by Calculated Risk on 5/08/2022 06:40:00 PM

Weekend:
• Schedule for Week of May 8, 2022

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

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 25 and DOW futures are down 170 (fair value).

Oil prices were up over the last week with WTI futures at $109.60 per barrel and Brent at $112.24 per barrel. A year ago, WTI was at $66 and Brent was at $69 - so WTI oil prices are up 70% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $4.31 per gallon. A year ago prices were at $2.95 per gallon, so gasoline prices are up $1.36 per gallon year-over-year.

by Calculated Risk on 5/08/2022 09:49:00 AM

It will be interesting to see if high gasoline prices will lead to a higher percentage of passenger car sales.

The BEA released their estimate of light vehicle sales for April last week.

This graph shows the percent of light vehicle sales between passenger cars and trucks / SUVs through April 2022.

Over time the mix has changed more and more towards light trucks and SUVs.

Only when oil prices are high, does the trend slow or reverse.  

The percent of light trucks and SUVs was at 79.0% in April 2022 - just below the record high percentage of 80.0% last October.

The second graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the April 2022 seasonally adjusted annual sales rate (SAAR).

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009.  Then heavy truck sales increased to a new all-time high of 563 thousand SAAR in September 2019.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."

Heavy truck sales really declined at the beginning of the pandemic, falling to a low of 299 thousand SAAR in May 2020.  

Heavy truck sales were at 467 thousand SAAR in April, unchanged from March, and down 3% from 482 thousand SAAR in April 2021.

The last graph shows light vehicle sales since the BEA started keeping data in 1967. The BEA reported sales of 14.29 million SAAR in April 2022 (Seasonally Adjusted Annual Rate), up 6.6% from the March sales rate, and down 21.9% from April 2021.

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 decreased late last year due to supply issues. It appears the "supply chain bottom" was in September 2021, and sales in April were above the consensus forecast of 13.8 million SAAR.   

Sales are still weak but picking up.

by Calculated Risk on 5/07/2022 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• Housing: "What Killed the Home ATM in 2006?"

• Black Knight Mortgage Monitor: Record Low Delinquencies, "Home Affordability Nears All-Time Low"

• Rent Increases Up Sharply Year-over-year, Pace may be slowing

• Denver Real Estate in April: Active Inventory up Sharply

• Lawler: Mortgage/Treasury Spreads, Part I

• 1st Look at Local Housing Markets in April Realtor.com shows active inventory down only 3% year-over-year

This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

The blog will continue as always!

You can subscribe at https://calculatedrisk.substack.com/

Most content is available for free (and no Ads), but please subscribe!

by Calculated Risk on 5/07/2022 08:11:00 AM

The key report this week is April CPI.

Note: The Census Bureau is expected to release "National, State, and County housing units" from the 2020 Census sometime in May.

----- Monday, May 9th -----
2:00 PM: Senior Loan Officer Opinion Survey on Bank Lending Practices for April.

----- Tuesday, May 10th -----
6:00 AM ET: NFIB Small Business Optimism Index for April.

11:00 AM: NY Fed: Q1 Quarterly Report on Household Debt and Credit

----- Wednesday, May 11th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: The Consumer Price Index for April from the BLS. The consensus is for 0.2% increase in CPI (up 8.1% YoY), and a 0.4% increase in core CPI (up 6.1% YoY).

----- Thursday, May 12th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 210 thousand up from 200 thousand last week.

8:30 AM: The Producer Price Index for April from the BLS. The consensus is for a 0.5% increase in PPI, and a 0.6% increase in core PPI.

----- Friday, May 13th -----
10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for May).

10:00 AM: NY Fed: Climate Change: Implications for Macroeconomics

by Calculated Risk on 5/06/2022 09:21:00 PM

On COVID (focus on hospitalizations and deaths):

COVID Metrics
	Now	Week Ago	Goal
Percent fully Vaccinated	66.3%	---	≥70.0%1
Fully Vaccinated (millions)	220.0	---	≥2321
New Cases per Day3🚩	67,263	54,883	≤5,0002
Hospitalized3🚩	12,602	11,162	≤3,0002
Deaths per Day3🚩	341	315	≤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.

Click on graph for larger image.

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

New cases have more than doubled from the recent low, and hospitalizations and deaths are increasing week-over-week.

Average daily deaths bottomed in July 2021 at 214 per day.

by Calculated Risk on 5/06/2022 03:46:00 PM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

U.S. rail traffic in April 2022 was like a box of assorted chocolates: it had something for everyone. Optimists can point to several commodities that had solid traffic gains. For example, April 2022 was the third best month ever for carloads of chemicals, with carloads up 3.4% over last year. April’s carloads of iron and steel scrap were the highest since August 2013, while carloads of autos and auto parts were up 12.0% over last year. Carloads of food products and crushed stone and sand were also up.

Pessimists can point to several traffic categories with lower volumes in April. For example, carloads of grain in April were the fewest in seven months, coal carloads were the lowest in more than a year, and carloads of petroleum products were their second lowest since September 2017.
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows the six-week average of U.S. Carloads in 2020, 2021 and 2022:

Total carloads on U.S. railroads fell 3.4% in April 2022 from April 2021, their second monthly decline so far this year following 10 straight monthly gains from March to December 2021. For 2022 through April, total carloads were up 1.1% over the same period in 2021.

