Freddie Mac: Mortgage Rates Near Record Lows

From Freddie Mac today: Mortgage Rates Virtually Unchanged

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates virtually unchanged and remaining near their record lows ...

30-year fixed-rate mortgage (FRM) averaged 3.32 percent with an average 0.8 point for the week ending November 29, 2012, up from last week when it averaged 3.31 percent. Last year at this time, the 30-year FRM averaged 4.00 percent.

15-year FRM this week averaged 2.64 percent with an average 0.6 point, up from last week when it averaged 2.63 percent. A year ago at this time, the 15-year FRM averaged 3.30 percent.

Click on graph for larger image.

This graph shows the MBA's refinance index (monthly average) and the the 30 year fixed rate mortgage interest rate from the Freddie Mac Primary Mortgage Market Survey®.
The Freddie Mac survey started in 1971 and mortgage rates are currently near the record low for the last 40 years.

It usually takes around a 50 bps decline from the previous mortgage rate low to get a significant refinance boom, and refinance activity has picked up.

There has also been an increase in refinance activity due to HARP.

Here is an update to an old graph - by request - that shows the relationship between the 10 year Treasury Yield and 30 year mortgage rates.

The y-intercept is around 2.6%, so if the 10 year Treasury yield falls to zero, 30 year mortgage rates would still be around 2.6% (using this fit).

Currently the 10 year Treasury yield is 1.62% and 30 year mortgage rates are at 3.32%.

The third graph shows the 15 and 30 year fixed rates from the Freddie Mac survey since the Primary Mortgage Market Survey® started in 1971 (15 year in 1991).

Note: Mortgage rates were at or below 5% back in the 1950s.

Friday: October Personal Income and Outlays, Chicago PMI

A couple of articles on the fiscal slope negotiations:

Suzy Khimm at the WaPo has the initial White House proposal: The White House's fiscal cliff proposal

Jonathan Weisman at the NY Times writes: G.O.P. Balks at White House Plan on Fiscal Crisis

Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal on Thursday to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, $50 billion in immediate stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.

For the economy this proposal would resolve the "fiscal cliff" uncertainty, significant reduce the fiscal drag, and also reduce the deficit. Of course there are other agendas too - this proposal is a starting point - but hopefully eliminating the debt ceiling nonsense is part of the final agreement.

My guess is an agreement will be reached, perhaps in early January after the tax cuts expire, so politicians can claim to be cutting taxes.

Friday:
' At 8:30 AM, the Personal Income and Outlays report for October will be released. The consensus is for a 0.3% increase in personal income in October, and for 0.1% increase in personal spending. And for the Core PCE price index to increase 0.2%.

' At 9:45 AM, Chicago Purchasing Managers Index for November. The consensus is for an increase to 50.3, up from 49.9 in October.

The last question for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

Personal Income unchanged in October, Spending decreased 0.2%

The BEA released the Personal Income and Outlays report for October:

Personal income increased $0.4 billion, or less than 0.1 percent ... in October, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $20.2 billion, or 0.2 percent.
...
The October estimates of personal income and outlays reflect the effects of Hurricane Sandy, which made landfall in the United States on October 29. The storm affected 24 states, with particularly severe damage in New York and New Jersey. BEA cannot quantify the total impact of the storm on personal income and outlays because most of the source data used to estimate these components reflect the effects of the storm and cannot be separately identified. However, BEA did make adjustments where source data were not yet available or did not reflect the effects of Sandy. The largest of these adjustments was for work interruptions, which reduced wages and salaries by about $18 billion (at an annual rate).

Real PCE -- PCE adjusted to remove price changes -- decreased 0.3 percent in October, in contrast to an increase of 0.4 percent in September. ... The price index for PCE increased 0.1 percent in October, compared with an increase of 0.3 percent in September. The PCE price index, excluding food and energy, increased 0.1 percent in October, the same increase as in September.
...
Personal saving -- DPI less personal outlays -- was $410.1 billion in October, compared with $391.3 billion in September. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 3.4 percent in October, compared with 3.3 percent in September.

The following graph shows real Personal Consumption Expenditures (PCE) through October (2005 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

This graph shows real PCE by month for the last few years. The dashed red lines are the quarterly levels for real PCE. According to the BEA, Hurricane Sandy impacted PCE in October, but the BEA could not quantify the total impact - however PCE in October was weak.

A key point is the PCE price index has only increased 1.7% over the last year, and core PCE is up only 1.6%.

Thursday: Q3 GDP, Unemployment claims, Pending Home Sales

First, Jon Hilsenrath at the WSJ discusses some of the issues that will be discussed at the next FOMC meeting in December: Fed Likely to Keep Buying Bonds

Central bank officials face critical decisions at their next policy meeting Dec. 11-12. ... Since September the Fed has been buying $40 billion a month of mortgage-backed securities and looks set to continue that program. ...

The more urgent issue is what to do with a $45 billion-a-month program known as Operation Twist, in which the central bank is buying long-term Treasury securities and funding the purchases with sales of short-term Treasurys.
...
Another issue for officials to consider at the December meeting is whether to alter their communications strategy. For several months, they have been debating whether to state explicitly what unemployment rates or inflation rates would get them to raise short-term interest rates from their very low levels. ... If the Fed is going to adopt such a move, it would make sense to do it either at the December meeting or in March, when Mr. Bernanke will hold news conferences and be able to explain the central bank's thinking on the complicated subject.
emphasis added

My guess is the Fed will expand "QE3" to around $85 billion per month when Operation Twist concludes. On communication, I'm not sure they are ready to change to thresholds for unemployment and inflation, so that will probably wait until March (but it could happen in December).

Thursday:
' At 8:30 AM, the initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 390 thousand from 410 thousand.

' Also at 8:30 AM, the second estimate for Q3 GDP will be released. The consensus is that real GDP increased 2.8% annualized in Q3, revised up from 2.0% in the advance release.

' At 10:00 AM, the NAR will release Pending Home Sales Index for October. The consensus is for a 1.0% increase in the index.

' At 11:00 AM, the Kansas City Fed regional Manufacturing Survey for November. This is the last of the regional surveys for November, and the consensus is for a reading of -1, up from -4 in October (below zero is contraction).

Earlier on New Home Sales:
' New Home Sales at 368,000 SAAR in October
' New Home Sales and Distressing Gap
' New Home Sales graphs

Another question for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in). 8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 390 thousand from 410 thousand.

FHFA: HARP Refinance Boom Continued in September

Note: HARP is the program that allows borrowers with loans owned or guaranteed by Fannie Mae or Freddie Mac - and with high loan-to-value (LTV) ratios - to refinance at low rates.  Fannie or Freddie are already responsible for the loan, and allowing the borrower to refinance lowers the default risk.

From the FHFA:

The Federal Housing Finance Agency (FHFA) today released its September Refinance Report, which shows that Fannie Mae and Freddie Mac loans refinanced through the Home Affordable Refinance Program (HARP) accounted for nearly one-quarter of all refinances in the third quarter of 2012. More than 90,000 homeowners refinanced their mortgage in September through HARP with more than 709,000 loans refinanced since the beginning of this year. The continued high volume of HARP refinances is attributed to record-low mortgage rates and program enhancements announced last year.
...
In September, half of the loans refinanced through HARP had loan-to-value (LTV) ratios greater than 105 percent and one-fourth had LTVs greater than 125 percent.

In September, 19 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages, which help build equity faster than traditional 30-year mortgages.

HARP refinances in September represented 45 percent of total refinances in states hard hit by the housing downturn'Nevada, Arizona, Florida and Georgia'compared with 21 percent of total refinances nationwide.

Note: the automated system wasn't released until the end of March - and there were some issues with that system - so HARP refinances didn't really pickup until sometime in Q2. Now they are on pace for around 1 million refinances this year. 

These "underwater" borrowers are current (most took out loans 5 to 7 years ago), and they will probably stay current with the lower interest rate.

This table shows the number of HARP refinances by LTV through September of this year compared to all of 2011. Clearly there has been a sharp increase in activity. Note: Here is the September report.

Weekly Initial Unemployment Claims decline to 393,000

Note: From MarketWatch: U.S. Q3 GDP revised up to 2.7% from 2.0% (I'll have more later on the GDP revision).

The DOL reports:

In the week ending November 24, the advance figure for seasonally adjusted initial claims was 393,000, a decrease of 23,000 from the previous week's revised figure of 416,000. The 4-week moving average was 405,250, an increase of 7,500 from the previous week's revised average of 397,750.

