by Calculated Risk on 12/11/2023 10:30:00 AM

A reader asks if we could look at the participation rate for 25 to 64, as opposed to 25 to 54, since many people work until they receive Social Security and Medicare.

First, the BLS provides seasonally adjusted data for the "Prime" working age group (25 to 54), but only NSA data for the 55 to 64 cohort. So, this makes tracking a larger Prime+ group more difficult.

Second, the reason we use the 25 to 54 group is that the participation rate is fairly steady across the entire age spectrum.

Here is a graph of the participation rate by age cohort for November (1983, 1993, 2003, 2013 and 2023 NSA).  The participation rate dips a little for the 50 to 54 age group, but in general the participation rate is fairly steady from 25 to 54.

If we added 55 to 59 to the prime group, calling it prime+, we'd have to age adjust to track the participation rate over time.  

Although the participation rate is increasing over time, it is still below the prime levels.  When a large cohort is moving through that age group, that would push down the prime+ participation rate, and when a small cohort is passing through that would push up the prime+ participation rate.

This graph shows that older people are participating more over the last 40 years, and younger people are participating less.  This is probably because people are healthier (older participation rate), and younger people are staying in school.  Both positives!

by Calculated Risk on 12/11/2023 08:19:00 AM

Altos reports that active single-family inventory was down 1.7% week-over-week and is now up 1.9% year-over-year.  Inventory will decrease seasonally for next few weeks (for the Holidays).

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of December 8th, inventory was at 546 thousand (7-day average), compared to 556 thousand the prior week.   

Year-to-date, inventory is up 11.3%.

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 up 1.9% compared to the same week in 2022 (last week it was up 1.0%), and down 34.1% compared to the same week in 2019 (last week down 34.9%). 

Inventory is now solidly above the same week in 2020 levels (dark blue line).

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 12/10/2023 06:16:00 PM

Weekend:
• Schedule for Week of December 10, 2023

• FOMC Preview: No Change to Policy Expected

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 futures are up 4 and DOW futures are up 38 (fair value).

Oil prices were down over the last week with WTI futures at $71.23 per barrel and Brent at $75.84 per barrel. A year ago, WTI was at $73, and Brent was at $78 - so WTI oil prices were down slightly year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.12 per gallon. A year ago, prices were at $3.22 per gallon, so gasoline prices are down $0.10 year-over-year.

by Calculated Risk on 12/10/2023 04:00:00 PM

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View — Data Week Ending December 2, 2023

• Active inventory increased slightly, with for-sale homes 3.1% above year ago levels. Active listings exceeded last year’s levels again this week, with the rate of increase picking up steam from the previous week (+3.1% year-over-year vs +1.8%). However, on an absolute basis, active inventory continued to fall below its peak earlier in the month, as is seasonally typical.

• New listings–a measure of sellers putting homes up for sale–were up this week, by 5.6% from one year ago. New listings registered lower than prior year levels from mid-2022 through roughly 6 weeks ago, as the mortgage rate lock-in effect froze homeowners with low-rate existing mortgages in place. More recently the trend has reversed as new listings during the week outpaced the same week in the previous year by 5.6%.

Here is a graph of the year-over-year change in inventory according to realtor.com. 

Inventory was up year-over-year for the 4th consecutive week following 20 consecutive weeks with a YoY decrease in inventory.  

Inventory is still historically very low.

New listings really collapsed a year ago, so the YoY comparison for new listings is easier now - and although new listings also remain well below "typical pre-pandemic levels", new listings are now up YoY.

by Calculated Risk on 12/10/2023 08:21:00 AM

Most analysts expect there will be no change to FOMC policy at this meeting, keeping the target range for the federal funds rate at 5‑1/4 to 5-1/2 percent.

Currently the market expects the next Fed move to be a 25 bp cut announced at either the March or May FOMC meeting.  The market is pricing in the 2nd cut in either June or July - and a total of 4 or even 5 cuts in 2024.  Fed Chair Powell will probably push back on those expectations at the press conference this week.

Projections will be released at this meeting. For review, here are the September projections.  Since the last projections were released, the economy has performed better than the FOMC expected, and inflation was below expectations.

The BEA reported real GDP increased at a 5.2% annual rate in Q3. GDP tracking estimates show Q4 at around 1.2% SAAR.  This would put Q4 over Q4 GDP at 2.6%. So, the FOMC projection for year-over-year growth in Q4 2023 was too low.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2023	2024	2025
Sept 2023	1.9 to 2.2	1.2 to 1.8	1.6 to 2.0
June 2023	0.7 to 1.2	0.9 to 1.5	1.6 to 2.0

¹ Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 3.7% in November. The FOMC's unemployment rate projection for Q4 was probably close.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2023	2024	2025
Sept 2023	3.7 to 3.9	3.9 to 4.4	3.9 to 4.3
June 2023	4.0 to 4.3	4.3 to 4.6	4.3 to 4.6

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of October 2023, PCE inflation increased 3.0 percent year-over-year (YoY), down from 3.4 percent YoY in September, and down from the recent peak of 7.1 percent in June 2022.  So, the FOMC projection for Q4 2023 was too high.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2023	2024	2025
Sept 2023	3.2 to 3.4	2.3 to 2.7	2.0 to 2.3
June 2023	3.0 to 3.5	2.3 to 2.8	2.0 to 2.4

