by Calculated Risk on 8/27/2021 10:18:00 AM

From Fed Chair Powell at Jackson Hole Symposium: Monetary Policy in the Time of Covid (Watch speech here). Excerpt:

That brings me to a concluding word on the path ahead for monetary policy. The Committee remains steadfast in our oft-expressed commitment to support the economy for as long as is needed to achieve a full recovery. The changes we made last year to our Statement on Longer-Run Goals and Monetary Policy Strategy are well suited to address today's challenges.

We have said that we would continue our asset purchases at the current pace until we see substantial further progress toward our maximum employment and price stability goals, measured since last December, when we first articulated this guidance. My view is that the "substantial further progress" test has been met for inflation. There has also been clear progress toward maximum employment. At the FOMC's recent July meeting, I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year. The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the Delta variant. We will be carefully assessing incoming data and the evolving risks. Even after our asset purchases end, our elevated holdings of longer-term securities will continue to support accommodative financial conditions.

The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test. We have said that we will continue to hold the target range for the federal funds rate at its current level until the economy reaches conditions consistent with maximum employment, and inflation has reached 2 percent and is on track to moderately exceed 2 percent for some time. We have much ground to cover to reach maximum employment, and time will tell whether we have reached 2 percent inflation on a sustainable basis.
emphasis added

by Calculated Risk on 8/27/2021 08:37:00 AM

The BEA released the Personal Income and Outlays, July 2021 report:

Personal income increased $225.9 billion (1.1 percent) in July according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $198.0 billion (1.1 percent) and personal consumption expenditures (PCE) increased $42.2 billion (0.3 percent).

Real DPI increased 0.7 percent in July and Real PCE decreased 0.1 percent; goods decreased 1.6 percent and services increased 0.6 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.
emphasis added

The July PCE price index increased 4.2 percent year-over-year and the July PCE price index, excluding food and energy, increased 3.6 percent year-over-year.

The following graph shows real Personal Consumption Expenditures (PCE) through July 2021 (2012 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was above expectations, and personal spending was at expectations,  and the increase in PCE was at expectations.

by Calculated Risk on 8/26/2021 07:15:00 PM

Friday:
• At 8:30 AM ET, Personal Income and Outlays, July 2021. The consensus is for a 0.2% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.3%.

• At 10:00 AM, Speech, Fed Chair Jerome Powell, The Economic Outlook, At the Jackson Hole Economic Policy Symposium

• Also at 10:00 AM, University of Michigan's Consumer sentiment index (Final for August). The consensus is for a reading of 70.9.

by Calculated Risk on 8/26/2021 05:28:00 PM

The 7-day average hospitalizations is the highest since February 4th.

The 7-day average deaths is the highest since March 16th.

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 365,767,674, as of a week ago 359,623,380. Average doses last week: 0.88 million per day. 

COVID Metrics
	Today	Yesterday	Week Ago	Goal
Percent fully Vaccinated	51.9%	51.7%	51.1%	≥70.0%1
Fully Vaccinated (millions)	172.2	171.8	169.6	≥2321
New Cases per Day3🚩	142,006	142,946	138,087	≤5,0002
Hospitalized3🚩	87,297	86,406	77,516	≤3,0002
Deaths per Day3🚩	864	844	778	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37 day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  

KUDOS to the residents of the 7 states that have achieved 60% of total population fully vaccinated: Vermont at 67.6%, Massachusetts, Maine, Connecticut, Rhode Island, Maryland and New Jersey at 60.9%.

The following 17 states and D.C. have between 50% and 59.9% fully vaccinated: Washington at 59.7%, New Hampshire, New York State, New Mexico, Oregon, District of Columbia, Virginia, Colorado, Minnesota, California, Hawaii, Delaware, Pennsylvania, Wisconsin, Florida, Nebraska, Iowa, Illinois, and Michigan at 50.2%.

Next up (total population, fully vaccinated according to CDC) are South Dakota at 48.8%, Ohio at 48.0%, Kentucky at 47.9%, Kansas at 47.7%, Arizona at 47.4%, Utah at 47.3%, Nevada at 47.2%, and Alaska at 46.9%.

Click on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

by Calculated Risk on 8/26/2021 03:26:00 PM

From the Las Vegas Visitor Authority: July 2021 Las Vegas Visitor Statistics

July marked the strongest visitation month since the pandemic began as the destination hosted 3.3M visitors, up 11.2% MoM and down ‐10.4% from July 2019.

Hotel occupancy continued to ramp up, exceeding 79% (up 3.5 pts MoM, down ‐11.7 pts vs. July 2019), as Weekend occupancy came in at 88.1% (down ‐1.3 pts MoM) while Midweek occupancy increased to 74.6% (up 3.7 pts MoM, down ‐14.1 pts vs. July 2019.)