The previous week was revised up from 410,000.

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

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 405,250.

This sharp increase in the 4 week average is due to Hurricane Sandy as claims increased significantly in the impacted areas. Note the spike in 2005 related to hurricane Katrina - we are seeing a similar impact, although on a smaller scale.

Weekly claims were about at the consensus forecast.

And here is a long term graph of weekly claims:

Mostly moving sideways this year until the recent spike due to Hurricane Sandy. Weekly claims should continue to decline over the next few weeks.

Update: The Recession Probability Chart

A few weeks ago, I mentioned a recession probability chart from the St Louis Fed that was making the rounds. (see below). This graph shouldn't be interpreted as indicating a new recession. Jeff Miller at a Dash of Insight discussed why: Debunking the 100% Recession Chart.

Now the author, University of Oregon Professor Jeremy Piger, posted some FAQs and data for the chart online. Professor Piger writes:

2. How should I interpret these probabilities as a recession signal?

Historically, three consecutive months of smoothed probabilities above 80% has been a reliable signal of the start of a new recession, while three consecutive months of smoothed probabilities below 20% has been a reliable signal of the start of a new expansion. For an analysis of the performance of the model for identifying new turning points in real time, see:

Chauvet, M. and J. Piger, 'A Comparison of the Real-Time Performance of Business Cycle Dating Methods,' Journal of Business and Economic Statistics, 2008.

Click on graph for larger image in new window.

Here is the chart from FRED at the St Louis Fed.

Obviously we haven't seen three consecutive months above 80%. Also I expect the recent data point to be revised down.

This is kind of a Woody Allen and Marshall McLuhan moment! Those arguing this chart indicated a 100% probability of a new recession knew nothing of Piger's work.

Earlier on House Prices:
' Case-Shiller: Comp 20 House Prices increased 3.0% year-over-year in September
' Case-Shiller House Price Comments and Graphs
' Real House Prices, Price-to-Rent Ratio
' All Current House Price Graphs

Wednesday: New Home Sales, Beige Book

Earlier, a little good manufacturing news from the Richmond Fed: Manufacturing Activity Advanced in November; Optimism Increased

Manufacturing activity in the central Atlantic region advanced moderately in November following a slight pullback in October, according to the Richmond Fed's latest survey. ...

In November, the seasonally adjusted composite index of manufacturing activity ' our broadest measure of manufacturing ' gained sixteen points to 9 from October's reading of '7. Among the index's components, shipments rose twenty points to 11, new orders moved up seventeen points to finish at 11, and the jobs index increased eight points to 3.

And on consumer confidence from the Financial Times: US growth hopes lifted by housing data

The figures suggest that consumers and companies are holding their nerve despite anxiety about the fiscal cliff ... The Conference Board, an industry group, said its index of consumer attitudes towards the economy rose to 73.7 in November, its highest since February 2008.
excerpt with permission

Wednesday:
' At 7:00 AM, the Mortgage Bankers Association (MBA) will release the mortgage purchase applications index.

' At 10:00 AM, New Home Sales for October from the Census Bureau will be released. The consensus is for a decrease in sales to 387 thousand Seasonally Adjusted Annual Rate (SAAR) in October from 389 thousand in September.).

' At 2:00 PM, the Federal Reserve Beige Book will be released.  This is an informal review by the Federal Reserve Banks of current economic conditions in their Districts. This might show some slight improvement. Some analysts will be looking for concerns about Europe or the "fiscal cliff".

Earlier on House Prices:
' Case-Shiller: Comp 20 House Prices increased 3.0% year-over-year in September
' Case-Shiller House Price Comments and Graphs
' Real House Prices, Price-to-Rent Ratio
' All Current House Price Graphs

Another question for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

Tuesday: Case-Shiller House Prices, Durable Goods Orders

First, on Greece, here is the Eurogroup statement on Greece.  Excerpt:

The Eurogroup was informed that Greece is considering certain debt reduction measures in the near future, which may involve public debt tender purchases of the various categories of sovereign obligations. If this is the route chosen, any tender or exchange prices are expected to be no higher than those at the close on Friday, 23 November 2012.

This buy-back lacks details such as the source of money for the buy-backs and how much debt will be bought. The IMF will wait to disburse funds until the results of the buy-backs are known (that was my understanding from the press conference).

From the WSJ: Greece's Creditors Reach Deal on New Aid

From the NY Times: European Finance Ministers Agree on Greek Bailout Terms

Tuesday:
' At 8:30 AM ET, Durable Goods Orders for October from the Census Bureau. The consensus is for a 0.8% decrease in durable goods orders.

' At 9:00 AM, the S&P/Case-Shiller House Price Index for September will be released. Although this is the September report, it is really a 3 month average of July, August and September. The consensus is for a 2.9% year-over-year increase in the Composite 20 index (NSA) for September. This release also includes the Q3 Case-Shiller National index.

' At 10:00 AM, the Richmond Fed Survey of Manufacturing Activity for November will be released. The consensus is for a decrease to -8 for this survey from -7 in October (below zero is contraction).

' Also at 10:00 AM, the FHFA House Price Index for September 2012 will be released. This is based on GSE repeat sales and is no longer as closely followed as Case-Shiller (or CoreLogic). The consensus is for a 0.5% increase in house prices.

' Also at 10:00 AM, Conference Board's consumer confidence index for November. The consensus is for an increase to 72.8 from 72.2 last month.

' At 3:00 PM: the New York Fed will release the Q3 Report on Household Debt and Credit.

Another question for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

LPS: House Price Index increased 0.1% in September, Up 3.6% year-over-year

Notes: I follow several house price indexes (Case-Shiller, CoreLogic, LPS, Zillow, FNC and more). The timing of different house prices indexes can be a little confusing. LPS uses September closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted.

From LPS: U.S. Home Prices Up 0.1 Percent for the Month; Up 3.6 Percent Year-Over-Year

Lender Processing Services ... today released its latest LPS Home Price Index (HPI) report, based on September 2012 residential real estate transactions. The LPS HPI combines the company's extensive property and loan-level databases to produce a repeat sales analysis of home prices as of their transaction dates every month for each of more than 15,500 U.S. ZIP codes. The LPS HPI represents the price of non-distressed sales by taking into account price discounts for REO and short sales.

The LPS HPI is off 22.8% from the peak in June 2006. Note: The press release has data for the 20 largest states, and 40 MSAs. LPS shows prices off 54.4% from the peak in Las Vegas, 46% off from the peak in Riverside-San Bernardino, CA (Inland Empire), and barely off in Austin and Houston.

Looking at the year-over-year price change, in May, the LPS HPI was up 0.4% year-over-year, in June the index was up 0.9% year-over-year, 1.8% in July, 2.6% in August, and now 3.6% in September. This is steady improvement on a year-over-year basis. Note: Case-Shiller for September will be released tomorrow morning.

Greek Debt Deal Reached

Press conference here.

From Reuters: Euro zone, IMF reach deal on long-term Greek debt

Euro zone finance ministers and the International Monetary Fund clinched agreement on a new debt target for Greece on Monday in a breakthrough towards releasing an urgently needed tranche of loans to the near-bankrupt economy, officials said.

After nearly 10 hours of talks at their third meeting on the issue in as many weeks, Greece's international lenders agreed to reduce Greek debt by 40 billion euros, cutting it to 124 percent of gross domestic product by 2020, via a package of steps.

From AlphaVille: A mere three weeks later, a Greek debt deal (?)

UPDATE: Press release here: Eurogroup statement on Greece.

Chicago Fed: Economic Activity Slower in October

The Chicago Fed released the national activity index (a composite index of other indicators): Economic Activity Slower in October

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to '0.56 in October from 0.00 in September. All four broad categories of indicators that make up the index decreased from September, and only two made positive contributions to the index in October.

The index's three-month moving average, CFNAI-MA3, decreased from '0.36 in September to '0.56 in October'its eighth consecutive reading below zero. October's CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Click on graph for larger image.

This suggests economic activity slowed, and growth was still below trend in October.

According to the Chicago Fed:

What is the National Activity Index? The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

Greece Update: Eurozone finance ministers meet Monday

The eurozone finance ministers are meeting on Monday, and trying to reach an agreement to disburse more funds to Greece.

From the Financial Times: Greece upbeat about signing debt deal

Eurozone finance ministers will make another attempt on Monday ... to settle differences over debt relief measures for Athens and give a green light to disburse up to '44bn of aid.

