by Calculated Risk on 3/11/2023 08:11:00 AM

The key reports this week are February CPI, Retail Sales, and Housing Starts.

For manufacturing, the February Industrial Production report and the March NY and Philly Fed manufacturing surveys will be released.

----- Monday, March 13th -----
10:00 AM: State Employment and Unemployment (Monthly) for January 2023

----- Tuesday, March 14th -----
6:00 AM ET: NFIB Small Business Optimism Index for February.


8:30 AM: The Consumer Price Index for February from the BLS. The consensus is for a 0.4% increase in CPI, and a 0.4% increase in core CPI.  The consensus is for CPI to be up 6.0% Year-over-year (YoY), and core CPI to be up 5.5% YoY.

----- Wednesday, March 15th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Retail sales for February is scheduled to be released.  The consensus is for a 0.3% decrease in retail sales.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline were up 3.2% in January.

8:30 AM: The Producer Price Index for February from the BLS. The consensus is for a 0.3% increase in PPI, and a 0.4% increase in core PPI.

8:30 AM: The New York Fed Empire State manufacturing survey for March. The consensus is for a reading of -7.7, down from -5.8.

10:00 AM: The March NAHB homebuilder survey. The consensus is for a reading of 41, down from 42.  Any number below 50 indicates that more builders view sales conditions as poor than good.

----- Thursday, March 16th -----
8:30 AM: Housing Starts for February.

This graph shows single and multi-family housing starts since 1968.

The consensus is for 1.310 million SAAR, up from 1.309 million SAAR.

8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 205 thousand initial claims, down from 211 thousand last week.

8:30 AM: the Philly Fed manufacturing survey for March. The consensus is for a reading of -14.8, up from -24.3.

----- Friday, March 17th -----
9:15 AM: The Fed will release Industrial Production and Capacity Utilization for February.

This graph shows industrial production since 1967.

The consensus is for a 0.4% increase in Industrial Production, and for Capacity Utilization to increase to 78.5%.

10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for March).

by Calculated Risk on 3/10/2023 09:03:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

On COVID (focus on hospitalizations and deaths).  Data is now weekly.

The winter surge was much smaller in 2023 than for the previous two years, and hopefully cases, hospitalizations and deaths will set new pandemic lows soon.

COVID Metrics
	Now	Week Ago	Goal
New Cases per Week2	170,576	226,995	≤35,0001
Hospitalized2	18,561	21,235	≤3,0001
Deaths per Week2	1,862	2,265	≤3501
1my goals to stop weekly posts, 2Weekly for Cases, Currently Hospitalized, and Deaths 🚩 Increasing number weekly for Cases, Hospitalized, and Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported.

After the first few weeks, the pandemic low for weekly deaths was the week of July 7, 2021, at 1,690 deaths.  For cases, the low was 82,186.  

For hospitalizations, the low was 9,821. 

by Calculated Risk on 3/10/2023 04:11:00 PM

From CoStar: STR: Weekly US Hotel Performance Falls From Prior Week

U.S. hotel performance fell from the previous week, according to STR‘s latest data through March 4.

Feb. 26 through March 4, 2023 (percentage change from comparable weeks in 2022, 2019):

• Occupancy: 62.8% (+3.0%, -5.6%)
• verage daily rate (ADR): $151.35 (+8.9%, +14.1%)
• Revenue per available room (RevPAR): $95.06 (+12.1%, +7.7%)

*Due to the pandemic impact, STR is measuring recovery against comparable time periods from 2019. Year-over-year comparisons will once again become standard after Q1.
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

NOTE: Last year, the occupancy rate was close to normal after the first quarter (depressed due to a surge in COVID), so STR will only be comparing to 2022 after Q1.

Click on graph for larger image.

The red line is for 2023, black is 2020, blue is the median, and dashed light blue is for 2022.  Dashed purple is 2019 (STR is comparing to a strong year for hotels).

The 4-week average of the occupancy rate is close to the median rate for the previous 20 years (Blue).

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

The 4-week average of the occupancy rate will increase seasonally for several more weeks.

by Calculated Risk on 3/10/2023 03:42:00 PM

From BofA:

The trade deficit in January widened to $68.3bn, the widest deficit in the last three months. Exports increased by 3.4% m/m while imports went up by 3.0%. This increased our tracking estimate for bothexports and imports, while reducing our estimate fornet exports in 1Q. On net, since the last weekly publication, this pushed down our 1Q US GDP tracking estimate from 0.9% q/q saar to 0.7% q/q saar. [Mar 10th estimate]
emphasis added

From Goldman:

We left our Q1 GDP tracking estimate unchanged at +2.0% (qoq ar). We also left our domestic final sales forecast unchanged at +2.3%. [Mar 8th estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2023 is 2.6 percent on March 8, up from 2.0 percent on March 7. [Mar 8th estimate]

by Calculated Risk on 3/10/2023 12:25:00 PM

From the FDIC: FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California

Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank. ... As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.

As of the December 2022, Silicon Valley Bank was the 16th largest US bank in terms of assets.

by Calculated Risk on 3/10/2023 09:21:00 AM

The headline jobs number in the February employment report was above expectations, however employment for the previous two months was revised down by 34,000, combined.  The participation rate increased, and the unemployment rate increased to 3.6%.

Leisure and hospitality gained 105 thousand jobs in February.  At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 410 thousand jobs since February 2020.  So, leisure and hospitality has now added back about 95% all of the jobs lost in March and April 2020. 

