February Mortgage Monitor, consumer credit, job openings, and wholesale sales and inventory; March producer prices

it's been a fairly light week for economic data, but we did have the release of the Mortgage Monitor for February from Black Knight Financial Services (aka LPS Data & Analytics), the nearly all graphics report on the mortgage crisis which we've  been reviewing for years, so after we take a quick look at the data from the regular monthly government releases, we'll take a look at a handful of graphs and pictures from that report and see what they tell us about homeowners with mortgage trouble...

February Consumer Credit Grows at a 6.4% Annual Rate on Student Loans

the first release we saw last week was the G.19 Release on Consumer Credit for February from the Fed, which you might recall we tracked monthly a few years ago when student debt issued by the federal government was growing at a 50% annual rate...in February, total seasonally adjusted consumer credit increased at a $16.49 billion annual rate to $3.13 trillion, which would work out to a 6.4% growth rate over a year...however, the revolving portion of that, which would be like credit cards, decreased by $2.4 billion, a 3.4% annual rate, to $854.2 billion, while non-revolving credit, which includes loans for autos, yachts and college but not real estate, rose by $18.9 billion to $2,275.3, an annual rate of 10.1%....January's seasonally adjusted credit increase was revised to $13.80 billion instead of the previously reported $13.70 billion, with a $0.2 billion decrease in revolving credit and a $14.0 billion increase in non-revolving credit…the Zero Hedge bar graph below shows the seasonally adjusted monthly change in non-revolving credit outstanding in red and revolving credit monthly in blue since the beginning of 2011, with negative changes pointing down…the black line sums the two to track the headline change in credit that this release reports on...

the unadjusted data show that total credit outstanding has actually fallen since December with revolving credit contracting sharply, as one might expect during the post holiday winter months...the abbreviated table below, excerpted from the second table in the report, shows the actual level of credit outstanding in billions of dollars by type and by holder at year end for each year from 2009 to 2013, and then also at the end of January and February…note that revolving credit outstanding in February fell $18.5 billion in these preliminary figures, after falling $21.1 billion in January, as consumers paid for their holiday credit card purchases, and that revolving credit, which is mostly car and student loans, jumped $33.0 billion in January but rose just $3.8 in February…in the revolving credit section, we can also see the rapid expansion of student debt from $223.1 billion in 2009 to $764.0 billion as of February in non-revolving consumer debt originating with the Federal government, which are student loans originated by the Department of Education…the pdf of this report puts total student debt from all sources, including private student loans without government guarantees, at $1,225.6 billion at year end, with more recent data on the aggregate unavailable..also note that were it not for the student loans, non-revolving credit would also have been negative year to date...

February Job Openings at 6 Year High

on Tuesday, the Job Openings and Labor Turnover Summary for February from the Bureau of Labor Statistics indicated a 299,000 jump in the number of job openings in February, which brought the number of unemployed per opening down to 2.5, the lowest level since July 2008...seasonally adjusted job openings rose from 3,874,000 in January to 4,173,000 in February,  a six year high which is 2.9% of total employment, up from 2.7% of the labor force in January, when even seasonally adjusted openings may have been held back due to the brutal weather...almost all of the increase in February openings could be accounted for by the 204,000 additional positions in the professional and business service sector, where they now have 816,000 openings for jobs that could be anything from programmers to janitors, and the 110,000 new spots added by the retail sector, where openings rose to 489,000 unfilled slots...on the other hand, openings in durable goods manufacturing fell 12,000 to 143,000...

this release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and 'others', which include retirements and death...in February, seasonally adjusted new hires totaled 4,587,000, which was up slightly from 4,516,000 million hired or rehired in January, while the hiring rate as a percentage of all employed was unchanged at 3.3%, same as it was for the past 5 months.....seasonally adjusted hiring increases were strongest in accommodation and food services, where hiring rose by 23,000 workers to 695,000, while hiring in health care and social assistance fell by 35,000 to 440,000....total separations, on the other hand, were down by 35,000, from 4,419,000 in January to 4,384,000 in February, while the separations rate as a percentage of total employment was unchanged at 3.2%...thus hires minus separations would work out to an increase of 203,000 payroll jobs, a bit more than the revised 197,000 jobs reported for February in last weeks jobs report...