ADR came in very strong during the month, reaching $152, surpassing last month by 19%, and RevPAR beat comparable 2019 monthly levels for the first time as it reached $120.79, up +24.4% MoM and 4.5% ahead of July 2019.

Click on graph for larger image.

The first graph shows visitor traffic for 2019 (blue), 2020 (orange) and 2021 (red).

Visitor traffic was down 10.4% compared to the same month in 2019.

There had been no convention traffic since March 2020, but there were a few conventions in June (data not available yet).

I'll add a graph of convention traffic once convention data is available.

by Calculated Risk on 8/26/2021 01:29:00 PM

I'm launching a newsletter focused solely on real estate.  This newsletter will be ad free.

The current article discusses the probable large increase in the conforming loan limits for Fannie & Freddie (and the FHA) for 2022.

This will usually be published several times a week, and will provide more in-depth analysis of the housing market.  

The blog will continue as always!

You can subscribe at https://calculatedrisk.substack.com/ (Currently all content is available for free, but please subscribe).

by Calculated Risk on 8/26/2021 10:14:00 AM

Note: The year-over-year occupancy comparisons are easy, since occupancy declined sharply at the onset of the pandemic.  So STR is comparing to the same week in 2019.

The occupancy rate is down 9.1% compared to the same week in 2019.

From CoStar: STR: US Hotel Performance Continues Decline in Mid-August

Reflecting seasonal demand patterns and concerns around the pandemic, U.S. hotel performance continued to decline from previous weeks, according to STR‘s latest data through August 21.

August 15-21, 2021 (percentage change from comparable week in 2019*):

• Occupancy: 63.7% (-9.1%)
• Average daily rate (ADR): $135.77 (+5.1%)
• Revenue per available room (RevPAR): $86.43 (-4.5%)

While none of the Top 25 Markets recorded an occupancy increase over 2019, Detroit came closest to its 2019 comparable (-0.7% to 69.3%).
...
*Due to the steep, pandemic-driven performance declines of 2020, STR is measuring recovery against comparable time periods from 2019.
emphasis added

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 2021, black is 2020, blue is the median, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

Occupancy is above the horrible 2009 levels and weekend occupancy (leisure) has been solid - but, according to STR, occupancy is declining due to both seasonal factors and "concerns around the pandemic".

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

With solid leisure travel, the Summer months had decent occupancy - but it is uncertain what will happen in the Fall with business travel - especially with the sharp increase in COVID pandemic cases and hospitalizations.

by Calculated Risk on 8/26/2021 08:41:00 AM

The DOL reported:

In the week ending August 21, the advance figure for seasonally adjusted initial claims was 353,000, an increase of 4,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 348,000 to 349,000. The 4-week moving average was 366,500, a decrease of 11,500 from the previous week's revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week's average was revised up by 250 from 377,750 to 378,000.
emphasis added

This does not include the 117,709 initial claims for Pandemic Unemployment Assistance (PUA) that was up from 108,081 the previous week.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 366,500.

The previous week was revised up.

Regular state continued claims decreased to 2,862,000 (SA) from 2,865,000 (SA) the previous week.

Note: There are an additional 5,004,753 receiving Pandemic Unemployment Assistance (PUA) that increased from 4,900,047 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.  And an additional 3,793,956 receiving Pandemic Emergency Unemployment Compensation (PEUC) down from 3,846,045.

Weekly claims were slightly above the consensus forecast.

by Calculated Risk on 8/26/2021 08:34:00 AM

From the BEA: Gross Domestic Product, 2nd Quarter 2021 (Second Estimate); Corporate Profits, 2nd Quarter 2021 (Preliminary Estimate)

Real gross domestic product (GDP) increased at an annual rate of 6.6 percent in the second quarter of 2021, according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 6.3 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 6.5 percent. The update reflects upward revisions to nonresidential fixed investment and exports that were partly offset by downward revisions to private inventory investment, residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, were revised down
emphasis added

Here is a Comparison of Second and Advance Estimates. PCE growth was revised up from 11.8% to 11.9%. Residential investment was revised down from -9.8% to -11.5%. This was slightly below the consensus forecast.

by Calculated Risk on 8/25/2021 06:20:00 PM

Thursday:
• At 8:30 AM ET, Gross Domestic Product, 2nd quarter 2021 (second estimate). The consensus is that real GDP increased 6.7% annualized in Q2, up from the advance estimate of 6.5% in Q2.

• At 8:30 AM, The initial weekly unemployment claims report will be released.  The consensus is for a increase slightly to 350 thousand from 348 thousand last week.

• At 11:00 AM, the Kansas City Fed manufacturing survey for August.

• Thursday through Saturday, Jackson Hole Economic Policy Symposium, Macroeconomic Policy in an Uneven Economy