The stumbling blocks to a deal, in addition to Berlin's reluctance to accept drastic interest rate cuts, include opposition by some eurozone members to returning profits from the European Central Bank's purchases of Greek bonds, and a gloomy assessment of Greece's growth prospects until 2020 by the IMF.
excerpt with permission

And from Bloomberg: Euro Ministers Take Third Swing at Clearing Greek Payment

Finance chiefs from the 17-member single currency return to Brussels tomorrow ...

Euro-area finance ministers held a conference call yesterday to prepare for the Brussels meeting. A breakthrough hinges on coming up with 10 billion euros ($13 billion) through reductions in interest rates charged by creditors and a debt buyback financed by bailout funding. The gap emerged when the finance chiefs agreed this month to give Greece two more years to meet targets.

I expect an agreement will be reached soon that will buy more time.

Schedule for Week of Nov 25th

Earlier:
' Summary for Week Ending Nov 23rd

Negotiations concerning the "fiscal slope" in the US will be back in the headlines this week.  And, in Europe, the discussion on funding for Greece will resume on Monday.

There are two key housing reports this week: Case-Shiller house prices on Tuesday, and New Home Sales on Wednesday.

Revised Q3 GDP will be released on Thursday, and the October Personal Income and Outlays report will be released on Friday.

For manufacturing, three regional manufacturing reports will be released (Richmond, Dallas and Kansas City Fed surveys), plus the Chicago PMI will be released Friday.

The NY Fed will release their Q3 Report on Household Debt and Credit on Tuesday, and the FDIC is expected to release the Q3 Quarterly Banking Profile this week.

Unofficial Problem Bank list unchanged at 857 Institutions

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew steadily and peaked at 1,002 institutions on June 10, 2011. The list has been declining recently.

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Nov 23, 2012. (repeat from last week, table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

As expected, a very quiet week for the Unofficial Problem Bank List as it went without change. You have to go back to January 6th of this year for the last time it went a week unchanged. The list stands at 857 institutions with assets of $329.2 billion. A year ago, the list held 980 institutions with assets of $400.5 billion.

Next week, the FDIC will likely release its actions through October 2012 and the Official Problem Bank List as of September 30, 2012. The difference between the two lists will likely drop from 187 at last issuance to the low 170s.

CR Note: The FDIC's official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public. (CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.)

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest.

When the list was increasing, the official and "unofficial" counts were about the same. Now with the number of problem banks declining, the unofficial list is lagging the official list. This probably means regulators are changing the CAMELS rating on some banks before terminating the formal enforcement actions.

Earlier:
' Summary for Week Ending Nov 23rd
' Schedule for Week of Nov 25th

Jim the Realtor: Upcoming REO listings

I haven't checked in with Jim the Realtor in San Diego for some time. In this video below, Jim reviews a few upcoming REO listings in North County San Diego. Jim says: "there are only 16 houses owned by banks that aren't on the market" in the North County area (152 homes closed in the area last month, so the bank owned REO will not have much of an impact).

The first house is interesting. It looks like the bank will actually make money when they sell it.

The third house is good for a laugh (starts about 4:20). The bank has made some absurd repairs, like putting in a low end vanity in the master bath to replace a built-in that went all the way across the bathroom. (around 9:20 - Jim can't help but laugh).

Earlier:
' Summary for Week Ending Nov 23rd
' Schedule for Week of Nov 25th

Las Vegas: Visitor Traffic on pace for Record High, Convention Attendance Lags

During the recession, I wrote about the troubles in Las Vegas and included a chart of visitor and convention attendance: Lost Vegas.

Since then Las Vegas visitor traffic has recovered and here is an update.

Through September visitor traffic is running just ahead of the 2007 pace (the previous peak) and it is possible Las Vegas will see 40 million visitors this year. However convention attendance is barely ahead of last year, and about 20% below the peak level in 2006.  Here is the data from the Las Vegas Convention and Visitors Authority.  

Click on graph for larger image.

The blue bars are annual visitor traffic (left scale), and the red line is convention attendance (right scale). 2012 is estimated based on traffic through September.

The gamblers are back, but not the conventions ...

ATA Trucking Index declines sharply in October, Impacted by Hurricane Sandy

This is a minor indicator that I follow. Clearly truck tonnage was impacted by Hurricane Sandy in October, and we will probably see a bounce back in November and December.

From ATA: ATA Truck Tonnage Index Fell 3.8% in October

The American Trucking Associations' advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 3.8% in October after falling 0.4% in September. (The 0.4% decrease in September was revised from a 0.1% gain ATA reported on October 23, 2012.) October's drop was the third consecutive totaling 4.7%. As a result, the SA index equaled 113.7 (2000=100) in October, the lowest level since May 2011. Compared with October 2011, the SA index was off 2.1%, the first year-over-year decrease since November 2009. Year-to-date, compared with the same period last year, tonnage was up 2.9%.
...
'Clearly Hurricane Sandy negatively impacted October's tonnage reading,' ATA Chief Economist Bob Costello said. 'However, it is impossible for us to determine the exact impact.'

Costello noted that a large drop in fuel shipments into the affected area likely put downward pressure on October's tonnage level since fuel is heavy freight, in addition to reductions in other freight.

'I'd expect some positive impact on truck tonnage as the rebuilding starts in the areas impacted by Sandy, although that boost may only be modest in November and December,' he said. 'Excluding the Hurricane impacts, I still think truck tonnage is decelerating along with factory output and consumer spending on tangible-goods.'
emphasis added

Note from ATA:

Trucking serves as a barometer of the U.S. economy, representing 67% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9.2 billion tons of freight in 2011. Motor carriers collected $603.9 billion, or 80.9% of total revenue earned by all transport modes.

Click on graph for larger image.

Here is a long term graph that shows ATA's For-Hire Truck Tonnage index.

The dashed line is the current level of the index.

 Even with the sharp decline in October, the index is at the pre-recession level. However, even before the hurricane, the index was mostly moving sideways this year due to the slowdown in manufacturing.

Summary for Week Ending Nov 23rd

Last week was a short holiday week and I hope everyone is enjoying their Thanksgiving weekend!

Overall the economic data was positive last week, especially the housing data.  Housing starts were at the highest level in four years, but are still very low - and both comments are important.  Housing (residential investment) is now a tail wind for the economy, and housing can increase significantly from here.

Also the existing home sales market continues to show improvement.  The keys for the existing home report are inventory and the number of conventional sales.  Inventory is down significantly, and conventional sales are increasing.  There will be more housing data next week (New home sales and the Case-Shiller house price indexes).

Initial weekly unemployment claims were still elevated because of Hurricane Sandy, but I expect claims will decline back to the pre-storm level pretty quickly.

Early in the week I spoke with Joe Weisenthal at Business Insider, and he wrote a way too nice article: The Genius Who Invented Economics Blogging Reveals How He Got Everything Right And What's Coming Next.

As I noted, I just track economic data and make a few forecasts - and I didn't invent economic blogging (although I've been at it for eight years). Professor Krugman added a few nice comments: All Hail Calculated Risk.

Excuse my blushing - thanks to all for reading!

Here is a summary of last week in graphs:

' Housing Starts increased to 894 thousand SAAR in October

Click on graph for larger image.

Total housing starts were at 894 thousand (SAAR) in October, up 3.6% from the revised September rate of 863 thousand (SAAR). Note that September was revised down from 872 thousand.

Single-family starts decreased slightly to 594 thousand in October.

Total starts are up about 87% from the bottom start rate, and single family starts are up about 70% from the low.

This was above expectations of 840 thousand starts in October. This was mostly because of the volatile multi-family sector that increased sharply in October, however single family starts have increased recently too.   Starts are still very low, but on pace to be up about 25% from 2011.

Europe Summit Update

No announcements yet. There is much more being dicussed at the summit than just the Greek situation. Here are a few articles ...

From the WSJ: EU Leaders Prepare for Battle Royal at Summit

European Union leaders are headed to Brussels on Thursday for a big showdown over the bloc's spending budget, in a battle that pits richer against poorer member states, the East of the continent against the West, and the U.K. against almost everyone else.
...
European Council President, Herman Van Rompuy, who will preside over the two-day meeting, has vowed repeatedly to keep heads of state in Brussels through the weekend to avert a collapse of the talks, arguing that a deal is needed urgently to ensure the EU and its institutions continue to function properly.

The Multiannual Financial Framework, as the 2014 to 2020 budget is known, sets out the headline figures allocated to different EU programs and activities, ranging from foreign policy to transport and infrastructure.

