by Calculated Risk on 12/17/2024 09:15:00 AM

Earlier from the Fed: Industrial Production and Capacity Utilization

Industrial production (IP) moved down 0.1 percent in November after declining 0.4 percent in October. In November, manufacturing output rose 0.2 percent, boosted by a 3.5 percent increase in the index for motor vehicles and parts. The indexes for mining and utilities fell 0.9 percent and 1.3 percent, respectively. At 102.0 percent of its 2017 average, total IP in November was 0.9 percent below its year-earlier level. Capacity utilization stepped down to 76.8 percent in November, a rate that is 2.9 percentage points below its long-run (1972–2023) average.
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Click on graph for larger image.

This graph shows Capacity Utilization. This series is up from the record low set in April 2020, but below the level in February 2020 (pre-pandemic).

Capacity utilization at 76.8% is 2.9% below the average from 1972 to 2023.  This was below 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 decreased to 102.0. This is above the pre-pandemic level.

Industrial production was below consensus expectations.

by Calculated Risk on 12/17/2024 08:30:00 AM

On a monthly basis, retail sales increased 0.7% from October to November (seasonally adjusted), and sales were up 3.8 percent from November 2023.

From the Census Bureau report:

Advance estimates of U.S. retail and food services sales for November 2024, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $724.6 billion, an increase of 0.7 percent from the previous month, and up 3.8 percent from November 2023. ... The September 2024 to October 2024 percent change was revised from up 0.4 percent to up 0.5 percent.
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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 was up 0.7% in November.

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 4.0% on a YoY basis.

The change in sales in November were above expectations, and sales in September and October were revised up, combined.

by Calculated Risk on 12/16/2024 07:13:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Start New Week With Some Hope

Last week wasn't great for mortgage rates. They moved higher on each of the 5 days. Moreover, there was a distinct lack of logical motivation from the economic data. In fact, on a few occasions, the data argued for lower rates only for things to move in the other direction by the end of the day.

The new week is off to a different start. ...

Traders are already assuming the Fed will pencil in a slower pace of rate cuts than they did in the September meeting. Some of the recent rise in rates reflects those trades. [30 year fixed 6.72%]
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Tuesday:
• At 8:30 AM ET, Retail sales for November will be released.  The consensus is for a 0.5% increase in retail sales.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for November. The consensus is for a 0.1% increase in Industrial Production, and for Capacity Utilization to increase to 77.2%.

• At 10:00 AM, The December NAHB homebuilder survey. The consensus is for a reading of 46, unchanged from 46 the previous month. Any number below 50 indicates that more builders view sales conditions as poor than good.

by Calculated Risk on 12/16/2024 03:01:00 PM

From STR: U.S. hotel results for week ending 7 December

The U.S. hotel industry reported positive year-over-year performance comparisons, according to CoStar’s latest data through 7 December. ...

1-7 December 2024 (percentage change from comparable week in 2023):

• Occupancy: 59.0% (+0.5%)
• Average daily rate (ADR): US$159.77 (+3.8%)
• Revenue per available room (RevPAR): US$94.31 (+4.3%)
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The following graph shows the seasonal pattern for the hotel occupancy rate using the four-week average.

Click on graph for larger image.

The red line is for 2024, blue is the median, and dashed light blue is for 2023.  Dashed purple is for 2018, the record year for hotel occupancy. 

The 4-week average of the occupancy rate is above both last year and the median rate for the period 2000 through 2023 (Blue) - and will likely finish mostly unchanged year-over-year.

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

The 4-week average of the occupancy rate has peaked for the fall business travel season and will decline seasonally through the holidays.    This is a solid finish for 2024!

by Calculated Risk on 12/16/2024 11:14:00 AM

Today, in the Calculated Risk Real Estate Newsletter: 3rd Look at Local Housing Markets in November

A brief excerpt:

The NAR is scheduled to release November Existing Home sales on Thursday, December 19th at 10:00 AM. The consensus is for 3.97 million SAAR, up from 3.96 million in October. Last year, the NAR reported sales in November 2023 at 3.91 million SAAR. This will be the second year-over-year gain since July 2021 (last month was the first).

This is the third look at local markets in November. I’m tracking over 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released. The tables for active listings, new listings and closed sales all include a comparison to November 2019 for each local market (some 2019 data is not available).

Closed sales in November were mostly for contracts signed in September and October when 30-year mortgage rates averaged 6.18% and 6.43%, respectively (Freddie Mac PMMS). These were the lowest mortgage rates in 2 years!
...
Here is a look at months-of-supply using NSA sales. Note the regional differences with more months-of-supply in the South, especially in Florida and Texas (although November statistics in Florida were likely still impacted by Hurricane Milton).
...
More local markets to come!

There is much more in the article.

by Calculated Risk on 12/16/2024 08:11:00 AM

Altos reports that active single-family inventory was down 1.1% week-over-week.  Inventory is now 7.7% below the peak for the year (8 weeks ago).

Inventory will continue to decline seasonally until early next year.

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

Click on graph for larger image.

The red line is for 2024.  The black line is for 2019.  

Inventory was up 26.6% compared to the same week in 2023 (last week it was up 26.3%), and down 17.0% compared to the same week in 2019 (last week it was down 16.8%). 

Back in June 2023, inventory was down almost 54% compared to 2019, so the gap to more normal inventory levels has closed significantly!

This second inventory graph is courtesy of Altos Research.

As of Dec 13th, inventory was at 682 thousand (7-day average), compared to 690 thousand the prior week. 

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 12/15/2024 07:15:00 PM

Weekend:
• Schedule for Week of December 15, 2024

Monday:
• 8:30 AM: The New York Fed Empire State manufacturing survey for December. The consensus is for a reading of 5.8, down from 31.2.