in breaking down the seasonally adjusted job separations, we find 2,382,000 quit their jobs in February, up from 2,368,000 in December, as the quits rate, considered an indication of worker confidence, remained unchanged at 1.7% of total employment...unsurprisingly, workers in accommodation and food services had the highest quitting rate at 4.0%, as 497,000 of them quit in February, 53,000 more than quit in January, while the number who quit jobs working in retail fell by 23,000 to 398,000...in addition, another 1,523,000 were either laid off, fired or otherwise discharged in February, down from 1,596,000 in January, while the discharges rate remained at 1.2% of all those employed...only unadjusted discharge data is given by industry, so unsurprisingly the largest drop in layoffs was in retail, where discharges fell to 161,000 from the 357,000 that were laid off in January..…meanwhile, other separations, which includes retirement and death, were at 383,000 in February, up from 341,000 in January, for an ‘other separations’ rate of 0.3%, up from 0.2%....our FRED graph for this report below shows job openings in blue in thousands monthly since  January 2005, and monthly hires in orange and monthly separations in violet over the same span…note that when separations in purple were above orange hires we were losing jobs...also, of the two major components of separations, the count of layoffs and firings is tracked in red, while the number of those quitting their jobs monthly is shown in green...

February Wholesale Sales Rise 0.7%; Inventories Up 0.5%

another release we saw at midweek was on Wholesale Trade, Sales and Inventories for February from the Census Bureau, which reported that seasonally adjusted sales of wholesale merchants rose 0.7% (+/-0.4%) to $436.1 billion from the revised January estimate of $433.1 billion and were up  3.1% (+/-1.6%) from a year earlier...the January preliminary sales estimate was revised downward $0.1 billion but was still 1.8% lower than December, suggesting a weaker 1st quarter for wholesalers...sales of durable goods were up 0.1% (+/-0.5%) over January and were up 2.9 percent (+/-1.1%) from February a year ago as wholesale metal sales rose 1.9% while lumber wholesale sales fell 2.9% and computer equipment wholesale sales fell 2.7%...sales of nondurable goods were up 1.2% (+/-0.5%) from January and 3.3% (+/-2.6%) higher than a year earlier as sales of petroleum and petroleum products were up 4.0% while sales of farm products fell 4.6%...meanwhile, seasonally adjusted wholesale inventories were valued at $518.3 billion at the end of February, 0.5% (+/-0.4%) higher than the revised January level and 4.7% (+/-0.7%) above last  February's level, while January's preliminary estimate was revised upward $0.3 billion or 0.1%...wholesale durable goods inventories were up 0.7% (+/-0.4%) in February and up 5.9 percent (+/-1.1%) from a year ago, with inventories of computer equipment up 2.2% and wholesale inventories of professional and commercial equipment and supplies up 1.4%...inventories of nondurable goods were up 0.1% (+/-0.5%) from January and up 2.9% (+/-1.2%) from last February, as inventories of farm products were up 2.7% while inventories of petroleum were down 2.6%...finally, the closely watched inventory to sales ratio of merchant wholesalers was unchanged from January at 1.19%, while up slightly from the 1.17% ratio of last February...