From the Financial Times: German Doubts Force Rethink on Greece

After almost 10 hours of intense talks on Tuesday night, eurozone finance ministers failed to agree on how fast to cut Greece's debt pile. They called a further meeting next week to settle differences and release '44bn of long-overdue aid.
excerpt with permission

From Reuters: EU's Rehn Sees Definitive Deal on Greek Aid on Monday

Greece has taken all the steps necessary to secure its next tranche of aid and euro zone finance ministers should be able to sign off definitively on the assistance on Monday, the European commissioner for economic affairs said on Wednesday.

"I trust everyone will reconvene in Brussels on Monday with the necessary constructive spirit, and move beyond the detrimental mindset of red lines," Olli Rehn told the European Parliament.

And from Reuters: Spain Kicks Off 2013 Funding With Strong Bond Sale

Spain sold nearly 4 billion euros of bonds with ease at an auction on Thursday that kicked off its funding program for a daunting 2013 ...

Zillow forecasts Case-Shiller House Price index to increase 3.0% Year-over-year for September

Note: The Case-Shiller report to be released next Tuesday is for September (really an average of prices in July, August and September).

Zillow Forecast: September Case-Shiller Composite-20 Expected to Show 3% Increase from One Year Ago

On Tuesday November 27th, the Case-Shiller Composite Home Price Indices for September will be released. Zillow predicts that the 20-City Composite Home Price Index (non-seasonally adjusted [NSA]) will be up by 3 percent on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will be up 2.3 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from August to September will be 0.4 percent for the 20-City Composite, as well as for the 10-City Composite Home Price Index (SA). All forecasts are ... are based on a model incorporating the previous data points of the Case-Shiller series, the September Zillow Home Value Index data and national foreclosure re-sales.

Zillow's forecasts for Case-Shiller have been pretty close.

CR Note: It looks like house prices will be up about 5% this year based on the Case-Shiller indexes.

Irwin: "Five economic trends to be thankful for"

From Neil Irwin at the WaPo looked for a few positives: Five economic trends to be thankful for. Some excerpts a few comments:

Household debt is way down. ... The good news is that in the past three years, Americans have made remarkable progress cleaning up their balance sheets and paying down those debts. After peaking at nearly 98 percent of economic output at the start of 2009, the household debt was down to 83 percent of GDP in the spring of 2012. ...

CR Note: This level is still fairly high, but households have made progress. We will have more data next week when the NY Fed releases their Q3 Report on Household Debt and Credit.

Click on graph for larger image.

This graph is from the Q2 NY Fed Report on Household Debt and Credit and shows that aggregate consumer debt has been decreasing.

From the NY Fed: "Household indebtedness declined to $11.38 trillion [in Q2], a $53 billion decline from the first quarter of 2012. Outstanding household debt has decreased $1.3 trillion since its peak in Q3 2008."

Note: Irwin uses a different starting point, and also looks at household debt as percent of GDP (a good way to look at debt), and clearly household is debt is down significantly.

Irwin:

The cost of servicing that debt is way, way down. ... In late 2007, debt service payments added up to a whopping 14 percent of disposable personal income. Now it's down to 10.7 percent, about the same as in the early 1990s. ..

CR Note: Here is the data source: Household Debt Service and Financial Obligations Ratios.

Irwin:

Electricity and natural gas prices are falling. ... The retail price for consumers' gas service piped into their homes is down 8.4 percent in the year ended in October. The lower wholesale price of natural gas is also pulling down electricity prices; they are off 1.2 percent over the past year. ...

Businesses aren't firing people. ... While businesses aren't adding new workers at a pace that would put the hordes of unemployed back on the job very rapidly, they also aren't slashing jobs at a very rapid clip. Private employers laid off or discharged 1.62 million people in September, according to the Labor Department's Job Openings and Labor Turnover data. ...

CR Note: I track the JOLTS data every month, and, as Irwin notes, layoffs and discharges are down.

Irwin:

Housing is dramatically more affordable. ... In the spring of 2006, ... typical American home buyer would have faced a monthly mortgage payment of $1,247 a month ... home prices have fallen, so have mortgage rates ... Add it all up, and in the spring of 2012 that median American house would require a mortgage payment of only $889 a month ...

CR Note: I'm not sure of all the numbers Irwin is using, but according to Case-Shiller, the Composite 20  house price index declined 31% from the peak (some areas more, some much less).  Factor in low mortgage rates, and the payment would have fallen even further. There are definitely positive trends.

Happy Thanksgiving!  

Business Insider Interview

I spoke with Joe Weisenthal at Business Insider yesterday. He wrote a way too nice article and included some of our conversation: The Genius Who Invented Economics Blogging Reveals How He Got Everything Right And What's Coming Next

Genius? Hardly. I just paid attention and put 2 plus 2 together.

And I didn't get "everything right", but I did get most of the US macro trends correct over the last 8 years. I started blogging in January 2005, and most of my early posts were about housing, as an example: Housing: Speculation is the Key

And I definitely didn't invent economics blogging. Barry Ritholtz and others were ahead of me.

In the interview, I mentioned the "doomer" mentality. Many people now think of the '90s as a great decade for the economy - and it was. But there were doomsday predictions every year. As an example, in 1994 Larry Kudlow was arguing the Clinton tax increases would lead to a severe recession or even Depression. Wrong. By the end of the '90s, there were many people concerned about the stock bubble and I shared that concern, but there were doomers every year (mostly wrong).

In the Business Insider interview, I said: "I'm not a roaring bull, but looking forward, this is the best shape we've been in since '97". Obviously the economy is still sluggish, and the unemployment rate is very high at 7.9%, but I was looking forward. I mentioned the downside risks from Europe and US policymakers (the fiscal slope), but I think the next few years could see a pickup in growth.

In the article I highlighted two of the reasons I expect a pickup in growth that I've mentioned before on the blog; a further increase in residential investment, and the end of the drag from state and local government cutbacks.

I also mentioned an excellent piece on autos from David Rosenberg back in early 2009. His piece made me think about auto sales - and I came to a different conclusion than Rosenberg, see: Vehicle Sales. I started expecting auto sales to bottom, and that led me to be more optimistic for the 2nd half of 2009.

I enjoyed talking with Joe - although he was way too nice - and, yes, that is a picture of me.

DOT: Vehicle Miles Driven decreased 1.5% in September

I first started tracking monthly vehicle miles to see the impact of the recession on driving. Since then we've seen the impact of demographics and changing preferences ... very interesting.

The Department of Transportation (DOT) reported today:

Travel on all roads and streets changed by -1.5% (-3.6 billion vehicle miles) for September 2012 as compared with September 2011. 'Travel for the month is estimated to be 237.1 billion vehicle miles.

Cumulative Travel for 2012 changed by 0.6% (14.2 billion vehicle miles).

The following graph shows the rolling 12 month total vehicle miles driven.

The rolling 12 month total is still mostly moving sideways.

Click on graph for larger image.

In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Currently miles driven has been below the previous peak for 58 months - and still counting.

The second graph shows the year-over-year change from the same month in the previous year.

Gasoline prices were up in September compared to September 2011. In September 2012, gasoline averaged of $3.91 per gallon according to the EIA. Last year, prices in September averaged $3.67 per gallon, so - just looking at gasoline prices - it is no surprise that miles driven decreased year-over-year in September.

Just looking at gasoline prices suggest miles driven will be down again in October - especially with the very high prices in California. Nationally gasoline prices averaged $3.81 in October, up sharply from $3.51 a year ago.

However, as I've mentioned before, gasoline prices are just part of the story. The lack of growth in miles driven over the last 5 years is probably also due to the lingering effects of the great recession (high unemployment rate and lack of wage growth), the aging of the overall population (over 55 drivers drive fewer miles) and changing driving habits of young drivers.

This graph from the Federal Highway Administration is based on the National Household Travel Survey shows the miles driven by certain age groups over time. The key is a large group is moving into the older age brackets, so their miles driven will decline - a large group is moving the from the "54 to 58" age group into the higher age groups.

Also miles driven has been falling for lower age groups over the last few years, and the next survey will probably show that decline. Here is an article on younger drivers: Young People Are Driving Less'And Not Just Because They're Broke (ht KarmaPolice)

An April study by the U.S. Public Interest Research Group found that between 2001 and 2009 the average annual vehicle miles traveled by Americans ages 16 to 34 fell by close to a quarter, from 10,300 to 7,900 per capita (four times greater than the drop among all adults), and from 12,800 to 10,700 among those with jobs.
...
The PIRG researchers concluded that this change couldn't simply be pegged to the economy, but indicates a value shift.

