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

From BofA:

Since our last weekly publication, our 3Q GDP tracking estimate is unchanged at 2.6% q/q saar. [Oct 11th estimate]
emphasis added

From Goldman:

We left our Q3 GDP tracking estimate unchanged at +3.2% (quarter-over-quarter annualized) and our Q3 domestic final sales forecast unchanged at +2.8%. [Oct 8th 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 3.2 percent on October 9, unchanged from October 8 after rounding. After this morning's wholesale trade release from the US Census Bureau, the nowcast of third-quarter real gross private domestic investment growth decreased from 3.4 percent to 3.3 percent. [Oct 9th estimate]

by Calculated Risk on 10/10/2024 07:42:00 PM

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

Friday:
• At 8:30 AM ET, 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.

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

by Calculated Risk on 10/10/2024 04:11:00 PM

The Cleveland Fed released the median CPI and the trimmed-mean CPI.

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.3% in September. The 16% trimmed-mean Consumer Price Index increased 0.3%. "The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report".

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. 

On a year-over-year basis, the median CPI rose 4.1% (down from 4.2% in August), the trimmed-mean CPI rose 3.2% (unchanged from 3.2%), and the CPI less food and energy rose 3.3% (up from 3.2%). 

Core PCE is for August was up 2.7% YoY, up from 2.6% in July.

Note: The Cleveland Fed released the median CPI details. Motor fuel decreased at a 39% annual rate in September.

by Calculated Risk on 10/10/2024 01:24:00 PM

Today, in the Calculated Risk Real Estate Newsletter: House Prices to Income

A brief excerpt:

One of the metrics we'd like to follow is a ratio of house prices to incomes. Unfortunately, most income data is released with a significantly lag, and there are always questions about which income data to use (the average total income is skewed by the income of a few people).

And for key measures of house prices - like Case-Shiller - we have indexes, not actually prices. But we can construct a ratio of the house price indexes to some measures of income.

House Price to National Average Wage Index

For the following graph I decided to look at house prices and the National Average Wage Index released this morning for 2023 from Social Security.

The National Average Wage Index increased to $66,621.80 in 2023, up 4.43% from $63,795.13 in 2022. This was the third consecutive year with strong wage gains, and wages are up almost 20% over the last 3 years.

The last time we saw 3-year wage gains this high was in the late 1970s and early 1980s. Another reason to compare the current housing cycle to the 1978 to 1982 period (not the housing bubble and bust).

There is much more in the article.

by Calculated Risk on 10/10/2024 09:20:00 AM

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had mentioned when services less rent of shelter was up around 8% year-over-year.  This declined and is now up 4.4% YoY.

Click on graph for larger image.

This graph shows the YoY price change for Services and Services less rent of shelter through September 2024.

Services were up 4.7% YoY as of September 2024, down from 4.8% YoY in August.

Services less rent of shelter was up 4.4% YoY in September, up from 4.3% YoY in August.

The second graph shows that goods prices started to increase year-over-year (YoY) in 2020 and accelerated in 2021 due to both strong demand and supply chain disruptions.

Durables were at -2.9% YoY as of September 2024, up from -4.2% YoY in August.

Commodities less food and energy commodities were at -1.2% YoY in September, up from -1.7% YoY in August.

Here is a graph of the year-over-year change in shelter from the CPI report (through September) and housing from the PCE report (through August)

Shelter was up 4.8% year-over-year in September, down from 5.2% in August. Housing (PCE) was up 5.3% YoY in August, up from 5.2% in July.

The BLS noted this morning: "The index for shelter rose 0.2 percent in September, and the index for food increased 0.4 percent. Together, these two indexes contributed over 75 percent of the monthly all items increase."

This is still catching up with private data.

Core CPI ex-shelter was up 2.0% YoY in September.

by Calculated Risk on 10/10/2024 08:56:00 AM

With the release of the CPI report this morning, we now know the Cost of Living Adjustment (COLA), and the contribution base for 2025.

