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Monday, November 08, 2021

Tuesday: PPI, Quarterly Report on Household Debt and Credit

by Calculated Risk on 11/08/2021 09:01:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Slightly Lower Despite Bond Market Weakness

Mortgage rates are directly based on trading levels in the bond market, so it's almost a given that rates will move in the same direction as bond yields on any given day. But for a variety of reasons, it doesn't happen like that every day. Today was just such a day.
...
Keep in mind that we're talking about extremely small movement. Between Friday and today, you'd likely see the exact same "note rate" for any given conventional 30yr fixed scenario. The improvements would only be detectable in the form of upfront costs. [30 year fixed 3.07%]
emphasis added
Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for October.

• At 8:30 AM, The Producer Price Index for October from the BLS. The consensus is for a 0.6% increase in PPI, and a 0.5% increase in core PPI.

• At 11:00 AM, NY Fed: Q3 Quarterly Report on Household Debt and Credit

November 8th COVID-19: New Cases Stuck at 70,000+ per Day

by Calculated Risk on 11/08/2021 06:00:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 430,927,624, as of a week ago 422,070,099, or 1.27 million doses per day.

COVID Metrics
 TodayWeek
Ago
Goal
Percent fully Vaccinated58.4%58.0%≥70.0%1
Fully Vaccinated (millions)193.8192.5≥2321
New Cases per Day3🚩71,86771,470≤5,0002
Hospitalized338,57043,574≤3,0002
Deaths per Day31,0681,176≤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).  Note: COVID will probably stay endemic (at least for some time).

KUDOS to the residents of the 5 states that have achieved 70% of total population fully vaccinated: Vermont at 71.7%, Rhode Island, Connecticut, Maine, and Massachusetts at 70.0% .

KUDOS also to the residents of the 16 states and D.C. that have achieved 60% of total population fully vaccinated: New York at 67.2%, , New Jersey, Maryland, New Mexico, New Hampshire, Washington, Oregon, Virginia, District of Columbia,  Colorado, California, Pennsylvania,  Illinois, Delaware, Minnesota, Hawaii, and Florida at 60.1%.

The following 20 states have between 50% and 59.9% fully vaccinated: Wisconsin at 58.7%, Nebraska, Iowa, Illinois, Michigan, Kentucky, South Dakota, Texas, Arizona, Kansas, Nevada, Alaska, Utah, North Carolina, Ohio, Montana, Oklahoma, South Carolina, Indiana, and Missouri at 50.1%.

Next up (total population, fully vaccinated according to CDC) are Georgia at 48.6%, Arkansas at 48.4%, Louisiana at 48.0%, and Tennessee at 48.0%.

COVID-19 Positive Tests per DayClick on graph for larger image.

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

MBA Survey: "Share of Mortgage Loans in Forbearance Decreases to 2.06%"

by Calculated Risk on 11/08/2021 04:00:00 PM

Note: This is as of October 31st.

From the MBA: Share of Mortgage Loans in Forbearance Decreases to 2.06%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 9 basis points from 2.15% of servicers’ portfolio volume in the prior week to 2.06% as of October 31, 2021. According to MBA’s estimate, 1 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 5 basis points to 0.92%. Ginnie Mae loans in forbearance decreased 13 basis points to 2.52%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 13 basis points to 5.00%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 15 basis points relative to the prior week to 2.28%, and the percentage of loans in forbearance for depository servicers decreased 5 basis points to 2.02%.

“One million homeowners remained in forbearance as we reached the end of October, but the forbearance share continued to decline, with larger declines for portfolio and PLS loans,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “More borrowers who exited forbearance the last week of October went into modifications, a sign that they have not yet regained their pre-pandemic level of income.”

Added Fratantoni, “The strong job market report from October, with another drop in the unemployment rate and a pickup in wage growth, is a positive sign for homeowners still struggling to get back on their feet.”
emphasis added
MBA Forbearance Survey Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  The number of forbearance plans is decreasing rapidly recently since many homeowners have reached the end of the 18-month term.