PCE core inflation increased 3.5 percent YoY, down from 3.7 percent in September, and down from the recent peak of 5.6 percent in February 2022. This remains a concern for the FOMC, however this includes shelter that was up 6.9% YoY in October (even though asking rents are slightly negative YoY).  Also, core PCE inflation was fairly high in November and December 2022 - increasing at a 4.1% annual rate - and it seems likely YoY core PCE inflation will be below the low end of the FOMC Q4 projection.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2023	2024	2025
Sept 2023	3.6 to 3.9	2.5 to 2.8	2.0 to 2.4
June 2023	3.7 to 4.2	2.5 to 3.1	2.0 to 2.4

by Calculated Risk on 12/09/2023 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• The "Home ATM" Mostly Closed in Q3

• Q3 Update: Delinquencies, Foreclosures and REO

• 1st Look at Local Housing Markets in November with Comparison to 2019

• Asking Rents Down 1.1% Year-over-year

• ICE (Black Knight) Mortgage Monitor: "Home prices continued sending mixed signals in October"

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 12/09/2023 08:11:00 AM

The key economic reports this week are November CPI and Retail Sales.

For manufacturing, November Industrial Production, and the December New York Fed survey will be released this week.

The FOMC meets this week and no change to policy is expected.

----- Monday, December 11th -----
No major economic releases scheduled.

----- Tuesday, December 12th -----
6:00 AM: NFIB Small Business Optimism Index for November.

8:30 AM: The Consumer Price Index for November from the BLS. The consensus is for no change in CPI, and a 0.3% increase in core CPI.  The consensus is for CPI to be up 3.1% year-over-year and core CPI to be up 4.0% YoY.

----- Wednesday, December 13th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: The Producer Price Index for November from the BLS. The consensus is for a 0.1% increase in PPI, and a 0.2% increase in core PPI.

2:00 PM: FOMC Meeting Announcement. No change to policy is expected at this meeting.

2:00 PM: FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate along with the quarterly economic projections.

2:30 PM: Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

----- Thursday, December 14th -----
8:30 AM ET: Retail sales for November will be released.  The consensus is for a 0.1% 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).

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 220 thousand, unchanged from 220 thousand last week.

----- Friday, December 15th -----
8:30 AM: The New York Fed Empire State manufacturing survey for December. The consensus is for a reading of 3.5, down from 9.1.

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

This graph shows industrial production since 1967.

The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 79.1%.

by Calculated Risk on 12/08/2023 07:23:00 PM

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

Due to changes at the CDC, weekly cases are no longer updated.

For deaths, I'm currently using 3 weeks ago for "now", since the most recent two weeks will be revised significantly.

Hospitalizations have more almost tripled from a low of 5,150 in June 2023.

Hospitalizations are far below the peak of 150,000 in January 2022.

COVID Metrics
	Now	Week Ago	Goal
Hospitalized2🚩	17,479	15,516	≤3,0001
Deaths per Week2	1,197	1,291	≤3501
1my goals to stop weekly posts, 2Weekly for Currently Hospitalized, and Deaths 🚩 Increasing number weekly for Hospitalized and Deaths ✅ Goal met.

Click on graph for larger image.

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

Weekly deaths have more than doubled from a low of 485 in early July.  Weekly deaths are far below the weekly peak of 26,000 in January 2021.

And here is a new graph I'm following on COVID in wastewater:

Note the recent surge in COVID.

This appears to be a leading indicator for COVID hospitalizations and deaths, and both will likely increase over the next several weeks.

by Calculated Risk on 12/08/2023 04:30:00 PM

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

In the first 11 months of 2023, total carloads were 10.82 million, up 0.2% (21,700 carloads) over last year and up 0.5% (53,682 carloads) over 2021. ... In 2023 through November, intermodal originations totaled 11.68 million, down 6.0% (748,046 units) from 2022 and down 10.6% (1.39 million units) from 2021.
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 2021, 2022 and 2023:

Total originated carloads on U.S. railroads fell 0.01%, or 102 carloads, in November 2023 from the equivalent period in 2022. It was the fifth year-over-year decline for total carloads in the past six months, but most of those declines have been very small in percentage terms. Total carloads averaged 225,715 per week in November 2023, the fourth lowest of the 11 months so far this year. The Thanksgiving holiday typically holds down rail volumes in November.

The second graph shows the six-week average (not monthly) of U.S. intermodal in 2021, 2022 and 2023: (using intermodal or shipping containers):

U.S. intermodal volume was up 5.0% in November 2023, its third straight year-over-year gain after 18 straight declines and the biggest year-over-year percentage gain for intermodal in 29 months. U.S. railroads averaged 255,981 originated containers and trailers per week in November 2023. That’s the fourth highest average intermodal volume for November on record (2017, 2018, and 2020 were higher).

by Calculated Risk on 12/08/2023 02:00:00 PM

From BofA:

Our 4Q GDP tracking estimate remains at 1.0% q/q saar as higher than expected October construction spending was offset by lower than expected vehicle sales in November and a small downward revision in core capital goods orders in the final October print. [Dec 6th estimate]
emphasis added

From Goldman:

We lowered our Q4 GDP tracking estimate by 0.1pp to +1.4% (qoq ar). Our Q4 domestic final sales estimate remains at +2.1% (qoq ar). [Dec 7th estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2023 is 1.2 percent on December 7, down from 1.3 percent on December 6 after rounding. [Dec th estimate]