March Producer Prices Rise 0.5% and are 1.4% Above a Year Ago

on Friday, the Bureau of Labor Statistics released the composite Producer Price Index for March, which in addition to reporting on selling prices received by producers for finished, intermediate and raw goods, it now includes prices for services, and construction sold for personal consumption, capital investment, government purchases, and export....the seasonally adjusted headline producer price index for final demand rose by 0.5% in March after falling 0.1% in February and is now up 0.6% for 2014 and 1.4% higher than a year ago, the greatest year over year increase in 7 months...the index for final demand for services rose 0.7% after falling 0.3% in February, while the index for final demand goods was unchanged after rising 0.4% the previous month...core producer prices for final demand goods, which exclude producer prices for food and energy, rose 0.1% in March, as finished foods rose 1.1% while final demand energy fell 1.2%…major factors in the increase in wholesale food prices were a 7.2% increase in prices for pork and a 4.6% increase in grain prices, while a 15.7% decline in the price of LP gas and a 7.0% decline in No 2 diesel fuel weighed on the final demand energy index...in finished goods other than energy, only textile house furnishings, which fell 5.2% in price, and Industrial chemicals, which fell by 2.0%, saw price changes greater than 1.0%...meanwhile, of the 0.7% jump in prices for final demand services, roughly three fifths of it was due to a 1.4% increase in margins for final demand trade services, a measurement of changes in margins received by wholesalers and retailers; of that, the largest jumps were an 8.1% jump in margins for flooring and floor coverings retailing and a 4.7% increase in margins for chemicals and related products wholesaling...

Foreclosure Starts, Mortgage Delinquencies, and New Mortgages All at New Lows in February

lastly, as we mentioned in opening, we'll now take a look at the Mortgage Monitor for February from LPS, aka Black Knight Financial Services, which we usually follow for its thorough graphics presentation on mortgage delinquencies and foreclosures, without spending much time on the other areas that this 30 plus page report covers, which includes mortgage modifications, home sales and prices, homebuyer credit ratings and a host of other special mortgage related topics as they come up....but this week we'll start by with the widely cited news from this month's Mortgage Monitor that new mortgage originations were at their lowest since their records began, at least a 14 year span that includes the worst of the housing bust....BKFS assures its clientele that home sales remain stable because cash sales now account for almost half of all transactions, and complains the reason for the decline in new mortgages is that credit standards have remained tight, so borrowers with lower credit scores have difficulty getting a mortgage...whatever the reason, it looks like individuals who need a mortgage are being squeezed out and replaced by investors and corporations with cash...the first graph below, from page 4 of the pdf presentation, shows that this decline in new mortgages is a fairly recent phenomena that seems to have begun last summer when the threat of a Fed pullback caused interest rates to spike…as recently as last spring, new mortgages were being issued at a 800,000 a month rate, but as of this report new mortgages have collapsed to under 300,000 a month…there may be some seasonality in play here, as this data is not seasonal adjusted, but it’s clear that last February still saw an elevated level of new mortgages…also note by the color coding that the lion’s share of mortgages (FHA/GNMA. VA, & GSEs), are government backed, with “other mortgages” in orange and TBD (To Be Determined) approvals in light blue accounting for just a sliver…

shifting our focus back to the monthly data on delinquencies and foreclosures, BKFS reported that 1,115,000 mortgages, or 2.22% of the total outstanding, remained in the foreclosure process, which was down from 1,175,500 home mortgages, or 2.35% of all loans that were in foreclosure in January and down from 3.38% in February last year; these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and February's total was the lowest percentage of homes in foreclosure since 2008...in addition, they reported new foreclosure starts were also at a multiyear low of 91,993, while in a separate report, RealtyTrac reported total foreclosure filings, including default notices, auctions and bank repossessions, were at the lowest since the 2nd quarter of 2007...in addition to homes in foreclosure, BKFS data showed that 2,991,000​ mortgage loans, or 5.97% of all mortgages, were at least one mortgage payment overdue but not in foreclosure in February, down from 3,140,000​ homeowners, or 6.27% of those with a mortgage, who were more than 30 days behind in January, which gives us a total of 8.17% of all mortgages either delinquent or in foreclosure in February...of those who were behind on their housepayments in February, 1,242,000 home owners, or 2.48% of the total, were seriously delinquent, which means they were 90 or more days behind on mortgage payments, but not in foreclosure at the end of the month....combining those seriously delinquent with those homeowners who were in foreclosure, we find that 4.70% of all homeowners remained in serious trouble at the end of the month... 

