The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 66 in August, up from 65 in July. Any number above 50 indicates that more builders view sales conditions as good than poor.From NAHB: Builder Confidence Trending Higher as Interest Rates Move LowerBuilder confidence in the market for newly-built single-family homes rose one point to 66 in August, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. Sentiment levels have held at a solid 64-to-66 level for the past four months.“Even as builders report a firm demand for single-family homes, they continue to struggle with rising construction costs stemming from excessive regulations, a chronic shortage of workers and a lack of buildable lots,… [Read More...]

The BLS reported this morning:The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.7 percent over the last 12 months to an index level of 250.236 (1982-84=100). For the month, the index rose 0.2 percent prior to seasonal adjustment.CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). The calculation dates have changed over time (see Cost-of-Living Adjustments), but the current calculation uses the average CPI-W for the three months in Q3 (July, August, September) and compares to the average for the highest previous average of Q3 months. Note: this is not the headline CPI-U, and is not seasonally adjusted (NSA).• In 2018, the Q3 average of CPI-W was 246.352.The 2018 Q3 … [Read More...]

Special note: The expansion to the Panama Canal was completed in 2016 (As I noted a few years ago), and some of the traffic that used the ports of Los Angeles and Long Beach is probably going through the canal. This might be impacting TEUs on the West Coast.Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report 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 … [Read More...]

The BEA released their estimate of July vehicle sales on Tuesday. The BEA estimated sales of 16.82 million SAAR in July 2019 (Seasonally Adjusted Annual Rate), down 1.8% from the June sales rate, and down slightly from July 2018.Sales in 2019 are averaging 16.9 million (average of seasonally adjusted rate), down 1.5% compared to the same period in 2018.Click on graph for larger image.This graph shows light vehicle sales since 2006 from the BEA (blue) and an estimate for July (red).A small decline in sales to date this year isn’t a concern – I think sales will move mostly sideways at near record levels.This means the economic boost from increasing auto sales is over (from the bottom in 2009, auto sales boosted growth every year through 2016).The second graph shows … [Read More...]

Back in early 2009, I wrote a couple of posts arguing there would be an increase in auto sales – Vehicle Sales (Jan 2009) and Looking for the Sun (Feb 2009). This was an out-of-the-consensus call and helped me call the bottom for the US economy in mid-2009.I wrote an update in 2014, and argued vehicle sales would “mostly move sideways” for the next few years.Here is another update to the U.S. fleet turnover graph.This graph shows the total number of registered vehicles in the U.S. divided by the sales rate through July 2019 – and gives a turnover ratio for the U.S. fleet (this doesn’t tell you the age or the composition of the fleet). Note: the number of registered vehicles is … [Read More...]

The key reports this week are July CPI, Housing starts and Retail sales.For manufacturing, the Industrial Production report and the August New York and Philly Fed manufacturing surveys will be released.—– Monday, Aug 12th —–No major economic releases scheduled.—– Tuesday, Aug 13th —–6:00 AM ET: NFIB Small Business Optimism Index for July.8:30 AM: The Consumer Price Index for July from the BLS. The consensus is for a 0.2% increase in CPI, and a 0.2% increase in core CPI.11:00 AM: NY Fed: Q2 Quarterly Report on Household Debt and Credit—– Wednesday, Aug 14th —–7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.—– Thursday, Aug 15th —–8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 208 thousand … [Read More...]

Fannie and Freddie earlier reported results for Q2 2019. Here is some information on Real Estate Owned (REOs).Freddie Mac reported the number of REO declined to 5,869 at the end of Q2 2019 compared to 7,135 at the end of Q2 2018.For Freddie, this is down 92% from the 74,897 peak number of REOs in Q3 2010.Fannie Mae reported the number of REO declined to 17,913 at the end of Q2 2019 compared to 22,007 at the end of Q2 2018.For Fannie, this is down 89% from the 166,787 peak number of REOs in Q3 2010. Click on graph for larger image.Here is a graph of Fannie and Freddie Real Estate Owned (REO). REO inventory decreased in Q2 2019, and combined inventory is down 18% year-over-year. This is close to normal levels of REOs. [Read More...]

With the ten year yield at 1.63%, and based on an historical relationship, 30-year rates should currently be around 3.5%. As of yesterday, Mortgage News Daily reported: Lowest Rates Since November 2016Mortgage rates hit their lowest levels since November 2016 late last week and they’ve proceeded to set a new long-term low each day since then. [30YR FIXED – 3.5% – 3.75% (wider range than normal due to volatility)] emphasis addedThe graph shows the relationship between the monthly 10 year Treasury Yield and 30 year mortgage rates from the Freddie Mac survey. Currently the 10 year Treasury yield is at 1.63%, and 30 year mortgage rates were at 3.75% according to the Freddie Mac survey last week – and rates will probably be lower in the survey for this week.The record low … [Read More...]

Here is a look at the change in teen employment over time.The graph below shows the participation rate and employment-population ratio for those 16 to 19 years old.The graph is Not Seasonally Adjusted (NSA), to show the seasonal hiring of teenagers during the summer.A few observations:1) Although teen employment has recovered some since the great recession, overall teen employment had been trending down. This is probably because more people are staying in school (a long term positive for the economy). Click on graph for larger image.2) A smaller percentage of teenagers are seeking summer employment. The seasonal spikes are smaller than in previous decades. So a smaller percentage of teenagers are joining the labor force during the summer as compared to previous years. … [Read More...]

Notes: In June there were 7.348 million job openings, and, according to the June Employment report, there were 5.975 million unemployed. So, for the sixteenth consecutive month, there were more job openings than people unemployed. Also note that the number of job openings has exceeded the number of hires since January 2015 (over 4 years).From the BLS: Job Openings and Labor Turnover Summary The number of job openings was little changed at 7.3 million on the last business day of June, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.7 million and 5.5 million, respectively. … The number of quits was little changed in June at 3.4 million. The quits rate was 2.3 percent. The quits level was little changed for total private and decreased … [Read More...]