Construction employment increased 24 thousand and is now 310 thousand above the pre-pandemic level. 

Manufacturing lost 4 thousand jobs and is now 198 thousand above the pre-pandemic level.

Earlier: February Employment Report: 311 thousand Jobs, 3.6% Unemployment Rate

In February, the year-over-year employment change was 4.34 million jobs.

Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both 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 increased in February to 83.1% from 82.7% in January, and the 25 to 54 employment population ratio increased to 80.5% from 80.2% the previous month.

Both are at the pre-pandemic levels and suggest essentially all of the prime age workers have returned to the labor force.

Average Hourly Wages

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.6% YoY in February. 

Wages growth was strong last year in the March through July period, so year-over-year wage growth will likely slow over the next few months.

Part Time for Economic Reasons

From the BLS report:

"The number of persons employed part time for economic reasons, at 4.1 million, was essentially unchanged in February. 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 increased in February to 4.067 million from 4.050 million in January. This is at pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 6.8% from 6.6% in the previous month. This is down from the record high in April 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is below the level 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 1.057 million workers who have been unemployed for more than 26 weeks and still want a job, down from 1.111 million the previous month.

This is at pre-pandemic levels.

Summary:

The headline monthly jobs number was above expectations; however, employment for the previous two months was revised down by 34,000, combined.   The headline unemployment rate increased to 3.6%.

Overall, this was a solid employment report.

by Calculated Risk on 3/10/2023 08:42:00 AM

From the BLS:

Total nonfarm payroll employment rose by 311,000 in February, and the unemployment rate edged up to 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in leisure and hospitality, retail trade, government, and health care. Employment declined in information and in transportation and warehousing.
...
The change in total nonfarm payroll employment for December was revised down by 21,000, from +260,000 to +239,000, and the change for January was revised down by 13,000, from +517,000 to +504,000. With these revisions, employment gains in December and January combined were 34,000 lower than previously reported.
emphasis added

Click on graph for larger image.

The first graph shows the jobs added per month since January 2022.

Total payrolls increased by 311 thousand in February.  Private payrolls increased by 265 thousand, and public payrolls increased 46 thousand.

Payrolls for December and January were revised down 34 thousand, combined.

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

In February, the year-over-year change was 4.34 million jobs.  Employment was up significantly year-over-year.

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

The Labor Force Participation Rate increased to 62.5% in February, from 62.4% in January. This is the percentage of the working age population in the labor force.

The Employment-Population ratio was unchanged at 60.2% (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 increased in February to 3.6% from 3.4% in January.

This was above consensus expectations; however, December and January payrolls were revised down by 34,000 combined.  

I'll have more later ...

by Calculated Risk on 3/09/2023 09:01:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Friday:
• At 8:30 AM ET, Employment Report for February.   The consensus is for 200,000 jobs added, and for the unemployment rate to be unchanged at 3.4%.

by Calculated Risk on 3/09/2023 02:29:00 PM

Today, in the Real Estate Newsletter: "Home ATM" is Closing

Excerpt:

Here is the quarterly increase in mortgage debt from the Federal Reserve’s Financial Accounts of the United States - Z.1 (sometimes called the Flow of Funds report) released today. In the mid ‘00s, there was a large increase in mortgage debt associated with the housing bubble.

In Q4 2022, mortgage debt increased $155 billion, down from $210 billion in Q3, and down from the cycle peak of $258 billion in Q2 2022. Note the almost 7 years of declining mortgage debt as distressed sales (foreclosures and short sales) wiped out a significant amount of debt.

However, some of this debt is being used to increase the housing stock (purchase new homes), so this isn’t all Mortgage Equity Withdrawal (MEW).
...
The bottom line is, the “Home ATM” is now closing with refinance activity off sharply and HELOC borrowing declining.

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/ (All ad free).

by Calculated Risk on 3/09/2023 01:52:00 PM

The Federal Reserve released the Q4 2022 Flow of Funds report today: Financial Accounts of the United States.

The net worth of households and nonprofits rose to $147.7 trillion during the fourth quarter of 2022. The value of directly and indirectly held corporate equities increased $2.7 trillion and the value of real estate decreased $0.1 trillion.
...
Household debt increased 2.3 percent at an annual rate in the fourth quarter of 2022. Consumer credit grew at an annual rate of 7 percent, while mortgage debt (excluding charge-offs) grew at an annual rate of 4.4 percent.

Click on graph for larger image.

The first graph shows Households and Nonprofit net worth as a percent of GDP.  

Net worth as a percent of GDP is down $4.2 trillion from the all-time high in Q1 2022.

This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations.

The second graph shows homeowner percent equity since 1952.

Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.

In Q4 2022, household percent equity (of household real estate) was at 71.2% - down slightly from 71.6% in Q3, 2022. This is close to the highest percent equity since the early 1980s.

Note: This includes households with no mortgage debt.

The third graph shows household real estate assets and mortgage debt as a percent of GDP.  Note this graph was impacted by the sharp decline in Q2 2020 GDP.

Mortgage debt increased by $155 billion in Q4.

Mortgage debt is up $1.82 trillion from the peak during the housing bubble, but, as a percent of GDP is at 47.9% - down from Q3 - and down from a peak of 73.3% of GDP during the housing bust.

The value of real estate, as a percent of GDP, decreased in Q4 - after peaking in Q2 2022 - and is well above the average of the last 30 years.