by Calculated Risk on 7/29/2010 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending July 24, the advance figure for seasonally adjusted initial claims was 457,000, a decrease of 11,000 from the previous week's revised figure of 468,000. The 4-week moving average was 452,500, a decrease of 4,500 from the previous week's revised average of 457,000.
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The advance number for seasonally adjusted insured unemployment during the week ending July 17 was 4,565,000, an increase of 81,000 from the preceding week's revised level of 4,484,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since January 2000.

The four-week average of weekly unemployment claims decreased this week by 4,500 to 452,500.

The dashed line on the graph is the current 4-week average.

The 4-week average of initial weekly claims has been at about the same level since December 2009 (eight months) and the 4-week average of 452,500 is high historically, and suggests a weak labor market.

by Calculated Risk on 7/28/2010 10:41:00 PM

For those interested, here is the paper by Alan Blinder and Mark Zandi that I mentioned last night: How the Great Recession Was Brought to an End

by Calculated Risk on 7/28/2010 06:04:00 PM

CR Note: This is from housing economist Tom Lawler.

Meritage Homes, the 11th largest US home builder in 2009, reported that net home orders in the quarter ended 6/30/10 totaled 900, down 21.5% from the comparable quarter of 2009. Home deliveries, in contrast, jumped by 35.6% from a year ago to 1,207, reflecting buyers’ (and the builders) rush to close prior to the expected 6/30 closing date deadline for the federal home buyer tax credit. Compared to the previous quarter, net orders fell 15.4% while home closings surged by 49.4%. As a result, the company order backlog as of 6/30/10 fell to 1,044, down 22.7% from 3/31/10 and down 34.4% from a year ago.

Company officials were reportedly “surprised” by the extent of the post-tax-credit slowdown, and some analysts were a little spooked by the company’s move to increase active communities this year in California, Arizona, and Florida, while reducing its footprint in “lower-margin” Texas markets, as well as its recent acquisitions of land/lots. Meritage noted that margins on its newer communities have been higher than on older communities, in part because it purchased “deeply discounted” lots – especially in CA/AZ/FL. The company also said that it had “reduced our incentives while maintaining prices,” though whether it can do so in the post-tax-credit world remained unclear. Meritage, btw, appears to be one of those builders cited in yesterday’s WSJ article that may increase building in troubled markets that have not fully recovered yet because of land/lot acquisitions. (“Housing Glut is Likely to Build,”, July 27th, p. A2. This article, by the way, vastly overstates the potential for an increase in housing production related to SOME builders buying land/lots, often mainly either from other troubled builders or from banks. It also ignored surveys of builders indicating that most have dramatically cut their building production plans following the post-tax-credit plunge in sales, and ignored the sharp drop in SF building permits in May and June!!!)

M/I Homes, the 16th largest US home builder in 2009, reported that net home orders in the quarter ended 6/30/10 totaled 602, down 20.7% from the comparable quarter of 2009. Home deliveries last quarter totaled 790, up 60.6% form a year ago, as buyers (and the builder) rushed to close prior to the expected 6/30 closing date deadline for the federal home buyer tax credit. Compared to the previous quarter, net orders in the latest quarter fell by 21.3% while home deliveries surged by 64.9%. As a result, the company’s order backlog fell to 748 on 6/30/10, down 20.1% from 3/31/10 and down 32.4% from a year ago.

M/I CEO Robert Schottenstein noted that “coincident with the expiration of the tax credit on April 30, 2010 (for contract signings), we experienced a noticeable decline in our sales activity for May and June, resulting in a 21% decline in sales for the quarter” (implying BIG declines in May and June!) – breaking the company's previous string of six consecutive YOY gains in net orders.

At the risk of repeating myself (yet again!!!), the incoming data on home builders highlight that new home sales based on settlements actually surged in Q2/10 vs. Q1/10, even though contracts signed on a seasonally adjusted basis declined. Similarly, existing home sales closed in Q2 increased from Q1, even though new pending home sales declined. So for you “home data folks” who I guess because of ignorance add closed existing home sales to new SF home sales based on contracts signed/deposits taken (as reported by Census) to measure total home sales – stop it, it’s just wrong, and doing so makes you look like a fool!

CR Note: This was from Tom Lawler.

by Calculated Risk on 7/28/2010 04:01:00 PM

From the Sacramento Bee: Schwarzenegger orders more furloughs

[Gov. Arnold Schwarzenegger's] new executive order requires employees take three unpaid days off per month. But unlike that policy, it has no termination date: Furloughs will end when lawmakers pass a 2010-11 budget.
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The governor made the decision this week after Controller John Chiang said that unless lawmakers enacted a budget soon, the state's cash would go into the red by October. Chiang said he'll start issuing IOUs in August or September to conserve funds as long as possible.

And the beat goes on ...

by Calculated Risk on 7/28/2010 02:00:00 PM

Note: This is based on information collected on or before July 19, 2010.

From the Federal Reserve: Beige book

Economic activity has continued to increase, on balance, since the previous survey, although the Cleveland and Kansas City Districts reported that the level of economic activity generally held steady.
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Manufacturing activity continued to expand in most Districts, although several Districts reported that activity had slowed or leveled off during the reporting period. Districts also noted improved conditions in the services sector.
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Reports on retail sales during the early summer months were generally positive, although in most Districts the increases were modest.

And on real estate:

Nearly all Districts reported sluggish housing markets in the months since the homebuyer tax credit expired on April 30. While some Districts, such as Boston and St. Louis, reported an increase in May and June home sales on a year-over-year basis, some contacts noted that these sales may reflect closings of homes under contract by the April tax credit deadline. The Boston, Philadelphia, Atlanta, and Kansas City Districts reported that home sales are expected to weaken going forward. Residential construction remained limited in several Districts. In the Atlanta District, residential construction activity softened from already weak levels. Homebuilders in the Cleveland District do not expect a turnaround in new home construction any time this year. Builders in the Chicago District are not introducing new inventory without a signed contract on a home. Housing starts were expected to decline for the second half of the year in the Dallas District and to increase slightly over the next three months in the Kansas City District.

Commercial and industrial real estate markets continued to struggle in all twelve Districts. Overall, vacancy rates were flat to slightly increased and continued to exert downward pressure on rents. Construction activity remained weak in most Districts. ... The outlook for commercial and industrial real estate across the Districts ranged from further declines in activity to slow growth.