the graph below, from page 22 of the Mortgage Monitor pdf, shows the percentage of active home loans that were delinquent monthly since 1995 in red and in green the percentage of mortgages that had been in the foreclosure process monthly over the same period…obviously, the percentage of homes in foreclosure in green has been falling fairly steadily over the last two years and at 2.22% in February is now just over half of the October 2011 peak of 4.29% of mortgages in the foreclosure process…but notice we're still 5 times the pre-crisis foreclosure inventory of 0.44% from December 2005 that’s highlighted on the graph, so the percentage of homes in foreclosure is still a long way from normal …similarly, with delinquent mortgages shown in red at 5.97% of all mortgage outstanding in February, we’re down nearly 43% from the 10.57% of mortgages that were delinquent but not in foreclosure in January of 2010, but still well above the December 2005 delinquency percentage of 4.27% noted on the graph...the seasonality of mortgage delinquencies is also apparent in the track of the red graph, wherein they usually begin to increase at the begiinning of the school year and peak during the holidays, and then decline at the beginning of the year as homeowners catch up on all their bills after holiday shopping...in the face of higher heating bills this winter, we're surprised that decline in delinquencies has remained pronounced as it is...

the next graphic is a map from page 23 of the pdf which shows the percentage of homeowners who are either seriously delinquent or in foreclosure in each county in the US; those counties in the darkest red, including most counties in New York, New Jersey, Florida and Maine, have over 10% of their homeowners with a mortgage that is still in serious trouble; on the other hand, those in the darkest green, including many in N Dakota and other resource boom area,s approach zero percent of their homeowners either more than 90 days late or in foreclosure…

the next graph below, from page 17 of the mortgage monitor pdf,  gives us a count of the number of foreclosures initiated each month by the number of months that the homeowner was delinquent when the foreclosure was first initiated, with the number foreclosed in each given delinquency bracket on the left margin...in dark blue, we have the number of homes that were 6 months overdue when foreclosure was started, in orange we have the number 5 months delinquent when foreclosure was initiated, in teal blue, foreclosure starts in the 4 month bracket, while the 3 month delinquency bracket is in violet and the 2 month delinquents who were foreclosed on are in red...we can see early on in the mortgage crisis many homeowners were having foreclosure proceedings initiated after falling 3 months behind, and now most are delinquent for 6 months or more before foreclosures are started...BKFS wants us to note that there's been a large drop in foreclosure starts primarily in the 2 and 3 month delinquent brackets, which they blame on new rules from the Consumer Financial Protection Bureau...  

this next bar graph, from page 18 of the Mortgage Monitor, breaks out the number of mortgages becoming seriously delinquent each month and compares that to the number of foreclosures started in that same month…the number of foreclosure starts monthly is shown by the blue bar, while the number of delinquent mortgages that deteriorated to serious, ie, first became more than 90 days late, is shown in red for each month...the blue line on the graph shows that the ratio of serious deterioration to foreclosure starts is at the highest level since 2010, and that also is in part because of delays imposed on the foreclosure process by CFPB rules...the number of seriously delinquent mortgages is actually down in February after remaining in the same narrow range over the previous 5 months, while the number of foreclosure starts has been dropping monthly since October, raising the ratio...