Homebuilder Comments in October: “Builders are lifting sales caps"

by Calculated Risk on 11/08/2021 02:43:00 PM

Today, in the Real Estate Newsletter: Homebuilder Comments in October: “Builders are lifting sales caps"

Excerpt (much more in newsletter):

Some homebuilder comments courtesy of Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting (a must follow for housing on twitter!):
...
#Dallas builder: “Due to a large number of sales in 2021, we’ll have declines in 2022. This is due to land availability. Huge number of communities coming online in 2023. Supply chain issues are getting worse & have spread to land development.”.

#Seattle builder: “Sales & closings in 2022 will be negatively impacted by limited supply of lots being delivered to the market in early 2022 with recovery in late 2022. No demand impacts are forecasted to impact sales or closings in 2022.”

#Atlanta builder: “We pulled so many extra sales & starts into 2021 that we're going to be severely short on vacant developed lots in the first half of 2022, hence the huge projected slowdowns in sales & starts in 2022.”
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Fed Survey: Banks reported Eased Standards, Weaker Demand for Residential Real Estate Loans

by Calculated Risk on 11/08/2021 02:24:00 PM

From the Federal Reserve: The October 2021 Senior Loan Officer Opinion Survey on Bank Lending Practices

The October 2021 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the third quarter of 2021.

Regarding loans to businesses, respondents to the October survey, on balance, reported easier standards and stronger demand for commercial and industrial (C&I) loans to large and middle-market firms over the third quarter. Banks also reported easier standards for C&I loans to small firms, while demand from small firms remained basically unchanged.2 For commercial real estate (CRE), banks reported easier standards for all loan categories. Banks also reported stronger demand for multifamily loans and for loans secured by nonfarm nonresidential properties, while demand for construction and land development loans remained basically unchanged. For loans to households, banks eased standards across most categories of residential real estate (RRE) loans, on net, and reported weaker demand for most types of RRE loans over the third quarter. Banks also eased standards across all three consumer loan categories—credit card loans, auto loans, and other consumer loans—while reports on demand for consumer loans were mixed.
emphasis added
Senior Loan Officer Survey, CRE Click on graph for larger image.

This graph on Residential Real Estate lending is from the Senior Loan Officer Survey Charts.

This shows that banks have eased standards (tightened for subprime), and that there is decreased demand for RRE loans.

Housing Inventory Nov 8th Update: Inventory Down 3.1% Week-over-week

by Calculated Risk on 11/08/2021 01:44:00 PM

Tracking existing home inventory will be very important this year.

Lumcber PricesClick on graph for larger image in graph gallery.

This inventory graph is courtesy of Altos Research.


As of November 5th, inventory was at 401 thousand (7 day average), compared to 530 thousand for the same week a year ago.  That is a decline of 24.3%.

Compared to the same week in 2019, inventory is down 55.3% from 898 thousand.  A week ago, inventory was at 414 thousand, and was down 23.9% YoY.   

Seasonally, inventory bottomed in April (usually inventory bottoms in January or February). Inventory was about 31% above the record low in early April.

Inventory peaked for the year in early September.   Nine weeks ago inventory was at 437 thousand (the peak for the year), so inventory is currently off about 8.2% from the peak for the year.  

Mike Simonsen discusses this data regularly on Youtube.  

Altos Research has also seen a significant pickup in price decreases - now well above the level of a year ago - but still below a normal rate for October.

Fed Governor Bowman: The U.S. Housing and Mortgage Market: Risks and Resilience

by Calculated Risk on 11/08/2021 12:08:00 PM

From Fed Governor Michelle Bowman, At the Women in Housing and Finance Public Policy Luncheon, Washington, D.C., The U.S. Housing and Mortgage Market: Risks and Resilience. Bowman comments on house prices and the end of the forbearance programs. Here are here comments on house prices:

Home prices had been rising at a moderate rate since 2012, but since mid-2020, their growth has accelerated significantly. In total, home prices in September were 21 percent higher than in June 2020. Home price increases are also widespread. In September, about 90 percent of American cities had experienced rising home prices over the past three months, and the home price increases were substantial in most of these cities.

