by Calculated Risk on 10/06/2024 07:34:00 PM

Weekend:
• Schedule for Week of October 6, 2024

Monday:
• No major economic releases scheduled.

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

Oil prices were up over the last week with WTI futures at $73.98 per barrel and Brent at $77.59 per barrel. A year ago, WTI was at $83, and Brent was at $88 - so WTI oil prices are down about 10% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.13 per gallon. A year ago, prices were at $3.71 per gallon, so gasoline prices are down $0.58 year-over-year.

by Calculated Risk on 10/06/2024 08:14:00 AM

Note: I covered apartments and offices in the newsletter: Moody's: Apartment Vacancy Rate Unchanged in Q3; Office Vacancy Rate at Record High

From Moody’s Analytics economists: Multifamily Performance Steadied, Office Stress Continued to Manifest, Retail Vacancy Declined, And Industrial Cooled Down

The Q3 2024 data indicated a slight decrease in the longstanding 10.4% vacancy rate for the retail sector, dropping to 10.3% this quarter. Asking rents saw a marginal increase of 0.3% to $21.85, while effective rents rose by 0.4% to $24.87 per square foot. Consumer spending in the third quarter has thus far exceeded expectations, particularly in July, which experienced a 1.1% increase. Although August saw a modest 0.1% increase, it surpassed the anticipated -0.2% decrease. These results were propelled by robust performance in online purchases and core retail sales, excluding automobiles, gasoline, building materials, and food services, alongside a decline in the unemployment rate following four consecutive monthly increases.

This graph shows the strip mall vacancy rate starting in 1980 (prior to 2000 the data is annual). 

Back in the '80s, there was overbuilding in the mall sector even as the vacancy rate was rising. This was due to the very loose commercial lending that led to the S&L crisis.

In the mid-'00s, mall investment picked up as mall builders followed the "roof tops" of the residential boom (more loose lending). This led to the vacancy rate moving higher even before the recession started. Then there was a sharp increase in the vacancy rate during the recession and financial crisis.

Recently the vacancy rate has held fairly steady at a high level as online shopping continues to impact brick and mortar stores.

by Calculated Risk on 10/05/2024 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• FHFA’s National Mortgage Database: Outstanding Mortgage Rates, LTV and Credit Scores

• Moody's: Apartment Vacancy Rate Unchanged in Q3; Office Vacancy Rate at Record High

• Freddie Mac House Price Index Increased Slightly in August; Up 3.7% Year-over-year

• Asking Rents Mostly Unchanged Year-over-year

• Final Look at Local Housing Markets in August and a Look Ahead to September Sales

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

by Calculated Risk on 10/05/2024 08:11:00 AM

The key economic report this week is September CPI.

Other key indicators include September PPI and the August trade deficit.

----- Monday, October 7th -----
No major economic releases scheduled.

----- Tuesday, October 8th -----
6:00 AM: NFIB Small Business Optimism Index for September.

8:30 AM: Trade Balance report for August from the Census Bureau.  The consensus is for the deficit to be $71.4 billion in August, from $78.8 billion in July.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

----- Wednesday, October 9th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

2:00 PM: FOMC Minutes, Minutes Meeting of September 17-18, 2024

----- Thursday, October 10th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 228 thousand initial claims, up from 225 thousand last week.

8:30 AM: The Consumer Price Index for September from the BLS. The consensus is for a 0.1% increase in CPI, and a 0.2% increase in core CPI.  The consensus is for CPI to be up 2.3% year-over-year and core CPI to be up 3.2% YoY.

----- Friday, October 11th -----
8:30 AM: The Producer Price Index for September from the BLS. The consensus is for a 0.1% increase in PPI, and a 0.2% increase in core PPI.

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

by Calculated Risk on 10/04/2024 07:00:00 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.

COVID Metrics
	Now	Week Ago	Goal
Deaths per Week	1,120	1,287	≤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.

Although weekly deaths met the original goal to stop posting, I'm continuing to post now that deaths are above the goal again.  

Weekly deaths are almost quadruple the low of 302 in early June but are now declining and will likely continue to decline based on wastewater sampling.

And here is a graph I'm following concerning COVID in wastewater as of October 3rd:

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

COVID in wastewater is now declining suggesting weekly deaths will continue to decline.

by Calculated Risk on 10/04/2024 03:41:00 PM

From BofA:

Since our last weekly publication, our 3Q GDP tracking estimate is up three-tenths to 2.6% q/q saar. [Oct 4th estimate]
emphasis added

From Goldman:

We left our Q3 GDP tracking estimate unchanged at +3.2% (quarter-over-quarter annualized) and our domestic final sales estimate unchanged at +2.8%. [Oct 3rd estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2024 is 2.5 percent on October 1, down from 3.1 percent on September 27. [Oct 1st estimate]

by Calculated Risk on 10/04/2024 12:37:00 PM

Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year

Brief excerpt:

Tracking rents is important for understanding the dynamics of the housing market. For example, the sharp increase in rents helped me deduce that there was a surge in household formation in 2021 (See from September 2021: Household Formation Drives Housing Demand).