With all these factors, it may be years before we see a new peak in miles driven.

Thursday: Happy Thanksgiving!

Happy Thanksgiving to all!

The US markets are closed on Thursday, however there might be some news from the European Union Summit Meeting.  CR is always open.

Thanks again to Joe Weisenthal at Business Insider for his nice comments today, and to Paul Krugman for adding even more: All Hail Calculated Risk.

While I'm giving thanks - I'm forever thankful for having the privilege of knowing and sharing this blog with Doris "Tanta" Dungey, thanks to my friend Tom Lawler for all of our data discussions and for allowing me to excerpt from his newsletter, to surferdude808 for all his work on tracking problem banks, and to Ken Cooper for his help with the comments.   I'm thankful for all the wonderful people I've met while blogging.  And thanks to all the commenters too, and to all the readers!

And on topic, Jon Hilsenrath at the WSJ interviewed San Francisco Fed President John Williams today: Fed's Williams: Fed Not Near Limit on Bond Buying.  A short excerpt:

WSJ: Would a reduction in the monthly flow of the Fed's purchases right now be counterproductive?

WILLIAMS: I would say that interest rates and financial conditions today in the market are based on the expectation that we will continue these policies into next year. That would include long-term Treasury purchases. A decision not to continue buying long-term Tereasurys when Twist expires I think that would be a surprise to markets and that would be counterproductive. In my view it would push long-term rates up and cause financial conditions to be a little less supportive of growth. That's my interpretation of market expectations today.

What to do when Twist expires will be a key topic at the December FOMC meeting. It seems likely the $85 billion a month in purchases of mortgages and long-term Treasury securities will continue next year.

Weekly Initial Unemployment Claims decline to 410,000

The DOL reports:

In the week ending November 17, the advance figure for seasonally adjusted initial claims was 410,000, a decrease of 41,000 from the previous week's revised figure of 451,000. The 4-week moving average was 396,250, an increase of 9,500 from the previous week's revised average of 386,750.

[New York] +43,956 Increase in initial claims due to Hurricane Sandy. These separations were primarily in the construction, food service, and transportation industries.

[New Jersey] +31,094 Increase in initial claims due to Hurricane Sandy. These separation were primarily in the accommodation and food services, manufacturing, transportation and warehousing, administrative service, healthcare and social assistance,construction, retail, professional, trade, educational service, and public administration industries.

The previous week was revised up from 439,000.

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

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 396,250.

This sharp increase in the 4 week average is due to Hurricane Sandy as claims increased significantly in the impacted areas. Note the spike in 2005 related to hurricane Katrina - we are seeing a similar impact, although on a smaller scale.

Weekly claims were about at the consensus forecast.

And here is a long term graph of weekly claims:

Mostly moving sideways this year until the recent spike due to Hurricane Sandy. Weekly claims should continue to decline over the next few weeks.

Zillow: House Prices increased 4.7% Year-over-year in October

From Zillow: October Marks 12th Consecutive Month of National Home Value Increases

Zillow's October Real Estate Market Reports, released today, show that national home values rose 1.1% from September to October to $155,400. This is the largest monthly increase since August 2005 when home values rose 1.2% month-over-month. October 2012 marks the 12th consecutive month of home value appreciation, further evidence of a durable housing market recovery. On a year-over-year basis, home values were up by 4.7% in October 2012 ' a rate of annual appreciation we haven't seen since September of 2006 ...

In October, 276 (75%) of the 366 markets showed monthly home value appreciation, and 228 (62%) of the 366 markets saw annual home value appreciation. Among the top 30 metros, 29 experienced monthly home value appreciation and 26 saw annual increases.

Click on graph for larger image.

The graph from Zillow shows both the year-over-year and month-over-month change for the Zillow HPI.

This is a very strong month-over-month increase, and the largest year-over-year increase since 2006.

MBA: Purchase Mortgage Applications increase, Refinance Applications decrease

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.54 percent from 3.52 percent, with points decreasing to 0.40 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

Click on graph for larger image.

This graph shows the MBA mortgage purchase index.

The purchase index has been mostly moving sideways over the last two years, however the purchase index has increased 7 of the last 9 weeks and is now near the high for the year - but this index still isn't showing an increase like other housing reports.

Existing Home Sales: The Increase in Conventional Sales

Earlier I pointed out that one the keys for housing to return to "normal" are more conventional sales and fewer distressed sales. Not all areas report the percentage of distressed sales, and the NAR uses an unscientific survey to estimate distressed sales.

CoreLogic estimates the percent of distressed sales each month, and they were kind enough to send me their series. The first graph below shows CoreLogic's estimate of the distressed share starting in October 2007.

Click on graph for larger image.

Note that the percent distressed increases every winter. This is because distressed sales happen all year, and conventional sales follow the normal seasonal pattern of stronger in the spring and summer, and weaker in the winter.

This is why the Case-Shiller seasonal adjustment increased in recent years.

Also note that the percent of distressed sales over the last 5 months is at the lowest level since mid-2008, but still very high.

The second graph shows the NAR existing home series using the CoreLogic share of distressed sales.

If we just look at conventional sales (blue), sales declined from over 7 million in 2005 (graph starts in 2007) to a low of under 2.5 million.

Using this method (NAR estimate for sales, CoreLogic estimate of share), conventional sales are now back up to around 3.8 million SAAR. The NAR reported total sales were up 10.9% year-over-year in October, but using this method, conventional sales were up almost 18% year-over-year.

Earlier:
' Existing Home Sales in October: 4.79 million SAAR, 5.4 months of supply
' Existing Home Sales: A Solid Report
' Existing Home Sales graphs

Tuesday: Housing Starts, Bernanke on Economy and Policy

Tuesday:
' At 8:30 AM, the Census Bureau will release Housing Starts for October. The consensus is for total housing starts to decline to 840,000 (SAAR) in October, down from 872,000 in September. Goldman Sachs is forecasting a decline in starts to 840,000, and Merrill Lynch is forecasting 815,000.

' At 10:00 AM, the BLS will release the Regional and State Employment and Unemployment report for October 2012.

' At 12:15 PM, Fed Chairman Ben Bernanke will speak at the Economic Club of New York, New York, New York, The Economic Recovery and Economic Policy. Bernanke will most likely avoid specific policies, but urge policymakers to put the budget on a "sustainable long-run path" and "to avoid unnecessarily impeding the current economic recovery".

Both quotes are from a speech Bernanke gave in June when he also said: "Fortunately, avoiding the fiscal cliff and achieving long-term fiscal sustainability are fully compatible and mutually reinforcing objectives. Preventing a sudden and severe contraction in fiscal policy will support the transition back to full employment, which should aid long-term fiscal sustainability. At the same time, a credible fiscal plan to put the federal budget on a longer-run sustainable path could help keep longer-term interest rates low and improve household and business confidence, thereby supporting improved economic performance today."

Earlier on Existing Home Sales:
' Existing Home Sales in October: 4.79 million SAAR, 5.4 months of supply
' Existing Home Sales: A Solid Report
' Existing Home Sales: The Increase in Conventional Sales
' Existing Home Sales graphs

Another question for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

Housing Starts increased to 894 thousand SAAR in October

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in October were at a seasonally adjusted annual rate of 894,000. This is 3.6 percent above the revised September estimate of 863,000 and is 41.9 percent above the October 2011 rate of 630,000.

Single-family housing starts in October were at a rate of 594,000; this is 0.2 percent below the revised September figure of 595,000. The October rate for units in buildings with five units or more was 285,000.

Building Permits:
Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 866,000. This is 2.7 percent below the revised September rate of 890,000, but is 29.8 percent above the October 2011 estimate of 667,000.

Single-family authorizations in October were at a rate of 562,000; this is 2.2 percent above the revised September figure of 550,000. Authorizations of units in buildings with five units or more were at a rate of 280,000 in October.

Click on graph for larger image.

The first graph shows single and multi-family housing starts for the last several years.

Total housing starts were at 894 thousand (SAAR) in October, up 3.6% from the revised September rate of 863 thousand (SAAR). Note that September was revised down from 872 thousand.

Single-family starts decreased slightly to 594 thousand in October.

The second graph shows total and single unit starts since 1968.

This shows the huge collapse following the housing bubble, and that total housing starts have been increasing lately after moving sideways for about two years and a half years.