These sharp increases raise the concern that housing is overvalued and that home prices may decline. Historically, large home price increases are somewhat less concerning if they are supported by economic fundamentals rather than speculation. Fundamentals certainly seem to be a large part of the story behind the increases we've seen since the middle of last year. The demand for housing has risen for several reasons. Interest rates are low, families have accumulated savings, and income growth in the past 18 months has been quite strong. Families are also reconsidering where, and in what kind of home, they want to live. Purchases of second homes, for example, have been somewhat high in the past 18 months. Meanwhile, the supply of new homes has been held back by shortages of materials, labor, and developed lots.

Another reason to be less concerned about the recent escalation in home prices is that we do not see much of the decline in underwriting standards that fueled the home price bubble in the mid-2000s. Mortgage underwriting standards have remained conservative relative to the mid-2000s, in part because of the mortgage policy reforms that were put in place in the aftermath of the housing crisis. Investor activity is subdued relative to that time as well.

Nonetheless, home prices do decline from time to time. In inflation-adjusted terms, U.S. home prices fell from 1979 to 1982 and from 1989 to 1993, although by much less than from 2006 to 2012. Although the declines in national home prices were modest in some of these episodes, some areas of the country experienced sharp declines. As we all know, home price declines cause problems and strain throughout the economy. To give just one example, families and small business owners borrow against their homes to fund big-ticket purchases and business expansions, and house price declines make it harder to use homes as loan collateral. This effect can be amplified if a credit crunch occurs, in which lenders react to the decline in house prices by pulling back on their lending. With banks and the broader financial system currently quite robust, such a credit crunch seems unlikely. Nonetheless, I know how painful these declines can be, especially in certain markets. For example, from my experience living in rural Kansas, I understand how smaller communities with a less diversified housing and employment base can take a long time to recover from a fall in home prices. I wonder also about communities with a sizable share of second-home owners. So I will continue to watch the incoming data closely.

Falling home prices would certainly be very dramatic, but continued outsized increases could also be problematic. First, high home prices make it more difficult for low- to moderate-income households to become homeowners, as larger down payments and other financing requirements effectively lock these households out of the housing market. Second, and related to one of the Federal Reserve's monetary policy goals, rising home prices and rents raise the cost of housing. Because housing costs are a large share of living expenses for most people, these increases are adding to current inflationary pressures in the economy. Indeed, we are already seeing sizable increases in rent and owners' equivalent rent in many parts of the country.
emphasis added

Seven High Frequency Indicators for the Economy

by Calculated Risk on 11/08/2021 08:28:00 AM

These indicators are mostly for travel and entertainment.    It will interesting to watch these sectors recover as the pandemic subsides.

----- Airlines: Transportation Security Administration -----

The TSA is providing daily travel numbers.

This data is as of November 7th.

TSA Traveler Data Click on graph for larger image.

This data shows the 7-day average of daily total traveler throughput from the TSA for 2019 (Light Blue), 2020 (Blue) and 2021 (Red).

The dashed line is the percent of 2019 for the seven day average.

The 7-day average is down 20.2% from the same day in 2019 (79.8% of 2019).  (Dashed line)

Overall, air travel has been off about 20% relative to 2019 for the last four months (with some ups and downs).

----- Restaurants: OpenTable -----

The second graph shows the 7-day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

IMPORTANT: OpenTable notes: "we’ve updated the data including downloadable dataset from January 1, 2021 onward to compare seated diners from 2021 to 2019, as opposed to year over year." Thanks!

DinersThanks to OpenTable for providing this restaurant data:

This data is updated through November 6, 2021.

This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."

Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.

Dining picked up for the Labor Day weekend, but declined after the holiday - and appears to be declining again.  The 7-day average for the US is down 14% compared to 2019.


----- Movie Tickets: Box Office Mojo -----

Move Box OfficeThis data shows domestic box office for each week and the median for the years 2016 through 2019 (dashed light blue).  

Blue is 2020 and Red is 2021.  

The data is from BoxOfficeMojo through November 4th.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.

Movie ticket sales were at $88 million last week, down about 50% from the median for the week. 

