by Calculated Risk on 12/20/2013 10:14:00 AM

From the BLS: Regional and state unemployment rates were little changed in October

Regional and state unemployment rates were generally lower in November. Forty-five states and the District of Columbia had unemployment rate decreases from October and five states had no change, the U.S. Bureau of Labor Statistics reported today.
...
Nevada and Rhode Island had the highest unemployment rates among the states in November, 9.0 percent each. The next highest rates were in Michigan, 8.8 percent, and Illinois, 8.7 percent. North Dakota continued to have the lowest jobless rate, 2.6 percent.

Click on graph for larger image.

This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are below the maximum unemployment rate for the recession.

The size of the blue bar indicates the amount of improvement - Michigan, Nevada and Florida have seen the largest declines and many other states have seen significant declines. 

The states are ranked by the highest current unemployment rate. No state has double digit unemployment and the unemployment rate is at 9% in two states: Nevada, and Rhode Island.

The second graph shows the number of states with unemployment rates above certain levels since January 2006. At the worst of the employment recession, there were 9 states with an unemployment rate above 11% (red).

Currently two states have an unemployment rate at or above 9% (purple), nine states at or above 8% (light blue), and 22 states at or above 7% (blue).

by Calculated Risk on 12/20/2013 08:39:00 AM

The BEA reports:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 4.1 percent in the third quarter of 2013 (that is, from the second quarter to the third quarter), according to the "third" estimate released by the Bureau of Economic Analysis. ... The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued on December 5, 2103. In the second estimate, the increase in real GDP was 3.6 percent ... With this third estimate for the third quarter, increases in personal consumption expenditures (PCE) and in nonresidential fixed investment were larger than previously estimated.

The upward revision to the percent change in real GDP primarily reflected upward revisions to personal consumption expenditures and to nonresidential fixed investment that were partly offset by a downward revision to residential fixed investment.

Here is a comparison of the second and third estimates of GDP. PCE was revised up from a 1.4% annualized increase to 2.0%.

Note: Analysts are also upping their forecasts for Q4 GDP. As an example, from Merrill Lynch:

The data continue to come in stronger than expected and so we have raised our forecast for 4Q GDP growth from 1.2 to 2.1%.

by Calculated Risk on 12/19/2013 08:24:00 PM

Here we go again, from the LA Times: Lew warns Congress debt limit must be raised no later than early March

Treasury will be able to use so-called extraordinary measures to extend the nation's borrowing ability until "late February or early March," Lew wrote in a letter to House and Senate leaders.
...
"The creditworthiness of the United States is an essential underpinning of our strength as a nation; it is not a bargaining chip to be used for partisan political ends," Lew wrote.

If Congress passes a budget with a deficit, the amount borrowed will have to increase.

We have a budget. The budget has a deficit (although the deficit has been declining rapidly). The deficit has to be borrowed to pay the bills.  The smart move would be to eliminate the so-called "debt ceiling".  It is solely for political posturing.

My prediction: The bills will be paid (debt ceiling increased), with no material concessions.

Friday:
• At 8:30 AM, Q3 GDP (third estimate). This is the third estimate of Q3 GDP from the BEA. The consensus is that real GDP increased 3.6% annualized in Q3, unchanged from the second estimate.

• At 10:00 AM, Regional and State Employment and Unemployment (Monthly) for November 2013.

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

by Calculated Risk on 12/19/2013 04:12:00 PM

Container traffic gives us an idea about the volume of goods being exported and imported - and possibly some hints about the trade report for November since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic was up 1.0% compared to the rolling 12 months ending in October.   Outbound traffic increased 1.3% compared to 12 months ending in October.

In general, inbound traffic has been increasing  and outbound traffic had been mostly moving sideways.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March (depending on the timing of the Chinese New Year).

Inbound traffic was up 13% compared to November 2012 and outbound traffic was up 17%.

This suggests a pickup in trade in November. 

by Calculated Risk on 12/19/2013 12:48:00 PM

As expected, existing home sales declined in November.  But lower existing home sales, and slower price appreciation, doesn't mean the housing recovery is over. What matters for jobs and the economy are new home sales, not existing home sales.  And I expect the housing recovery to continue.

A key story in the NAR release this morning was that inventory was up 5.0% year-over-year in November.    Inventory is still very low, but year-over-year inventory has now turned positive, and I expect inventory to continue to increase. With the low level of inventory, there is still upward pressure on prices - but as inventory starts to increase, buyer urgency will wane, and price increases will slow.

Click on graph for larger image.

The NAR does not seasonally adjust inventory, even though there is a clear seasonal pattern. Trulia chief economist Jed Kolko sent me the seasonally adjusted inventory (see graph of NAR reported and seasonally adjusted).

This shows that inventory bottomed in January (on a seasonally adjusted basis), and is now up about 8.4% from the bottom. On a seasonally adjusted basis, inventory was up 1.7% in November, even though the NAR reported inventory declined NSA.

Important: The NAR reports active listings, and although there is some variability across the country in what is considered active, most "contingent short sales" are not included. "Contingent short sales" are strange listings since the listings were frequently NEVER on the market (they were listed as contingent), and they hang around for a long time - they are probably more closely related to shadow inventory than active inventory. However when we compare inventory to 2005, we need to remember there were no "short sale contingent" listings in 2005. In the areas I track, the number of "short sale contingent" listings is also down sharply year-over-year.

Another key point: The NAR reported total sales were down 1.2% from November 2012, but conventional sales were probably up from November 2012, and distressed sales down.  The NAR reported that 14% of sales were distressed in November (from a survey that isn't perfect):

Nine percent of November sales were foreclosures, and 5 percent were short sales.

Last year the NAR reported that 22% of sales were distressed sales.  So total sales were down slightly, distressed sales down sharply and conventional sales were up.  That is a positive sign.   

The following graph shows existing home sales Not Seasonally Adjusted (NSA).

Click on graph for larger image.

Sales NSA in November (red column) were above the sales for 2007, 2008 and 2010, 2011.  Sales were below 2012 (fewer distressed sales), and below 2009 (boosted by tax credit).

Overall this was a solid report.

Earlier:
• Existing Home Sales in November: 4.90 million SAAR, Inventory up 5.0% Year-over-year