by Calculated Risk on 10/17/2023 09:15:00 AM

From the Fed: Industrial Production and Capacity Utilization

Industrial production increased 0.3 percent in September and advanced at an annual rate of 2.5 percent in the third quarter. Manufacturing output rose 0.4 percent in September, the index for mining moved up 0.4 percent, and the index for utilities decreased 0.3 percent. At 103.6 percent of its 2017 average, total industrial production in September was 0.1 percent above its year-earlier level. Capacity utilization moved up 0.2 percentage point to 79.7 percent in September, a rate that is equal to its long-run (1972–2022) 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 above the level in February 2020 (pre-pandemic).

Capacity utilization at 79.7% is at the average from 1972 to 2022.  This was above consensus expectations.

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 103.6. This is above the pre-pandemic level.

Industrial production was above consensus expectations, however the previous month was revised down.

by Calculated Risk on 10/17/2023 08:30:00 AM

On a monthly basis, retail sales were up 0.7% from August to September (seasonally adjusted), and sales were up 3.8 percent from September 2022.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for September 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $704.9 billion, up 0.7 percent from the previous month, and up 3.8 percent above September 2022. ... The July 2023 to August 2023 percent change was revised from up 0.6 percent to up 0.8 percent (±0.1 percent).
emphasis added

Click on graph for larger image.

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 0.7% in September.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales, ex-gasoline, increased by 4.3% on a YoY basis.

The increase in sales in September was well above expectations, and sales in July and August were revised up.

by Calculated Risk on 10/16/2023 07:10:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Jump Back Near Long-Term Highs

Last week was mostly good for mortgage rates, even if the goodness was made possible in large part by the badness of the previous week. By Friday, rates were 0.15% lower than the previous Friday, on average.

As the new week begins, virtually all of that progress has been erased. In other words, the average lender is now very close to the same rates seen on Friday, October 6th. [30 year fixed 7.80%]
emphasis added

Tuesday:
• At 8:30 AM ET, Retail sales for September will be released.  The consensus is for a 0.2% increase in retail sales.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for September. The consensus is for a 0.1% increase in Industrial Production, and for Capacity Utilization to decrease to 79.6%.

• At 10:00 AM, The October NAHB homebuilder survey. The consensus is for a reading of 44, down from 45 in September. Any number below 50 indicates that more builders view sales conditions as poor than good.

by Calculated Risk on 10/16/2023 04:07:00 PM

From the MBA: Share of Mortgage Loans in Forbearance Decreases to 0.31% in September

The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance decreased by 2 basis points from 0.33% of servicers’ portfolio volume in the prior month to 0.31% as of September 30, 2023. According to MBA’s estimate, 155,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 8 million borrowers since March 2020.

In September 2023, the share of Fannie Mae and Freddie Mac loans in forbearance decreased 1 basis point to 0.18%. Ginnie Mae loans in forbearance decreased 8 basis points to 0.57%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 4 basis points to 0.35%.

“The number of loans in forbearance dropped in September, but the overall performance of servicing portfolios and loan workouts declined slightly,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “MBA’s baseline forecast has a recession in the first half of 2024. Several factors – including unemployment increases, rising property taxes and insurance, the resumption of student debt payments, and possible natural disasters – may affect loan performance in future months.”
emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.

The share of forbearance plans has been decreasing and declined to 0.31% in September from 0.33% in August.

At the end of August, there were about 155,000 homeowners in forbearance plans.

by Calculated Risk on 10/16/2023 10:51:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Preliminary 2024 Housing Forecasts

A brief excerpt:

Towards the end of each year, I collect some housing forecasts for the following year - and also provide my own outlook. Several more forecast will be available in early December.
...
A few key points from these early forecasts:

1) Forecasters expect house prices in increase next year.

2) Everyone expects multi-family starts to be down sharply in 2024.

3) 30-year fixed rate mortgages rates are expected to be above 6% next year (MBA is at 6.1%, NAHB is at 6.4%, and Fannie is at 6.9%)

I’ll have several more forecasts (and updated forecasts) by December.

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

by Calculated Risk on 10/16/2023 08:19:00 AM

Altos reports that active single-family inventory was up 1.8% week-over-week.

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of October 13th, inventory was at 546 thousand (7-day average), compared to 537 thousand the prior week.   

Year-to-date, inventory is up 11.3%.  And inventory is up 34.8% from the seasonal bottom 26 weeks ago.

The second graph shows the seasonal pattern for active single-family inventory since 2015.

The red line is for 2023.  The black line is for 2019.  Note that inventory is up from the record low for the same week in 2021, but below last year and still well below normal levels.

Inventory was down 3.5% compared to the same week in 2022 (last week it was down 4.3%), and down 42.3% compared to the same week in 2019 (last week down 43.8%). 

In 2022, inventory didn't peak until late October, and it appears same week inventory will be below 2022 levels for the remainder of the year - depending on when inventory finally peaks this year!

It also seems likely that inventory will be above 2020 levels (dark blue line) sometime in the next few weeks.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 10/15/2023 07:00:00 PM

Weekend:
• Schedule for Week of October 15, 2023

Monday:
• At 8:30 AM ET, The New York Fed Empire State manufacturing survey for October. The consensus is for a reading of -1.5, down from 1.9.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 futures are up 4 and DOW futures are up 27 (fair value).