The second graph shows the six-week average (not monthly) of U.S. intermodal in 2020, 2021 and 2022: (using intermodal or shipping containers):

U.S. railroads originated an average of 270,788 intermodal containers and trailers per week in April 2022. That’s the most since August 2021, but down 7.7% from April 2021. For context, April 2021 was the best intermodal month in history for U.S. railroads.

by Calculated Risk on 5/06/2022 11:31:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 1st Look at Local Housing Markets in April

A brief excerpt:

Here is a summary of active listings for these housing markets in April. Note: Inventory usually increases seasonally in April, so some month-over-month (MoM) increase is not surprising.

Inventory was up 31.7% in April MoM from March, and up 9.7% year-over-year (YoY). The YoY increase in inventory in these markets was impacted by San Diego (a very tight market). The other markets were up YoY.

These markets were down 26% YoY in February, and unchanged YoY in March, so this is a significant change from February and March. This is another step towards a more balanced market, but inventory levels are still very low.

Notes for all tables:

1) New additions to table in BOLD.

2) Northwest (Seattle)

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

by Calculated Risk on 5/06/2022 11:05:00 AM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Decline in April From Seasonal Adjustment

Wholesale used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) declined 1.0% in April from March. The Manheim Used Vehicle Value Index declined to 221.2, which was up 14.0% from a year ago. The non-adjusted price change in April was an increase of 2.9% compared to March, leaving the unadjusted average price up 16.4% year over year.

Manheim Market Report (MMR) values saw weekly price increases that were strongest to start April and slowed as the month progressed.
emphasis added

Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices declined in April seasonally adjusted but are still up 14.0% year-over-year.

Note: This index was up 25% YoY last month, and up 45% YoY in January - so it appears prices will be down YoY soon.

According to the BLS, "Used cars and trucks" were down 3.8% in March compared to February and up 35% year-over-year in March. It seems likely that "Used cars and trucks" will be down again in the April CPI report.

by Calculated Risk on 5/06/2022 09:11:00 AM

This was another solid report.

The headline jobs number in the April employment report was slightly above expectations, however employment for the previous two months was revised down by 39,000.   The participation rate and the employment-population ratio both decreased slightly, and the unemployment rate was unchanged at 3.6%.

Excluding leisure and hospitality, the economy has added back all the jobs lost at the beginning of the pandemic.  Leisure and hospitality gained 78 thousand jobs in April.  At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.20 million jobs, and are now down 1.44 million jobs since February 2020.  So, leisure and hospitality has now added back about 83% all of the jobs lost in March and April 2020. 

Construction employment increased 2 thousand and is now 4 thousand above the pre-pandemic level. 

Manufacturing added 55 thousand jobs and is still 56 thousand below the pre-pandemic level.

Earlier: April Employment Report: 428 thousand Jobs, 3.6% Unemployment Rate

In April, the year-over-year employment change was 6.6 million jobs.

Permanent Job Losers

Click on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the report today.

This data is only available back to 1994, so there is only data for three recessions.

In April, the number of permanent job losers decreased to 1.386 million from 1.392 million in the previous month.

These jobs were likely the hardest to recover, so it is a positive that the number of permanent job losers is almost back to pre-recession levels.

Prime (25 to 54 Years Old) Participation

Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 participation rate decreased in April to 82.4% from 82.5% in March, and the 25 to 54 employment population ratio decreased to 79.9% from 80.0% the previous month.

Both are slightly below the pre-pandemic levels and indicate almost all of the prime age workers have returned to the labor force.

Part Time for Economic Reasons

From the BLS report:

"The number of persons employed part time for economic reasons was little changed at 4.0 million in April and is down by 357,000 from its February 2020 level. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."

The number of persons working part time for economic reasons decreased in April to 4.033 million from 4.170 million in March. This is below pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 7.0% from 6.9% in the previous month. This is down from the record high in April 22.9% for this measure since 1994. This measure at the 7.0% in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.483 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.428 million the previous month.

This does not include all the people that left the labor force. 

Summary:

The headline monthly jobs number was slightly above expectations; however, the previous two months were revised down by 39,000 combined.  

The headline unemployment rate was unchanged at 3.6%.  

There are still 1.2 million fewer jobs than prior to the recession.  

Overall, this was another solid report.

by Calculated Risk on 5/06/2022 08:41:00 AM

From the BLS:

Total nonfarm payroll employment increased by 428,000 in April, and the unemployment rate was unchanged at 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, led by gains in leisure and hospitality, in manufacturing, and in transportation and warehousing.

The change in total nonfarm payroll employment for February was revised down by 36,000, from +750,000 to +714,000, and the change for March was revised down by 3,000, from +431,000 to +428,000. With these revisions, employment in February and March combined is 39,000 lower than previously reported.
emphasis added

Click on graph for larger image.

The first 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.

However, 26 months after the onset of the current employment recession, almost all of the jobs have returned.

The second graph shows the year-over-year change in total non-farm employment since 1968.

In April, the year-over-year change was 6.6 million jobs.  This was up significantly year-over-year.

Total payrolls increased by 428 thousand in April.  Private payrolls increased by 406 thousand, and public payrolls increased 22 thousand.

Payrolls for February and March were revised down 39 thousand, combined.

The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate decreased to 62.2% in April, from 62.4% in March. This is the percentage of the working age population in the labor force.

The Employment-Population ratio decreased to 60.1% from 60.0% (blue line).

I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate was unchanged in April at 3.6% from 3.6% in March.

This was slightly above consensus expectations; however, February and March payrolls were revised down by 39,000 combined.  

I'll have more later ...