consumption expenditures (PCE) increased $130.5 billion (0.8 percent).

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

The August PCE price index increased 4.3 percent year-over-year and the August PCE price index, excluding food and energy, increased 3.6 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through August 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 slightly below expectations,  and the increase in PCE was above expectations.

Using the two-month method to estimate Q3 PCE growth, PCE was increasing at a 0.3% annual rate in Q3 2021. (using the mid-month method, PCE was  increasing at 2.2%).  This follows a sharp increase in PCE in Q2.

by Calculated Risk on 9/30/2021 09:00:00 PM

Friday:
• At 8:30 AM ET, Personal Income and Outlays for August. The consensus is for a 0.3% increase in personal income, and for a 0.6% increase in personal spending. And for the Core PCE price index to increase 0.2%.

• At 10:00 AM, ISM Manufacturing Index for September. The consensus is for a reading of 59.5, down from 59.9 in August. 

• Also at 10:00 AM, Construction Spending for August. The consensus is for a 0.3% increase.

• Late: Light vehicle sales for September. The consensus is for sales of 13.4 million SAAR, up from 13.1 million SAAR in August (Seasonally Adjusted Annual Rate).

by Calculated Risk on 9/30/2021 07:12:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 392,909,995, as of a week ago 387,821,704, or 0.85 million doses per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	55.6%	55.0%	≥70.0%1
Fully Vaccinated (millions)	184.6	182.6	≥2321
New Cases per Day3	106,394	122,659	≤5,0002
Hospitalized3	73,437	82,827	≤3,0002
Deaths per Day3	1,476	1,527	≤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 13 states and D.C. that have achieved 60% of total population fully vaccinated: Vermont at 69.5%, Connecticut, Maine, Rhode Island, Massachusetts, New Jersey, Maryland, New York, New Mexico, New Hampshire, Washington, Oregon, Virginia, and District of Columbia at 60.1%.

The following 21 states have between 50% and 59.9% fully vaccinated: Colorado at 59.4%, California, Minnesota, Hawaii, Pennsylvania, Delaware, Florida, Wisconsin, Texas, Nebraska, Iowa, Illinois, Michigan, Kentucky, South Dakota, Arizona, Kansas, Nevada, Alaska, Utah and Ohio at 50.2%.

Next up (total population, fully vaccinated according to CDC) are North Carolina 49.8%, Montana at 48.5%, and Indiana at 48.4% .

Click on graph for larger image.

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