Total starts are up about 87% from the bottom start rate, and single family starts are up about 70% from the low.

This was above expectations of 840 thousand starts in October. This was mostly because of the volatile multi-family sector that increased sharply in October. However single family starts have increased recently too. Right now starts are on pace to be up about 25% from 2011. I'll have more soon ...

Table of Short Sales and Foreclosures for Selected Cities in October

Economist Tom Lawler sent me the table below of short sales and foreclosures for a few selected cities in October. Keep this table in mind when the NAR releases existing home sales tomorrow.

The NAR headline number will probably be close to the 4.75 million SAAR in September, but there are other signs of significant change in the housing market. First, inventory has declined sharply, and there is very little inventory in many areas. Second, it appears that the share of conventional sales in certain markets has increased significantly (these are normal sales - not foreclosures or short sales). Both the decline in inventory, and the increase in conventional sales, are signs of moving towards a more normal housing market.

Look at the right two columns in the table below (Total "Distressed" Share for Oct 2012 compared to Oct 2011). In every area that reports distressed sales, the share of distressed sales is down year-over-year - and down significantly in most areas. The NAR will release some distressed sales measurements tomorrow from an unscientific survey of Realtors - and I have little confidence in the survey results - but these local reports suggest distressed sales have fallen sharply in many areas.

Also there has been a decline in foreclosure sales just about everywhere. Look at the middle two columns comparing foreclosure sales for Oct 2012 to Oct 2011. Foreclosure sales have declined in all these areas, and some of the declines have been stunning (the Nevada sales were impacted by a new foreclosure law).

Also there has been a shift from foreclosures to short sales. In most areas, short sales now far out number foreclosures, although Minneapolis is an exception with more foreclosures than short sales.

Imagine that the number of total sales doesn't change over the next year - some people would argue that is "bad" news and the housing market isn't recovering. But also imagine that the share of distressed sales declines 25%, and conventional sales increase to make up the difference. That would be a positive sign! As I noted a week ago, conventional sales in Sacramento were up 55% year-over-year in October (there were 2 more selling days in Oct 2012, but that is still a stunning increase). Too bad we don't have better national numbers on the share of distressed / conventional sales, but this table suggests some improvement.

Table from Tom Lawler:

Monday: Existing Home Sales, Homebuilder Confidence

First on the recession in the Euro Zone from Jim Hamilton: Europe in recession

The Business Cycle Dating Committee of the Centre for Economic Policy Research (the European counterpart of the U.S. NBER) last week issued a declaration that Europe entered a new recession a year ago, dating the business cycle peak at 2011:Q3.

This was pretty obvious a year ago.

Monday:
' At 10:00 AM ET, Existing Home Sales for October from the National Association of Realtors (NAR). The consensus is for sales of 4.74 million on seasonally adjusted annual rate (SAAR) basis. Sales in September 2012 were 4.75 million SAAR.  Economist Tom Lawler estimates the NAR will report sales at 4.84 million SAAR. Goldman Sachs is forecasting a decline in sales to 4.67 million, and Merrill Lynch is forecasting 4.60 million.

' Also at 10:00 AM, the NAHB will release their November homebuilder survey. The consensus is for a reading of 41, unchanged from October. Although this index has been increasing lately, any number below 50 still indicates that more builders view sales conditions as poor than good.

The Asian markets are green tonight, with the Nikkei up 1.5%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up 6 and DOW futures are up 46.

Oil prices are up slightly with WTI futures at $87.48 per barrel and Brent at $109.46 per barrel. Gasoline prices are still falling a little.

Weekend:
' Summary for Week Ending Nov 16th
' Schedule for Week of Nov 18th

And on mortgage delinquencies:
' Press Release: Q3 National Delinquency Survey
' Q3 MBA National Delinquency Survey Graph and Comments
' Mortgage Delinquencies by Loan Type in Q3
' Serious Mortgage Delinquencies and In-Foreclosure by State
' Percent of Mortgage Seriously Delinquent over time, Selected States

Two more questions this week for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

LA Times: "Most aid from mortgage settlement in California going to short sales"

by Bill McBride on 11/19/2012 08:41:00 AM

Unofficial Problem Bank list declines to 857 Institutions

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew steadily and peaked at 1,002 institutions on June 10, 2011. The list has been declining recently.

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Nov 16, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

As anticipated, the OCC released its latest actions this Friday, which contributed to many changes to the Unofficial Problem Bank List. This week, there were seven removals and four additions that leave the list at 857 institutions with assets of $329.2 billion. A year ago, the list held 903 institutions with assets of $419.6 billion.

The OCC or the Federal Reserve terminated actions against The Citizens National Bank, Putnam, CT ($354 million Ticker: CTZR); Bankers' Bank of the West, Denver, CO ($348 million); North Cascades National Bank, Chelan, WA ($333 million); Incommons Bank, N.A., Mexia, TX ($98 million); Prairie National Bank, Stewardson, IL ($54 million); and Butte State Bank, Butte, NE ($42 million). Amazingly, the FDIC closed another bank in Georgia -- Hometown Community Bank, Braselton, GA ($134 million), which is the 84th failure in the state since 2008.

Additions this week include Roma Bank, Robbinsville, NJ ($1.7 billion); First National Bank, Ronceverte, WV ($262 million); Interamerican Bank, A FSB, Miami, FL ($240 million); and St Tammany Homestead Savings and Loan Association, Covington, LA ($96 million).

We wish all readers a Happy Thanksgiving as the next update will be published after the holiday. As such, it is likely to be a quiet weekend as the FDIC will take the long weekend off from closings and they will likely not publish their latest actions until Friday the 30th.

Earlier:
' Summary for Week Ending Nov 16th
' Schedule for Week of Nov 18th

Schedule for Week of Nov 18th

Earlier:
' Summary for Week Ending Nov 16th

This is a short week (Happy Thanksgiving!), but there are several key releases early in the week.

On Monday, the NAR will release existing home sales for October, and the NAHB will release their homebuilder confidence survey. On Tuesday, Housing Starts for October will be released. Housing has been the bright spot for the U.S. economy recently.

Also on Tuesday, Fed Chairman Ben Bernanke will speak on "The Economic Recovery and Economic Policy".

California: Unemployment Rate falls to 10.1% in October, Payroll jobs increase 45,800

Recently I've been talking to a few friends from around the country, and they all seemed unaware that the California economy is clearly improving. California is seeing a pickup in employment, the delinquency rate is falling, and I wouldn't be surprised if California reports a balanced budget soon.

Note: when the MBA quarterly delinquency data was released earlier this week,  Mike Fratantoni, MBA's Vice President of Research and Economics, said there has been "dramatic" improvement in California and Arizona.

From California's Employment Development Department: California's unemployment rate decreases to 10.1 percent, Nonfarm payroll jobs increase by 45,800

California's unemployment rate decreased to 10.1 percent in October, and nonfarm payroll jobs increased by 45,800 during the month for a total gain of 574,900 jobs since the recovery began in February 2010, according to data released today by the California Employment Development Department (EDD) from two separate surveys.

This is the lowest unemployment rate for California since Jan 2009. There are only three states still with double digit unemployment: Nevada, Rhode Island, and California.

The BLS will release data for all states on Tuesday.

Earlier:
' Summary for Week Ending Nov 16th
' Schedule for Week of Nov 18th

Lawler: Early Read on October Existing Home Sales

From economist Tom Lawler:

Based on what I've seen, I expect the NAR's existing home sales number will come in at a seasonally adjusted annual rate of 4.84 million.

The unadjusted YOY change will be a boatload higher in October than in September, but October this year had two more business days than last October, so...

Closed sales were only slightly impacted by Sandy; a bigger impact in some hit markets is more likely to show up in November.

Best guess on inventories is a monthly decline of 3.4%.

CR Notes: The consensus is for the NAR to report sales of 4.74 million on seasonally adjusted annual rate (SAAR) basis on Monday. Based on Lawler's estimates, the NAR will report inventory around 2.3 million units for October, and months-of-supply will be around 5.7 months. This will be the lowest level of inventory for October since 2001 or 2002, and the lowest months-of-supply since early 2006.