Slower household formation and increased supply (more multi-family completions) has kept asking rents under pressure. ...

Welcome to the October 2024 Apartment List National Rent Report. The national median rent dipped by 0.5% in September, as we turn the corner into the slow season for the rental market. The median rent nationally now stands at $1,405, and we’re likely to see that number continue to dip modestly through the remainder of the year.

...
Realtor.com: 13th Consecutive Month with Year-over-year Decline in Rents

In August 2024, the U.S. median rent continued to decline year over year for the 13th month in a row, down $5, or -0.3%, year over year for 0-2 bedroom properties across the top 50 metros 

by Calculated Risk on 10/04/2024 09:16:00 AM

The headline jobs number in the September employment report was well above expectations, and July and August payrolls were revised up by 72,000 combined.   The participation rate was unchanged, the employment population ratio increased, and the unemployment rate decreased to 4.1%.

Construction employment increased 25 thousand and is now 688 thousand above the pre-pandemic level. 

Manufacturing employment decreased 7 thousand and is now 137 thousand above the pre-pandemic level.

Earlier: September Employment Report: 254 thousand Jobs, 4.1% Unemployment Rate

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 years old participation decreased in September to 83.8% from 83.9% in August.

The 25 to 54 employment population ratio was unchanged at 80.9% from 80.9% the previous month.

Both are above pre-pandemic levels and near the highest level this millennium.

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 4.0% YoY in September.   

Part Time for Economic Reasons

From the BLS report:

"The number of people employed part time for economic reasons changed little at 4.6 million in September. This measure is up from 4.1 million a year earlier. These individuals would have preferred full-time employment but 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 September to 4.62 million from 4.83 million in August.  This is above the pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 7.7% from 7.9% in the previous month. This is down from the record high in April 2020 of 23.0% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is above the 7.0% 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 1.63 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.53 million the previous month.

This is down from post-pandemic high of 4.174 million, and up from the recent low of 1.050 million.

This is above pre-pandemic levels.

Job Streak

Through September 2024, the employment report indicated positive job growth for 45 consecutive months, putting the current streak tied in 4th place of the longest job streaks in US history (since 1939).  It appears this streak will survive the annual benchmark revision (that will revise down job growth).

Headline Jobs, Top 10 Streaks
	Year Ended	Streak, Months
1	2019	100
2	1990	48
3	2007	46
4 tie	1979	45
4 tie	20241	45
6 tie	1943	33
6 tie	1986	33
6 tie	2000	33
9	1967	29
10	1995	25
1Currrent Streak

Summary:

The headline jobs number in the September employment report was well above expectations, and July and August payrolls were revised up by 72,000 combined. The participation rate was unchanged, the employment population ratio increased, and the unemployment rate decreased to 4.1%.

This was a strong employment report.

by Calculated Risk on 10/04/2024 08:30:00 AM

From the BLS: Employment Situation

Total nonfarm payroll employment increased by 254,000 in September, and the unemployment rate changed little at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in food services and drinking places, health care, government, social assistance, and construction.
...
The change in total nonfarm payroll employment for July was revised up by 55,000, from +89,000 to +144,000, and the change for August was revised up by 17,000, from +142,000 to +159,000. With these revisions, employment in July and August combined is 72,000 higher than previously reported.
emphasis added

Click on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 254 thousand in September.  Private payrolls increased by 223 thousand, and public payrolls increased 32 thousand.

Payrolls for July and August were revised up 72 thousand, combined.

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

In September, the year-over-year change was 2.44 million jobs.  Employment was up solidly year-over-year (Although the annual benchmark revision will lower the year-over-year change).

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

The Labor Force Participation Rate was unchanged at 62.7% in September, from 62.7% in August. This is the percentage of the working age population in the labor force.

The Employment-Population ratio increased to 60.2% from 60.0% in August (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 decreased to 4.1% in September from 4.2% in August.

This was well above consensus expectations, and July and August payrolls were revised up by 72,000 jobs, combined.  

A strong report.  I'll have more later ...

by Calculated Risk on 10/03/2024 07:33:00 PM

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

Friday:
• At 8:30 AM ET, 8:30 AM: Employment Report for September.   The consensus is for 145,000 jobs added, and for the unemployment rate to be unchanged at 4.2%.