Oil prices were up over the last week with WTI futures at $87.69 per barrel and Brent at $90.89 per barrel. A year ago, WTI was at $86, and Brent was at $92 - so WTI oil prices were up slightly year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.56 per gallon. A year ago, prices were at $3.87 per gallon, so gasoline prices are down $0.31 year-over-year.

by Calculated Risk on 10/15/2023 09:41:00 AM

Note: I used to post this monthly, but I stopped during the COVID-19 pandemic. I've received a number of requests lately to post this again, so here is another update of tracking employment during Presidential terms.  We frequently use Presidential terms as time markers - we could use Speaker of the House, Fed Chair, or any other marker.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter, George H.W. Bush and Trump only served one term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble and left during the bursting of the housing bubble. Mr. Obama (dark blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (dark red) took office.

There was a recession towards the end of President G.H.W. Bush (light purple) term, and Mr. Clinton (light blue) served for eight years without a recession.   And there was a pandemic related recession in 2020.

First, here is a table for private sector jobs. The top two previous private sector terms were both under President Clinton.  

Term	Private Sector Jobs Added (000s)
Carter	9,039
Reagan 1	5,363
Reagan 2	9,351
GHW Bush	1,511
Clinton 1	10,877
Clinton 2	10,093
GW Bush 1	-820
GW Bush 2	447
Obama 1	1,906
Obama 2	9,927
Trump	-2,135
Biden	12,8241
1After 32 months.

Click on graph for larger image.

The first graph is for private employment only.

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 820,000 jobs at the end of his first term.   At the end of Mr. Bush's second term, private employment was collapsing, and there were net 373,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased by 9,039,000 under President Carter (dashed green), by 14,714,000 under President Reagan (dark red), 1,511,000 under President G.H.W. Bush (light purple), 20,970,000 under President Clinton (light blue), and 11,833,000 under President Obama (dark dashed blue).  During Trump's term (Orange), the economy lost 2,135,000 private sector jobs.

In the first 32 months of President Biden's term (Blue), the economy has added 12,824,000 private sector jobs, as the economy recovered from the pandemic.

 A big difference between the presidencies has been public sector employment.  Note: the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, 2010 and 2020. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).  However, the public sector declined significantly while Mr. Obama was in office (down 271,000 jobs).  During Trump's term, the economy lost 535,000 public sector jobs.

In the first 32 months of President Biden's term, the economy has added 1,081,000 public sector jobs (about 94% of public job growth has been for state and local governments, and about 60% for education).

And a table for public sector jobs. Public sector jobs declined the most during Obama's first term and increased the most during Reagan's 2nd term.

Term	Public Sector Jobs Added (000s)
Carter	1,304
Reagan 1	-24
Reagan 2	1,438
GHW Bush	1,127
Clinton 1	692
Clinton 2	1,242
GW Bush 1	900
GW Bush 2	844
Obama 1	-710
Obama 2	447
Trump	-535
Biden	1,0811
1After 32 months.

by Calculated Risk on 10/14/2023 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• Part 1: Current State of the Housing Market; Overview for mid-October

• Part 2: Current State of the Housing Market; Overview for mid-October

• 3rd Look at Local Housing Markets in September

• 2nd Look at Local Housing Markets in September

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

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

by Calculated Risk on 10/14/2023 08:11:00 AM

The key economic reports this week are September Retail Sales, Housing Starts and Existing Home sales.

For manufacturing, September Industrial Production, and the October New York and Philly Fed surveys will be released this week.

----- Monday, October 16th -----
8:30 AM ET: The New York Fed Empire State manufacturing survey for October. The consensus is for a reading of -1.5, down from 1.9.

----- Tuesday, October 17th -----
8:30 AM ET: Retail sales for September will be released.  The consensus is for a 0.2% increase in retail sales.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for September.

This graph shows industrial production since 1967.

The consensus is for a 0.1% increase in Industrial Production, and for Capacity Utilization to decrease to 79.6%.

10:00 AM: The October NAHB homebuilder survey. The consensus is for a reading of 44, down from 45 in September. Any number below 50 indicates that more builders view sales conditions as poor than good.

----- Wednesday, October 18th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Housing Starts for September.

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

The consensus is for 1.405 million SAAR, up from 1.283 million SAAR.

During the day: The AIA/Deltek's Architecture Billings Index for September (a leading indicator for commercial real estate).

2:00 PM: the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

----- Thursday, October 19th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 210 thousand initial claims, up from 209 thousand last week.

8:30 AM: the Philly Fed manufacturing survey for October. The consensus is for a reading of -6.8, up from -13.5.

10:00 AM: Existing Home Sales for September from the National Association of Realtors (NAR). The consensus is for 3.94 million SAAR, down from 4.04 million in August.

The graph shows existing home sales from 1994 through the report last month.

12:00 PM: Discussion, Fed Chair Jerome Powell, Economic Outlook, At the Economic Club of New York (ECNY) Luncheon, New York, New York

----- Friday, October 20th -----
10:00 AM: State Employment and Unemployment (Monthly) for September 2023