Bank Failure #50 in 2012: Hometown Community Bank, Braselton, Georgia

by Bill McBride on 11/16/2012 05:12:00 PM

Summary for Week Ending Nov 16th

Hurricane Sandy impacted the economic data released last week, especially retail sales, industrial production and initial weekly unemployment claims.  The Fed reported that Sandy "reduced the rate of change in total output by nearly 1 percentage point".  Also the Philly Fed and Empire State manufacturing surveys were weak due to Sandy.  Since we are usually looking for the trend in the data, we have to be careful to look through short term event driven increases or decreases in the data. Overall I'd expect the data to return to trend fairly quickly.

Most of the discussion last week was related to the "fiscal slope", or more accurately, how much austerity the US should enact in 2013. This will be an ongoing discussion, and I expect some reasonable compromise to be reached - although I expect taxes will increase on just about everyone in 2013 with a combination of the payroll tax cut expiring and tax rates for higher income earners increasing.

Fed Chairman Ben Bernanke spoke this week and expressed concern that mortgage lending standards might be "overly tight". Also the FOMC minutes suggested the Fed is considering setting unemployment rate and inflation thresholds for raising the Fed Funds rate. I'll have more on thresholds before the FOMC meeting in December.

There was some good news on mortgage delinquencies. The MBA reported that delinquencies declined again in Q3, although they believe there is several years of "in foreclosure" inventory that still needs to be resolved.

Here is a summary of last week in graphs:

' Retail Sales declined 0.3% in October

Click on graph for larger image.

On a monthly basis, retail sales declined 0.3% from September to October (seasonally adjusted), and sales were up 3.8% from October 2011.  Sales for September were revised up to a 1.3% increase (from 1.1% increase).

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

This was below the consensus forecast for retail sales of a 0.2% declined in October. However the increase in September was revised up, and most of this decline was related to Hurricane Sandy (there should be some bounce back soon).

' Industrial Production decreased 0.4% in October due to Hurricane Sandy, Capacity Utilization decreased

The Fed reported: "Hurricane Sandy, which held down production in the Northeast region at the end of October, is estimated to have reduced the rate of change in total output by nearly 1 percentage point."

This graph shows Capacity Utilization. This series is up 10.9 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 77.8% is still 2.5 percentage points below its average from 1972 to 2010 and below the pre-recession level of 80.6% in December 2007.

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

 This  graph shows industrial production since 1967.

Industrial production decreased in October to 96.6. This is 15% above the recession low, but still 4.1% below the pre-recession peak.

IP was slightly below expectations due to the impact of Hurricane Sandy. We will probably see some bounce back over the next couple of months.

Key Measures show low inflation in October

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.3% annualized rate) in October. The 16% trimmed-mean Consumer Price Index increased 0.1% (1.7% annualized rate) during the month. 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.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.1% (1.8% annualized rate) in October. The CPI less food and energy increased 0.2% (2.2% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed has the median CPI details for October here.

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 2.2%, the trimmed-mean CPI rose 1.9%, the CPI rose 2.2%, and the CPI less food and energy rose 2.0%. Core PCE is for September and increased 1.7% year-over-year.

On a monthly basis, two of these measure were above the Fed's target; median CPI was at 2.3% annualized, core CPI increased 2.2% annualized. However trimmed-mean CPI was at 1.7% annualized, and core PCE for September increased 1.4% annualized. These measures suggest inflation is close to the Fed's target of 2% on a year-over-year basis.

The Fed's focus will probably be on core PCE and core CPI, and both are at or below the Fed's target on year-over-year basis.

2012 FHA Actuarial Review Released: Negative $13.5 Billion economic value

by Bill McBride on 11/15/2012 06:08:00 PM

Friday: Industrial Production and Capacity Utilization

Note: The report linked to in 2012 FHA Actuarial Review Released: Negative $13.5 Billion economic value appears to have been taken down (maybe released early by mistake). Nick Timiraos at the WSJ writes: Report: FHA to Exhaust Capital Reserves

[T]he latest forecasts show that while the FHA currently has reserves of $30.4 billion, it expects to lose $46.7 billion on the loans it has guaranteed, resulting in a $16.3 billion deficit.
...
"If [the FHA] were a private company, it would be declared insolvent and probably put under conservatorship like Fannie and Freddie," said Thomas Lawler, an independent housing economist in Leesburg, Va.
...
Overall, the FHA insured nearly 739,000 loans that were 90 days or more past due or in foreclosure at the end of September, an increase of more than 100,000 loans from a year ago. That represents about 9.6% of all insured loans.

Most of the agency's losses stem from loans made between 2007 and 2009, as the housing bust deepened. Loans made since 2010 are expected to be very profitable.

Friday:
' At 9:15 AM ET, the Fed will release Industrial Production and Capacity Utilization for October. The consensus is for 0.2% increase in Industrial Production in October, and for Capacity Utilization to increase to 78.4%.

Another question for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

MBA: Mortgage Applications rebound after Hurricane Sandy, Mortgage Rates fall to Record Low

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

The Refinance Index increased 13 percent from the previous week, ending a five-week decline. The seasonally adjusted Purchase Index increased 11 percent from one week earlier.

'Following the decrease in applications two weeks ago due to the effects of superstorm Sandy, mortgage applications in many East Coast states rebounded strongly this week,' said Mike Fratantoni, MBA's Vice President of Research and Economics. 'Application volume in New Jersey more than doubled over the week, while volume in Connecticut and New York increased more than 60 percent. In addition to the rebound in the states impacted by the storm, the 30 year fixed mortgage rate reached a new record low in the survey.'

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.52 percent from 3.61 percent, with points decreasing to 0.41 from 0.45 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. This record low rate for 30 year fixed mortgages beats the previous survey low of 3.53 percent for the week ending September 28, 2012.

Some of this decline in activity was related to Hurricane Sandy.

Click on graph for larger image.

This graph shows the MBA mortgage purchase index. The purchase index has been mostly moving sideways over the last two years.

The increase this week was mostly just a rebound from the sharp decline the previous week due to Hurricane Sandy.

Wednesday: Retail Sales, Producer Price Index, FOMC Minutes

From Jon Hilsenrath and Kristina Peterson at the WSJ: Fed Leans Toward Clearer Guidance

Under a new approach being considered by senior officials, the Fed would state how high inflation would have to rise or how low unemployment would have to fall before it would begin moving rates ...

"Several of my [Fed] colleagues have advocated such an approach, and I am also strongly supportive," Janet Yellen, the Fed's vice chairwoman, said ...
...
Chicago Fed President Charles Evans wants the Fed to offer assurances it will keep short-term rates low at least until the unemployment rate falls to 7%, as long as inflation remains below 3%. Minneapolis Fed President Narayana Kocherlakota has proposed thresholds of 5.5% for the unemployment rate and 2.25% for inflation.

There might be a mention of possible targets in the FOMC minutes to be released on Wednesday.

Wednesday:
' At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. Look for activity to rebound following Hurricane Sandy.

' At 8:30 AM, Retail sales for October will be released. Retail sales (especially auto sales) were impacted by Hurricane Sandy. The consensus is for retail sales to decrease 0.2% in October, and for retail sales ex-autos to increase 0.1%.

' Also at 8:30 AM, the Producer Price Index for October will be released. The consensus is for a 0.1% increase in producer prices (0.1% increase in core).

' At 10:00 AM, the Manufacturing and Trade: Inventories and Sales report for September (Business inventories). The consensus is for 0.6% increase in inventories.

' At 2:00 PM, the FOMC Minutes for Meeting of October 23-24, 2012 will be released. Look for a possible discussion of setting targets for exiting QE3.

Another question for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

Retail Sales declined 0.3% in October

On a monthly basis, retail sales declined 0.3% from September to October (seasonally adjusted), and sales were up 3.8% from October 2011. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $411.6 billion, a decrease of 0.3 percent from the previous month, but 3.8 percent above October 2011. ... The August to September 2012 percent change was revised from 1.1 percent to 1.3 percent.

Click on graph for larger image.

Sales for September were revised up to a 1.3% increase (from 1.1% increase).

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales are up 24.2% from the bottom, and now 8.6% above the pre-recession peak (not inflation adjusted)

The second graph shows the same data, but just since 2006 (to show the recent changes). Most of the decline in October was due to fewer auto sales - a direct impact of Hurricane Sandy. Retail sales ex-autos were unchanged in October.

Excluding gasoline, retail sales are up 20.2% from the bottom, and now 8.0% above the pre-recession peak (not inflation adjusted).

The third graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 3.5% on a YoY basis (3.8% for all retail sales).

This was below the consensus forecast for retail sales of a 0.2% declined in October. However the increase in September was revised up, and most of this decline was related to Hurricane Sandy (there should be some bounce back soon).