----- Hotel Occupancy: STR -----

Hotel Occupancy RateThis graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

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).

This data is through October 30th. The occupancy rate was down 5.7% compared to the same week in 2019.

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

The occupancy rate will now decline seasonally into the new year.

----- Gasoline Supplied: Energy Information Administration -----

gasoline ConsumptionThis graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019.

Blue is for 2020.  Red is for 2021.

As of October 29th, gasoline supplied was up 3.9% compared to the same week in 2019.

This was the eighth week so far this year when gasoline supplied was up compared to the same week in 2019 - and consumption is running close to 2019 levels now.

----- Transit: Apple Mobility -----

This graph is from Apple mobility. From Apple: "This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities." This is just a general guide - people that regularly commute probably don't ask for directions.

There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set "relative to its weekday-specific average over January–February", and is not seasonally adjusted, so we can't tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer.

Apple Mobility Data This data is through November 6th 
for the United States and several selected cities.

The graph is the running 7-day average to remove the impact of weekends.

IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.

According to the Apple data directions requests, public transit in the 7 day average for the US is at 111% of the January 2020 level. 

New York City is doing well by this metric, but subway usage in NYC is down sharply (next graph).

----- New York City Subway Usage -----

Here is some interesting data on New York subway usage (HT BR).

New York City Subway UsageThis graph is from Todd W Schneider

This graph shows how much MTA traffic has recovered in each borough (Graph starts at first week in January 2020 and 100 = 2019 average).

This data is through Friday, November 5th.

He notes: "Data updates weekly from the MTA’s public turnstile data, usually on Saturday mornings".

Sunday, November 07, 2021

Sunday Night Futures

by Calculated Risk on 11/07/2021 06:13:00 PM

Weekend:
Schedule for Week of November 7, 2021

Monday:
• At 12:00 PM ET, Speech, Fed Governor Michelle Bowman, The U.S. Housing Market, At the Women in Housing and Finance Public Policy Luncheon, Washington, D.C.

• At 2:00 PM, Senior Loan Officer Opinion Survey on Bank Lending Practices for October.

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

Oil prices were down over the last week with WTI futures at $81.27 per barrel and Brent at $82.74 per barrel. A year ago, WTI was at $37, and Brent was at $38 - so WTI oil prices are up more than double 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 $2.09 per gallon, so gasoline prices are up $1.31 per gallon year-over-year.

A Zillow Flip that Flopped

by Calculated Risk on 11/07/2021 01:49:00 PM

Today, in the Real Estate Newsletter: A Zillow Flip that Flopped

Excerpt:

Here is an example flop from Zillow.

This home is at 271 Capella Ave in La Habra California. It is list by Active Realty (that seems to be associated with Zillow). This is a single story home in a decent area (California prices are always crazy compared to most of the US).
...
So my guess is Zillow lost north of $10,000 on this one flop.
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UPDATE: I left out the fee Zillow charges when they purchase the house, so their loss as not as bad as I initially thought (although I left out some expenses too).

Saturday, November 06, 2021

Real Estate Newsletter Articles this Week

by Calculated Risk on 11/06/2021 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

1st Look at Local Housing Markets in October "Extreme bidding wars are less common"

The Market Impact of the Closure of Zillow Offers

The Rapid Increase in Rents Continues

2022 Housing Forecasts: First Look Optimism on New Home Sales in 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 - and some will always be free - but please subscribe!.

Schedule for Week of November 7, 2021

by Calculated Risk on 11/06/2021 08:11:00 AM

The key economic report this week is October CPI.

----- Monday, November 8th -----

12:00 PM: Speech, Fed Governor Michelle Bowman, The U.S. Housing Market, At the Women in Housing and Finance Public Policy Luncheon, Washington, D.C.

2:00 PM: Senior Loan Officer Opinion Survey on Bank Lending Practices for October.

----- Tuesday, November 9th -----

6:00 AM: NFIB Small Business Optimism Index for October.

8:30 AM: The Producer Price Index for October from the BLS. The consensus is for a 0.6% increase in PPI, and a 0.5% increase in core PPI.