the last two graphics relate to the lengthening period of time that those are in foreclosure remain mired in the process...the graph below, from page 19 of the pdf, shows the historical pipeline ratio for judicial states, where a court proceeding is necessary to complete a foreclosure, in blue, and the same ratio in non-judicial states, where such a proceeding isn't necessary for the banks to have the the home seized, in red....as the graphic indicates, the pipeline ratio is computed by adding those homes that are seriously delinquent to those already in foreclosure and dividing that by the average number of completed foreclosures per month over the previous 6 months; what that results in is the average number of months a problem home loan would be in the "foreclosure pipeline" at the current pace of foreclosure in each state before the foreclosure process on all seriously delinquent homes is completed…obviously, early on in the crisis, the process was much longer for judicial states, with their average reaching 118 months and the foreclosure pipeline ratios reaching 50 years for New York and New Jersey, but as we can see on the graph, the difference has closed as judicial states have moved to speed the process...still, the pipeline ratio now averages 51 months, or more than 4 years for judicial states, and 45 months and rising for non-judicial states...the reason for the increase in the foreclosure pipelines recently is not so much delays in court anymore but procrastination on the part of the mortgage servicers and banks, possibly because they've experienced quite a bit of deterioration in the properties they've seized, and would rather have them occupied by delinquent homeowners than ravaged by vandals...as of February, seriously delinquent homeowners have averaged 481 days in their homes since first becoming seriously delinquent, while those in the foreclosure process have been delinquent on their mortgages for an average of 956 days without a foreclosure sale... 

in the final plate, from page 20 of the Mortgage Monitor, we have a map showing the average length of time a home in foreclosure has been delinquent for each county in the US, and as the heading indicates, the average nationally is now greater than 2.6 years...in those counties shown in red, properties have remained in the foreclosure pipeline for an average of  1,000 days or more since they first became seriously delinquent on their mortgage...and although the scale indicates that those counties shown in green could have been delinquent as few a zero days, we know that's not precise because homeowners who have never been late in paying on their mortgage would not be in foreclosure..

(the above are the comments that accompanied my regular sunday morning links emailing, synopses which in turn were mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)

March employment; February trade, factory orders, construction spending, et al..

We Add 192,000 Mostly Low Paying Jobs in March

it should go without saying that the most important economic release the past week was the March Employment Situation Summary, covering the two surveys taken during the week of the 12th, the establishment survey, aka the Current Employment Statistics (CES), of roughly 26% of all businesses and government agencies nationwide, and the household survey, also known as the Current Population Survey (CPS), of roughly 60,000 representative households...in March, seasonally adjusted data derived from the establishment survey indicated that non-farm payroll employment rose by 192,000 to 137,928,000, a little less than what was expected and close to the slow monthly job creation trend of the past two years; in addition, non-farm payroll gains for February were revised to a seasonally adjusted 197,000 jobs from the previously reported 175,000, and January's job increase was revised upwards again, from 129,000 to 144,000...these changes are all incorporated into the FRED bar graph below, which shows the number of payroll jobs gained monthly above the '0' line and job losses below the line since the beginning of 2008...a number of commentators mentioned that this report finally marks the recovery of all the jobs lost in 2008 and 2009, not withstanding the increases in the working age population over the past 6 years....the unadjusted data indicates 743,000 jobs were added in February and another 941,000 in March to bring actual employment at month end to 137,135,000, as seasonal hiring has begun in some parts of the country...

the seasonally adjusted job gains in March were widespread across most sectors, with only manufacturing showing a net reduction of 1,000 jobs, as non-durable manufacturing industries lost 9,000 jobs, 4,600 of which were in food production...the large professional and business services sector added 57,000 jobs in March, exactly half of which were in temporary help services, with computer systems design also seeing the addition of 6,100 jobs...another 34,000 jobs were added in the broad education and health services category, 27,000 of which were in health care and social assistance; of those, 8,500 were in home health care services, while nursing care facilities cut 5,200...in addition, 29,000 jobs opened up in leisure and hospitality with an increase of 30,400 working at food services and drinking places, while 21,300 jobs were added in retail sales with the addition of 9,000 employees at food and beverage stores...meanwhile, 7,100 jobs were added in wholesale trade as durable goods wholesalers added 10,000 with small job losses elsewhere, and 7,900 were added in transportation and warehousing with the addition of 3.300 truck drivers...construction employment rose by another 19,000, 6,000 of which were in residential specialty trades, and the mining and logging sector also added 7,000 jobs, 5,400 of which were in support activities for mining...elsewhere, the information industry added 2,000 jobs, financial activities added 1,000 as gains in real estate offset jobs losses elsewhere, and overall jobs in government sector were unchanged as federal employment fell by 9,000, state employment fell by 2,000, and local governments added 11,000 workers...