From Social Security: Social Security Announces 2.5 Percent Benefit Increase for 2025

Social Security benefits and Supplemental Security Income (SSI) payments for more than 72.5 million Americans will increase 2.5 percent in 2025, the Social Security Administration announced today. On average, Social Security retirement benefits will increase by about $50 per month starting in January.

Over the last decade the COLA increase has averaged about 2.6 percent. The COLA was 3.2 percent in 2024.
...
Some other adjustments that take effect in January of each year are based on the increase in average wages.  Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) is slated to increase to $176,100 from $168,600.

Currently CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). Here is a discussion from Social Security on the current calculation (2.5% increase) and a list of previous Cost-of-Living Adjustments.

The contribution and benefit base will be $168,600 in 2024.

The National Average Wage Index increased to $ 66,621.80 in 2023, up 4.4% from $63,795.13 in 2022 (used to calculate contribution base). 

by Calculated Risk on 10/10/2024 08:41:00 AM

The DOL reported:

In the week ending October 5, the advance figure for seasonally adjusted initial claims was 258,000, an increase of 33,000 from the previous week's unrevised level of 225,000. This is the highest level for initial claims since August 5, 2023 when it was 258,000. The 4-week moving average was 231,000, an increase of 6,750 from the previous week's unrevised average of 224,250.
emphasis added

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 increased to 231,000.

The previous week was unrevised.

Weekly claims were above the consensus forecast. 

The increase this week is partially hurricane related, for example North Carolina had a sharp increase in initial claims from 2,941 the prior week to 11,475 in the week ending Oct 5th.

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

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis, the same increase as in August and July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.4 percent before seasonal adjustment.

The index for shelter rose 0.2 percent in September, and the index for food increased 0.4 percent. Together, these two indexes contributed over 75 percent of the monthly all items increase. The food at home index increased 0.4 percent in September and the food away from home index rose 0.3 percent over the month. The energy index fell 1.9 percent over the month, after declining 0.8 percent the preceding month.

The index for all items less food and energy rose 0.3 percent in September, as it did the preceding month. Indexes which increased in September include shelter, motor vehicle insurance, medical care, apparel, and airline fares. The indexes for recreation and communication were among those that decreased over the month.

The all items index rose 2.4 percent for the 12 months ending September, the smallest 12-month increase since February 2021. The all items less food and energy index rose 3.3 percent over the last 12 months. The energy index decreased 6.8 percent for the 12 months ending September. The food index increased 2.3 percent over the last year.
emphasis added

The change in CPI was slightly above expectations. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 10/09/2024 07:43:00 PM

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

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for 228 thousand initial claims, up from 225 thousand last week.

• Also at 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.

by Calculated Risk on 10/09/2024 03:35:00 PM

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

Year-to-date total carloads in 2024 through September were down 3.3% (285,871 carloads) from last year and down 3.0% from the first nine months of 2022. So far in 2024, total carloads fell on a year over-year basis every month except August. ... Year-to-date U.S. intermodal in 2024 through September was 10.2 million units, up 9.5% (882,064 units) over last year and the fourth highest January-September total ever.
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows the six-week average for carloads for the last 3 years.  Total carloads were down 0.5% in September YoY.

Carloads excluding coal were more promising: they were up 2.9% in Q3 2024 over Q3 2023, suggesting continued appetite for rail transportation. Excluding coal, total carloads were 1.4% (86,782 carloads) higher in the first nine months of 2024 than in the same period in 2023.

And on Intermodal:

U.S. intermodal originations in September 2024 were up 10.7% (108,257 containers and trailers) over September 2023, marking more than a year of consecutive year-over-year gains. In Q3 2024, intermodal was up 11.0% over Q3 2023, the biggest year-over-year percentage gain for a quarter since Q2 2021. Total intermodal originations averaged 274,500 in Q3 2024. Only 2018 had a better third quarter for total intermodal.

Note: rail traffic was weak even before the pandemic. As AAR noted: "Trade tensions and declining mfrg. output lead to lower rail volumes" in 2019.