11:00 AM: NY Fed: Q3 Quarterly Report on Household Debt and Credit

----- Wednesday, November 10th -----

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 October from the BLS. The consensus is for a 0.6% increase in CPI, and a 0.4% increase in core CPI.

8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 260 thousand initial claims, down from 269 thousand last week.

----- Thursday, November 11th -----

Veterans Day Holiday: Most banks will be closed in observance of Veterans Day. The stock market will be open.

----- Friday, November 12th -----

Job Openings and Labor Turnover Survey10:00 AM ET: Job Openings and Labor Turnover Survey for September from the BLS.

This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings decreased in August to 10.439 million from 11.098 million in July.

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

Friday, November 05, 2021

Black Knight: Number of Mortgages in Forbearance Declines

by Calculated Risk on 11/05/2021 04:10:00 PM

Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.

This data is as of November 2nd.

From Andy Walden at Black Knight: October Forbearance Exits Pick Up Pace in Final Week of Month

Improvement in the number of active COVID-19 forbearance plans continued this week as early entrants bumped against final expirations.

According to our McDash Flash daily mortgage performance dataset, the number of loans in active forbearance fell 85,000 (-6.9%). The week’s strongest declines were seen in FHA/VA plans, which marked a 42,000 (-9%) plan reduction. Strong improvement was also observed among GSE plans, which declined by 22,000 (-6%), as well as those held in bank portfolios or private label securities, (-21,000, -5.3%).

As of Nov. 2, 1.14 million mortgage holders remain in COVID-19 related forbearance plans, representing 2.1% of all active mortgages, including 1.2% of GSE, 3.5% FHA/VA and 2.8% of portfolio/PLS loans.

Black Knight ForbearanceClick on graph for larger image.

Active plans are now down 332,000 (-23%) from the same time last month, as the first wave of forbearance entrants continue to reach their final expirations. Further improvement is likely next week as well, given the 129,000 reviews still scheduled for October, 75% of which are expected to be final expirations.

Finally, forbearance plan starts decreased 8% this week, with plan restart activity falling to its lowest level since early October.
emphasis added

November 5th COVID-19: "Path of the economy continues to depend on the course of the virus"

by Calculated Risk on 11/05/2021 04:03:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 426,728,092, as of a week ago 419,020,753, or 1.10 million doses per day.

COVID Metrics
 TodayWeek
Ago
Goal
Percent fully Vaccinated58.2%57.8%≥70.0%1
Fully Vaccinated (millions)193.2192.0≥2321
New Cases per Day3🚩71,24169,805≤5,0002
Hospitalized341,16245,274≤3,0002
Deaths per Day31,1021,211≤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).  Note: COVID will probably stay endemic (at least for some time).

KUDOS to the residents of the 4 states that have achieved 70% of total population fully vaccinated: Vermont at 71.5%, Rhode Island, Connecticut, and Maine at 70.9% .

KUDOS also to the residents of the 16 states and D.C. that have achieved 60% of total population fully vaccinated: Massachusetts at 69.9%, New York, New Jersey, Maryland, New Mexico, New Hampshire, Washington, Oregon, Virginia, District of Columbia,  Colorado, California, Pennsylvania,  Illinois, Delaware, Minnesota and Hawaii at 60.0%.

The following 20 states have between 50% and 59.9% fully vaccinated: Florida at 59.9%, Wisconsin, Nebraska, Iowa, Illinois, Michigan, Kentucky, South Dakota, Texas, Arizona, Kansas, Nevada, Alaska, Utah, North Carolina, Ohio, Montana, Oklahoma, South Carolina and Indiana at 50.0%.

Next up (total population, fully vaccinated according to CDC) are Missouri at 49.9%, Georgia at 48.5%, Arkansas at 48.2%, and Tennessee at 47.9%.

COVID-19 Positive Tests per DayClick on graph for larger image.

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

AAR: October Rail Carloads Down Compared to 2019

by Calculated Risk on 11/05/2021 03:21:00 PM

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

U.S. rail volumes continue to be impacted by supply chain issues and an economy that isn’t yet what it could be.

