by Calculated Risk on 6/10/2024 11:12:00 AM

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

Total U.S. carloads were down 6.0% in May 2024 from May 2023, their fifth straight year-over-year decline. Year-to-date total carloads through May were down 5.0%, or 247,984 carloads, from last year and were the lowest in our records that go back to 1988.

We’ve said it before and we’ll say it again: it’s coal’s fault. Coal averaged 49,239 carloads per week in May 2024, down 22.0% from last year and its fifth straight double-digit percentage decline. In our records, only May 2020 and April 2024 had fewer coal carloads. Year-to-date coal carloads in 2024 through May were down 18.3%, or 263,128 carloads, from last year. Still, coal remains the single highest volume carload commodity for U.S. railroads (25% of carloads so far this year).
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 2022, 2023 and 2024:

Total originated carloads on U.S. railroads in May 2024 were down 6.0%, or 67,145 carloads, from May 2023. The weekly average in May 2024 was 212,160 carloads, virtually the same as in April 2024.

Year-to-date total carloads in 2024 through May were down 5.0% (247,984 carloads) from the same period last year and down 4.4% from the same period in 2022.

The second graph shows the six-week average (not monthly) of U.S. intermodal in 2022, 2023 and 2024: (using intermodal or shipping containers):

U.S. intermodal volume in May 2024 was up 7.6% (90,744 containers and trailers) over May 2023, its ninth straight gain. Year-to-date intermodal volume through May was 5.57 million units, up 8.7% (443,453 units) over last year but down 3.1% (180,434 units) from 2022.

by Calculated Risk on 6/10/2024 08:11:00 AM

Altos reports that active single-family inventory was up 1.1% week-over-week. Inventory is now up 23.8% from the February bottom, and at the highest level since August 2020.

Click on graph for larger image.

This inventory graph is courtesy of Altos Research.

As of June 7th, inventory was at 612 thousand (7-day average), compared to 605 thousand the prior week.   

Inventory is still far below pre-pandemic levels. 

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

The red line is for 2024.  The black line is for 2019.  Note that inventory is up 86% from the record low for the same week in 2021, but still well below normal levels.

Inventory was up 37.8% compared to the same week in 2023 (last week it was up 38.4%), and down 34.2% compared to the same week in 2019 (last week it was down 35.7%). 

Inventory should be above 2020 levels for the same week in the next couple of months.

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels is slowly closing.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 6/09/2024 06:18:00 PM

Weekend:
• Schedule for Week of June 9, 2024

Monday:
• No major economic releases scheduled.

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

Oil prices were down over the last week with WTI futures at $75.37 per barrel and Brent at $79.53 per barrel. A year ago, WTI was at $70, and Brent was at $75 - so WTI oil prices are up about 7% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.40 per gallon. A year ago, prices were at $3.57 per gallon, so gasoline prices are down $0.17 year-over-year.

by Calculated Risk on 6/09/2024 09:40:00 AM

Most analysts expect there will be no change to the federal funds rate at the meeting this week keeping the target range at 5‑1/4 to 5-1/2 percent.   Currently market participants expect the next Fed move to be a 25 bp cut announced at the November FOMC meeting.  The market is almost pricing in a 2nd cut in December. 

 
From BofA:

The bottom line is that the stronger-than-expected May employment report remains consistent with our monetary policy outlook for staying on hold. This report showed solid payroll gains with positive implications for consumer spending. We expect the Fed to stay on hold for now and start a gradual cutting cycle in December which will depend on a moderation in the inflation data. The economy may be cooling, but it is not cool.

Projections will be released at this meeting. For review, here are the March projections. 

The BEA's second estimate for Q1 GDP showed real growth at 1.3% annualized.  Early estimates for Q2 GDP are around 2% to 3% annualized, and the FOMC projections for year-over-year growth in Q4 2024 are close.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2024	2025	2026
Mar 2024	2.0 to 2.4	1.9 to 2.3	1.8 to 2.1
Dec 2023	1.2 to 1.7	1.5 to 2.0	1.8 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 4.0% in April, at the FOMC projections for Q4.  This might be revised up slightly.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2024	2025	2026
Mar 2024	3.9 to 4.1	3.9 to 4.2	3.9 to 4.3
Dec 2023	4.0 to 4.2	4.0 to 4.2	3.9 to 4.3

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

As of April 2024, PCE inflation increased 2.7 percent year-over-year (YoY).  This is at the high end of the FOMC projections for Q4, and inflation will likely be revised down slightly.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2024	2025	2026
Mar 2024	2.3 to 2.7	2.1 to 2.2	2.0 to 2.1
Dec 2023	2.2 to 2.5	2.0 to 2.2	2.0

PCE core inflation increased 2.8 percent YoY in April.  This is also at the high end of the FOMC projections for Q4 2024.  However, housing is still distorting the measures of inflation, and the shelter index will continue to decline (monetary policy can't impact what happened in the past), and it is likely projections for core PCE will be revised down slightly.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2024	2025	2026
Mar 2024	2.5 to 2.8	2.1 to 2.3	2.0 to 2.1
Dec 2023	2.4 to 2.7	2.0 to 2.2	2.0 to 2.1

by Calculated Risk on 6/08/2024 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• The "Home ATM" Mostly Closed in Q1

• 1st Look at Local Housing Markets in May

• Asking Rents Mostly Unchanged Year-over-year

• Freddie Mac House Price Index Increased in April; Up 6.5% Year-over-year

• ICE Mortgage Monitor: "Home Prices Cool for Second Straight Month in April"

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

by Calculated Risk on 6/08/2024 08:11:00 AM

The key report this week is May CPI.