NFIB: Small Business Optimism Index increases slightly in October

From the National Federation of Independent Business (NFIB): Small Business Optimism Ticks Up Slightly

The National Federation of Independent Business (NFIB) Small Business Optimism Index rose 0.3 in October to 93.1; the slight uptick in the reading did not seem to indicate a dramatic shift in owner sentiment over the course of the month.
...
One indicator that rose slightly in October is the frequency of reported capital outlays in the past six months, increasing 3 points to 54 percent. ... Weak sales is still the reported No. 1 business problem for 22 percent of owners surveyed. ... October was another weak job creation month, though better than September due primarily to a reduction in terminations which will raise the net jobs number. According to the October survey, owners stopped releasing workers; the average change in employment per firm rose to just 0.02 workers'essentially zero.

Click on graph for larger image.

This graph shows the small business optimism index since 1986. The index increased to 93.1 in October from 92.8 in September.

Note: Small businesses have a larger percentage of real estate and retail related companies than the overall economy. This index remains low, and once again, lack of demand is a huge problem for small businesses.

Lawler: Preliminary Table of Short Sales and Foreclosures for Selected Cities in October

Economist Tom Lawler sent me the following preliminary table today of short sales and foreclosures for a few selected cities in October. Over the weekend I posted some data from Sacramento showing a sharp increase in conventional sales, and that distressed sales have fallen to the lowest level since the Sacramento Association started tracking the data.

There has been a shift from foreclosures to short sales. Foreclosures are down and short sales are up in all of these cities. In most areas, short sales far out number foreclosures, although Minneapolis is an exception with more foreclosures than short sales.

The overall percent of distressed sales (combined foreclosures and short sales) are down year-over-year almost everywhere. In the cities listed below, distressed sales are down about 25% from a year ago.

And previously from Lawler:

Note that the distressed sales shares in the below table are based on MLS data, and often based on certain 'fields' or comments in the MLS files, and some have questioned the accuracy of the data. Some MLS/associations only report on overall 'distressed' sales.

Lawler on Builder Results

A few comments and a table from economist Tom Lawler:

D.R. Horton and Beazer Homes released their operating results for the quarter ended September 30th today. Here is a table showing some summary stats for nine large publicly-traded home builders. The net orders and settlements figures include results from 'discontinued operations.'

The combined order backlog of the builders on September 30th, 2012 was 30,461, up 44.6% from last September.

CR Note: I broke Tom's table into two sections - the first for orders and settlements, and the second for prices.

This increase in net orders was about the same as last quarter (year-over-year), and the backlog is continuing to increase.

Sacramento October House Sales: Conventional Sales up 55% year-over-year

Note: I've been following the Sacramento market to look for changes in the mix of house sales in a distressed area over time (conventional, REOs, and short sales). The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

Recently there has been a dramatic shift from REO to short sales, and the percentage of distressed sales has been declining. This data would suggest some improvement in the Sacramento market.

In October 2012, 47.7% of all resales (single family homes and condos) were distressed sales. This was down from 50.8% last month, and down from 64.1% in October 2011. The is the lowest percentage of distressed sales - and therefore the highest percentage of conventional sales - since the association started tracking the data.

The percentage of REOs fell to 12.0%, the lowest since the Sacramento Realtors started tracking the data and the percentage of short sales increased to 35.7%, the highest percentage recorded.

Here are the statistics.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales.

There has been an increase in conventional sales this year, and there were almost three times as many short sales as REO sales in October. The gap between short sales and REO sales is increasing.

Total sales were up 7% from October 2011, and conventional sales were up 55% compared to the same month last year. This is exactly what we expect to see in an improving distressed market - flat or even declining overall sales as distressed sales decline, but an increase in conventional sales.

Active Listing Inventory for single family homes declined 60.4% from last October, although listings were up 4% in October compared to the previous month.

Cash buyers accounted for 36.9% of all sales (frequently investors), and median prices were up 4.1% from last October.

This seems to be moving in the right direction, although the market is still in distress. We are seeing a similar pattern in other distressed areas to more conventional sales, and a shift from REO to short sales.

AAR: Rail Traffic "mixed" in October

From the Association of American Railroads (AAR): AAR Reports Mixed Rail Traffic for October

The Association of American Railroads (AAR) today reports U.S. rail traffic continues to show mixed results in monthly rail data, and that impacts from Hurricane Sandy can be seen in decreased traffic for week 44.

'The fundamentals of U.S. rail traffic remained roughly the same in October as in recent months: weakness in coal, remarkable growth in petroleum and petroleum products, a slight slowing of growth in intermodal and autos, and mixed results for everything else,' said AAR Senior Vice President John T. Gray.

Intermodal traffic in October saw an increase for the 35th straight month, totaling 1,233,475 containers and trailers, up 1.5 percent (18,710 units) compared with October of 2011. Carloads originated in October totaled 1,422,654 carloads, down 6.1 percent (92,601 carloads) compared with the same month last year. Carloads excluding coal were up 1.9 percent for the month, or 15,609 carloads, compared with the same month last year.

Click on graph for larger image.

This graph shows U.S. average weekly rail carloads (NSA).

Total U.S. rail carload traffic fell 6.1% (92,601 carloads) to 1,422,654 in October 2012 from October 2011 on a non-seasonally adjusted basis (see charts below). That's the largest year-over-year carload percentage decline since November 2009.

As was the case last month too, coal alone more than accounted for the total carload decline in October. Coal carloads were down 16.0% (108,210 carloads) in October 2012 from October 2011.
...
Hurricane Sandy negatively affected rail traffic in the last week of October in the East. As is always the case when bad weather affects rail traffic, some of the lost traffic will be made up, some will not, and it is not possible to precisely determine how much falls into each category.

The second graph is for intermodal traffic (using intermodal or shipping containers):

Graphs reprinted with permission.

On Intermodal traffic:

U.S. rail intermodal traffic rose 1.5% (18,710 containers and trailers) in October 2012 over October 2011 to 1,233,475 units. That's the 35th straight year-over-year monthly increase, though it was the smallest percentage gain in 14 months.

This is more evidence of sluggish growth.

Yesterday:
' Summary for Week Ending Nov 9th
' Schedule for Week of Nov 11th

Monday: Veterans Day

Monday:
' Bond markets and banks will be closed in observance of Veterans Day. The stock market will be open.

' 4:00 AM ET: Eurozone Finance Ministers Meeting

On Greece, from the Financial Times: Greece battles to avert '5bn default

Greece is battling to raise funds to avoid defaulting on a '5bn debt repayment this week ...

The country's debt management office has announced plans to cover the full amount through a treasury bill auction on Tuesday, but Greek banks expected to buy the issue can only raise about '3.5bn of collateral acceptable to the European Central Bank ...

Senior EU officials, however, said they remain doubtful a deal can be struck at Monday's meeting of finance ministers in Brussels ...
excerpt with permission

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are down 1 and DOW futures are slightly down.

Oil prices are down slightly with WTI futures at $85.96 per barrel and Brent at $109.03 per barrel. Gasoline prices have been falling.

Weekend:
' Summary for Week Ending Nov 9th
' Schedule for Week of Nov 11th

Two more questions this week for the November economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

Schedule for Week of Nov 11th

Earlier:
' Summary for Week Ending Nov 9th

Several economic reports this week will be impacted by Hurricane Sandy including retail sales, weekly unemployment claims, and the regional NY and Philly Fed manufacturing surveys.

The key report for the week is retail sales for October. For manufacturing, the November NY Fed (Empire state) and Philly Fed surveys, and the October Industrial Production and Capacity Utilization report will all be released this week.

On prices, CPI for October will be released on Thursday.

Also Fed Chairman Ben Bernanke speaks Thursday on "Housing and Mortgage Markets".

Unofficial Problem Bank list declines to 860 Institutions

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew steadily and peaked at 1,002 institutions on June 10, 2011. The list has been declining recently.

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Nov 9, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

Only one action termination this week for the Unofficial Problem Bank List. The Federal Reserve terminated the Written Agreement against Community First Bank, Boscobel, WI ($217 million). After the change, the list holds 860 institutions with assets of $328.2 billion. A year ago, the list held 981 institutions with assets of $405.9 billion.

Next week, activity should pick-up as the OCC will publish it actions through mid-October and perhaps the FDIC will execute a few closings to get ahead of the Thanksgiving Day holiday.

Earlier:
' Summary for Week Ending Nov 9th
' Schedule for Week of Nov 11th