Total U.S. carloads rose 3.8% in October 2021 over October 2020 as year-over-year gains in coal, chemicals, and crushed stone and sand, among others, exceeded declines in motor vehicles, grain, and petroleum products. October was the eighth straight month in which total carloads were higher than the same month in 2020, but the 3.8% gain in October was the lowest gain in those eight months. ...

Supply chain problems (especially shortages of dray trucks, drivers, and warehouse space) kept U.S. intermodal volume down in October — it fell 7.9% from October 2020, its third straight year-over-year decline.
emphasis added
Rail Traffic Click on graph for larger image.

This graph from the Rail Time Indicators report shows the six week average of U.S. Carloads in 2019, 2020 and 2021:
Total U.S. carload traffic has risen slightly but perceptibly over the past two months. At the end of October, the 6-week moving average for total carloads originated was 237,999. That’s the most since mid-June. ... Total carloads in October 2021 were down 3.1% from October 2019. In each month so far in 2021, total carloads in 2021 have been below the comparable month in 2019.
Rail TrafficThe second graph shows the six week average (not monthly) of U.S. intermodal in 2019, 2020 and 2021: (using intermodal or shipping containers):
[I]ntermodal volumes continue to be driven down by supply chain problems — especially shortages of dray trucks, drivers, and warehouse space — that are preventing rail customers from clearing their freight from rail terminals as quickly as they and railroads would like. Intermodal in October 2021 was down 7.9% from October 2020, its third straight year-over-year decline. October 202o was at the time the best intermodal month ever.

1st Look at Local Housing Markets in October

by Calculated Risk on 11/05/2021 11:45:00 AM

Today, in the Real Estate Newsletter: 1st Look at Local Housing Markets in October

Excerpt:

This is the first look at local markets in October. I’m tracking about 30 local housing markets in the US. Some of the 30 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

My view is that if the housing market is slowing, it will show up in inventory (not yet!).
...
Inventory almost always declines seasonally in October, so the MoM decline is not a surprise. Last month, these three markets were down 24% YoY, so the YoY decline in October is larger than in September. This isn’t indicating a slowing market (but this is just 3 early reporting markets).
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Comments on October Employment Report

by Calculated Risk on 11/05/2021 09:37:00 AM

The headline jobs number in the October employment report was above expectations, and employment for the previous two months was revised up significantly.   The participation rate was unchanged, and the unemployment rate decreased to 4.6%.  Overall this was a strong report.


Leisure and hospitality gained 164 thousand jobs in October.  In March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 1.4 million jobs since February 2020.  So leisure and hospitality has now added back about 83% all of the jobs lost in March and April 2020.

Construction employment increased 44 thousand, and manufacturing added 60 thousand jobs.

State and Local education lost 65 thousand jobs, seasonally adjusted.  This accounted for most of the 73 thousand public sector jobs lost in October.

Earlier: October Employment Report: 531 Thousand Jobs, 4.6% Unemployment Rate

In October, the year-over-year employment change was 5.8 million jobs.

Permanent Job Losers

Year-over-year change employmentClick on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the report today. (ht Joe Weisenthal at Bloomberg).

This data is only available back to 1994, so there is only data for three recessions.

In October, the number of permanent job losers decreased to 2.126 million from 2.251 million in September.

These jobs will likely be the hardest to recover, so it is a positive that the number of permanent job losers is declining fairly rapidly.

Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate has declined due to 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 prime working age will be key as the economy recovers.

The 25 to 54 participation rate increased in October to 81.7% from 81.6% in September, and the 25 to 54 employment population ratio increased to 78.3% from 78.0% in September.

Both are still low and indicate that many prime workers have still not returned to the labor force.

Seasonal Retail Hiring

Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.

Seasonal Retail HiringThis graph really shows the collapse in retail hiring in 2008. Since then seasonal hiring had increased back close to more normal levels. Note: I expect the long term trend will be down with more and more internet holiday shopping.

Retailers hired 219 thousand workers Not Seasonally Adjusted (NSA) net in October.