The FOMC meets on Tuesday and Wednesday, and rates are expected to be unchanged.

----- Monday, June 10th -----
No major economic releases scheduled.

----- Tuesday, June 11th -----
6:00 AM ET: NFIB Small Business Optimism Index for April.

----- Wednesday, June 12th -----
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 May from the BLS. The consensus is for 0.2% increase in CPI (up 3.4% YoY), and a 0.3% increase in core CPI (up 3.5% YoY).

2:00 PM: FOMC Statement. The FOMC is expected to leave the Fed Funds rate unchanged at this meeting.

2:00 PM: FOMC Projections 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, June 13th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 226 thousand initial claims, down from 229 thousand last week.

8:30 AM: The Producer Price Index for May from the BLS. The consensus is for a 0.2% increase in PPI, and a 0.3% increase in core PPI.

----- Friday, June 14th -----
10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for June).

by Calculated Risk on 6/07/2024 07:53:00 PM

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

For deaths, I'm currently using 4 weeks ago for "now", since the most recent three weeks will be revised significantly.

Note: "Effective May 1, 2024, hospitals are no longer required to report COVID-19 hospital admissions, hospital capacity, or hospital occupancy data."  So I'm no longer tracking hospitalizations, however hospitalizations were at a pandemic low three weeks ago.

COVID Metrics
	Now	Week Ago	Goal
Deaths per Week✅	303	398	≤3501
1my goals to stop weekly posts, 🚩 Increasing number weekly for Deaths ✅ Goal met.

Click on graph for larger image.

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

Weekly deaths have declined from the recent peak of 2,561 and are now below the previous pandemic low of 491 last July.  

And here is a graph I'm following concerning COVID in wastewater as of June 6th:

This appears to be a leading indicator for COVID hospitalizations and deaths.

Nationally, COVID in wastewater is now off about 90% from the holiday peak at the end of December - and also near the lows of last year - and that suggests weekly deaths will continue to decline.   However, there was a pickup recently, especially in the West.

by Calculated Risk on 6/07/2024 04:45:00 PM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Declined in May

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were down in May compared to April. The Manheim Used Vehicle Value Index (MUVVI) fell to 197.3, a decline of 12.1% from a year ago. The seasonal adjustment to the index reduced the impact on the month, resulting in values that declined 0.6% month over month. The non-adjusted price in May decreased by 1.2% compared to April, moving the unadjusted average price down 11.4% year over year.
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 May (seasonally adjusted) and were down 12.1% year-over-year (YoY).

by Calculated Risk on 6/07/2024 01:15:00 PM

Today, in the Real Estate Newsletter: The "Home ATM" Mostly Closed in Q1

Excerpt:

During the housing bubble, many homeowners borrowed heavily against their perceived home equity - jokingly calling it the “Home ATM” - and this contributed to the subsequent housing bust, since so many homeowners had negative equity in their homes when house prices declined.

Unlike during the housing bubble, very few homeowners have negative equity now. From CoreLogic this morning: Homeowner Equity Insights – Q1 2024

CoreLogic analysis shows U.S. homeowners with mortgages (roughly 62% of all properties*) have seen their equity increase by a total of $1.5 trillion since the first quarter of 2023, a gain of 9.6% year over year.

In the first quarter of 2024, the total number of mortgaged residential properties with negative equity decreased by 2.1%  from the fourth quarter of 2023, representing 1 million homes, or 1.8% of all mortgaged properties. On a year-over-year basis, negative equity declined by 16.1% from 1.2 million homes, or 2.1% of all mortgaged properties, from the first quarter of 2023.

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 Q1 2024, mortgage debt increased $38 billion, down from $91 billion in Q4, and down from the cycle peak of $467 billion in Q2 2021. 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).

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

by Calculated Risk on 6/07/2024 12:36:00 PM

The Federal Reserve released the Q1 2024 Flow of Funds report today: Financial Accounts of the United States.

The net worth of households and nonprofits rose to $160.8 trillion during the first quarter of 2024. The value of directly and indirectly held corporate equities increased $3.8 trillion and the value of real estate increased $0.9 trillion.
...
Household debt increased 2.9 percent at an annual rate in the first quarter of 2024. Consumer credit grew at an annual rate of 1.8 percent, while mortgage debt (excluding charge-offs) grew at an annual rate of 2.1 percent.

Click on graph for larger image.

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

Net worth increased $5.1 trillion in Q1 to an all-time high.  As a percent of GDP, net worth increased in Q1, but is below the peak in 2021.

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 Q1 2024, household percent equity (of household real estate) was at 73.8% - up from 73.4% in Q4, 2023. This is close to the highest percent equity since the 1960s.

Note: This includes households with no mortgage debt.

The third graph shows household real estate assets and mortgage debt as a percent of GDP.  

Mortgage debt increased by $38 billion in Q1.

Mortgage debt is up $2.38 trillion from the peak during the housing bubble, but, as a percent of GDP is at 46.3% - down from Q4 - and down from a peak of 73.3% of GDP during the housing bust.

The value of real estate, as a percent of GDP, increased in Q1 - but is below the peak in Q2 2022, and is well above the average of the last 30 years.