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 $71.12 per barrel and Brent at $74.41 per barrel. A year ago, WTI was at $71, and Brent was at $77 - so WTI oil prices are unchanged year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.98 per gallon. A year ago, prices were at $3.04 per gallon, so gasoline prices are down $0.06 year-over-year.

by Calculated Risk on 12/15/2024 10:22:00 AM

Most analysts expect the FOMC will cut the federal funds rate at the meeting this week by 25bp lowering the target range to 4 1/4 to 4 1/2 percent.   However, most market participants now expect the FOMC to pause in January and are split on a rate cut at the March meeting. 

From BofA:

We expect the Fed to cut rates by 25bp at its Dec meeting. Powell is likely to point to a slower pace of cuts thereafter, including a pause in Jan, in his presser. The dot plot should show three cuts in 2025 and a higher neutral rate. Consistent with this, we think the macro forecasts will indicate slightly stronger inflation next year, and higher longer run growth. Policymakers won’t account for the Trump agenda in their base case, but the balance of risks should give a sense of their assessment of potential policy changes.
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Projections will be released at this meeting. For review, here are the September projections.  The focus will be on changes to the projections for next year.

Since the last projections were released, economic growth has been above expectations, the unemployment rate is below expectations, and inflation close to expectations (although there are some "base effects" that might push PCE inflation up in Q4).  

The BEA's second estimate for Q3 GDP showed real growth at 2.8% annualized, following 3.0% annualized real growth in Q2, and 1.6% in Q1.  Current estimates for Q4 GDP are around 2.6%.  That would put real growth in 2024, Q4 over Q4, at 2.5% - well above the top end of the September FOMC projections.  

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2024	2025	2026	2027
Sept 2024	1.9 to 2.1	1.8 to 2.2	1.9 to 2.3	1.8 to 2.1
June 2024	1.9 to 2.3	1.8 to 2.2	1.8 to 2.1	---

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 4.2% in November (and 4.1%).  This is below the low end of the September projections for Q4.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2024	2025	2026	2027
Sept 2024	4.3 to 4.4	4.2 to 4.5	4.0 to 4.4	4.0 to 4.4
June 2024	3.9 to 4.2	3.9 to 4.3	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 October 2024, PCE inflation increased 2.3 percent year-over-year (YoY). This is in the middle of the September projection range.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2024	2025	2026	2027
Sept 2024	2.2 to 2.4	2.1 to 2.2	2.0	2.0
June 2024	2.5 to 2.9	2.2 to 2.4	2.0 to 2.1	---

PCE core inflation increased 2.8 percent YoY in October. This was slightly above the range of FOMC projections for Q4.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2024	2025	2026	2027
Sept 2024	2.6 to 2.7	2.1 to 2.3	2.0	2.0
June 2024	2.8 to 3.0	2.3 to 2.4	2.0 to 2.1	---

by Calculated Risk on 12/14/2024 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• Part 1: Current State of the Housing Market; Overview for mid-December 2024

• Part 2: Current State of the Housing Market; Overview for mid-December 2024

• The "Home ATM" Mostly Closed in Q3

• 2nd Look at Local Housing Markets in November

• Q3 Update: Delinquencies, Foreclosures and REO

• ICE Mortgage Monitor: Refinance Activity Increased Especially for Rate/Term Refinances

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

by Calculated Risk on 12/14/2024 08:11:00 AM

The key economic reports this week are Retail Sales, Housing Starts, Existing Home Sales, the 3rd estimate of Q3 GDP, and November Personal income and outlays.

For manufacturing, November Industrial Production, and the December New York, Philly and Kansas City Fed surveys will be released this week.

The FOMC meets this week and is expected to cut rates by 25bp.

----- Monday, December 16th -----
8:30 AM: The New York Fed Empire State manufacturing survey for December. The consensus is for a reading of 5.8, down from 31.2.

----- Tuesday, December 17th -----
8:30 AM ET: Retail sales for November will be released.  The consensus is for a 0.5% 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 November.

This graph shows industrial production since 1967.

The consensus is for a 0.1% increase in Industrial Production, and for Capacity Utilization to increase to 77.2%.

10:00 AM: The December NAHB homebuilder survey. 

The consensus is for a reading of 46, unchanged from 46 the previous month. Any number below 50 indicates that more builders view sales conditions as poor than good.

----- Wednesday, December 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 November.

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

The consensus is for 1.344 million SAAR, up from 1.311 million SAAR.

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

2:00 PM: FOMC Meeting Announcement. The Fed is expected to cut rates 25bp 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 19th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 232 thousand initial claims, down from 242 thousand last week.

8:30 AM: Gross Domestic Product, 3rd quarter 2024 (Third estimate). The consensus is for real GDP at 2.8% annualized, unchanged from the second estimate of 2.8%.

8:30 AM: the Philly Fed manufacturing survey for December. The consensus is for a reading of 2.2, up from -6.0.

10:00 AM: Existing Home Sales for November from the National Association of Realtors (NAR). The consensus is for 3.97 million SAAR, up from 3.96 million.

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

11:00 AM: the Kansas City Fed manufacturing survey for December.

----- Friday, December 20th -----
8:30 AM: Personal Income and Outlays for November. The consensus is for a 0.4% increase in personal income, and for a 0.5% increase in personal spending. And for the PCE price index to increase 0.2%, and the Core PCE price index to increase 0.2%.  PCE prices are expected to be up 2.5% YoY, and core PCE prices up 2.9% YoY.

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

10:00 AM: State Employment and Unemployment (Monthly) for November 2024