This was seasonally adjusted (SA) to a gain of 35 thousand jobs in October.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of persons employed part time for economic reasons, at 4.4 million, was little changed in October. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full- time jobs. This measure has essentially returned to its February 2020 level."
The number of persons working part time for economic reasons was essentially unchanged in October at 4.423 million from 4.468 million in September. This is back to pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 8.3% from 8.5% in the previous month. This is down from the record high in April 22.9% for this measure since 1994. This measure was at 7.0% in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 2.326 million workers who have been unemployed for more than 26 weeks and still want a job, down from 2.683 million the previous month.

This does not include all the people that left the labor force. 

Summary:

The headline monthly jobs number was above expectations, and the previous two months were revised up by 235,000 combined.  And the headline unemployment rate decreased to 4.6%.  Overall this was a strong report.

However, the prime age participation rate and employment-population ratio, are well below pre-pandemic levels, indicating a large number of prime workers are still out of the labor force.   And there are still 4.2 million fewer jobs than prior to the recession.   

This report (and the previous reports) show the impact of the pandemic.  When COVID cases are rising sharply, the economy slows, and when COVID cases are falling, the economy picks up.  There are other factors, but as the FOMC noted this week: "The path of the economy continues to depend on the course of the virus."

October Employment Report: 531 Thousand Jobs, 4.6% Unemployment Rate

by Calculated Risk on 11/05/2021 08:42:00 AM

From the BLS:

Total nonfarm payroll employment rose by 531,000 in October, and the unemployment rate edged down by 0.2 percentage point to 4.6 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, with notable job gains in leisure and hospitality, in professional and business services, in manufacturing, and in transportation and warehousing. Employment in public education declined over the month.
...
The change in total nonfarm payroll employment for August was revised up by 117,000, from +366,000 to +483,000, and the change for September was revised up by 118,000, from +194,000 to +312,000. With these revisions, employment in August and September combined is 235,000 higher than previously reported.
emphasis added
Year-over-year change employmentClick on graph for larger image.

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

In October, the year-over-year change was 5.8 million jobs.  This was up significantly year-over-year.

Total payrolls increased by 531 thousand in October.  Private payrolls increased by 604 thousand, and public payrolls declined 73 thousand.

Payrolls for August and September were revised up 235 thousand, combined.

Employment Recessions, Scariest Job ChartThe second graph shows the job losses from the start of the employment recession, in percentage terms.

The current employment recession was by far the worst recession since WWII in percentage terms, but currently is not as severe as the worst of the "Great Recession".

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

Employment Pop Ratio, participation and unemployment rates The Labor Force Participation Rate was unchanged at 61.6% in October, from 61.6% in September. This is the percentage of the working age population in the labor force.

The Employment-Population ratio increased to 58.8% from 58.7% (black line).

I'll post the 25 to 54 age group employment-population ratio graph later.

unemployment rateThe fourth graph shows the unemployment rate.

The unemployment rate decreased in October to 4.6% from 4.8% in September.

This was above consensus expectations, and August and September were revised up by 235,000 combined.  A strong report.

I'll have more later ...

Thursday, November 04, 2021

Friday: Employment Report

by Calculated Risk on 11/04/2021 09:00:00 PM

My October Employment Preview

Goldman October Payrolls Preview

Friday:
• At 8:30 AM, Employment Report for October.   The consensus is for 450 thousand jobs added, and for the unemployment rate to decrease to 4.7%.

Goldman October Payrolls Preview

by Calculated Risk on 11/04/2021 04:08:00 PM

A few brief excerpts from a note by Goldman Sachs economist Spencer Hill:

We estimate nonfarm payrolls rose 525k in October ... tomorrow’s report reflects the first full month of hiring following the expiration of federal enhanced unemployment benefits. Our forecast also reflects improving public health, strong labor demand, and a partial education rebound as schools gradually fill positions left open at the start of the school year. On the negative side, the seasonal factors may have evolved to fit the strong October 2020 data, raising the seasonal hurdle in tomorrow’s report. ... We estimate a one-tenth drop in the unemployment rate to 4.7%.
emphasis added
CR Note: The consensus is for 450 thousand jobs added, and for the unemployment rate to decrease to 4.7%.