the screenshot of our FRED bar graph below shows the seasonally adjusted monthly change in payroll employment in selected sectors since the beginning of 2013, with the scale on the left indicating the increase of payroll jobs in thousands when the colored bar for that sector extends upwards, and the decrease in jobs in thousands in that sector when its bar points downwards…in each monthly grouping of 8 bars, the monthly change in manufacturing employment for that month is indicated in blue, the change in monthly construction employment is in red, the monthly change in retail employment is in dark green, the monthly change in government jobs is in yellow, the change in employment in the large professional and business services sector, which could be anything from a manager to a janitor, is in grey, while the change in jobs in bars and restaurants is in light green, health care jobs are in orange, with private education jobs shown in violet..a 1000 pixel interactive of this graph should be available at the FRED website, where you'll be able to step through the data for each job type by moving your cursor across the graph, or expand the view with the slider on the bottom to take in more months...

other data from the establishment survey indicated that the average workweek for all payroll employees recovered to 34.5 hours in March after falling to 34.3 over January and February while the average workweek for production and nonsupervisory employees similarly recovered to 33.7 hours after previously falling to 33.4 hours....the manufacturing workweek increased by 0.4 hours to 42.0 hours, and factory overtime rose by 0.1 hour to 3.5 hours......the average hourly pay for all workers, however, fell a penny to $24.30, as construction, leisure and hospitality, and education and health service sectors all saw their pay drop by 4 cents an hour or more while the data showed utility workers saw a drop of 41 cents an hour in their pay...excluding management, average pay for nonsupervisory workers was down 2 cents to $20.47, with hourly pay cuts for line employees in those sectors somewhat more modest...

Labor Force Participation up 0.2% in March on 476K Jump in Employed

meanwhile, the returns from the March household survey improved considerably from the weakness we saw in February, as it showed a 476,000 seasonally adjusted increase in those reporting they were employed, while the extrapolated count of the unemployed rose by 27,000...with that corresponding 503,000 increase in the civilian labor force, the labor force participation rate rose 0.2% from 63.0% to 63.2%, and as the working age population rose by 173,000, the employment rate, also known as the employment to population ratio, also rose by 0.1% to 58.9%...thus, the count of those not in the labor force fell by 331,000, it's third consecutive decline after hitting an all time high of 91,808,000 in December... however, with greater participation in the labor force, the unemployment rate remained unchanged at 6.7%, although we should note with the small sampling in this survey, there's a margin of error in the unemployment rate of +/- 0.2%, while the margin of error in the count of the unemployed is +/- 300,000....also note that the unadjusted household data showed a 956,000 increase in those employed, while the count of the unemployed fell 356,000…the screenshot of our FRED graph below shows the track of the two metrics from this survey that we follow since 2000; the labor force participation rate is in red and the employment-population ratio is in blue...it's fairly obvious even without checking the interactive version of this graph that both metrics are off their recent lows...

of the seasonally adjusted total of 145,742,000 of us who counted as being employed in March, 27,695,000 were reported as working part time, or less than 34 hours in the reference week, an increase of 365,000 part time workers over February's count...of those, the count of those working part time who would rather work full time rose by 225,000 to 7,411,000, and thus the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", rose by 0.1% to 12.7%...meanwhile, the number of us unemployed for more than 27 weeks fell by 110,000 to 3,739,000 and the average length of time of unemployment for those jobless fell from 37.1 weeks to 36.6 weeks...among the 91,630,000 of us not officially in the labor force and hence not counted as unemployed, 5,891,000 reported that they still want a job, down from 6,091,000 in February; of those, 2,168,000 were categorized as "marginally attached to the labor force" because they had looked for work sometime during the last year, but not during the 30 day period covered by the March survey...698,000 of those were further characterized as "discouraged workers", because they reported that they haven't looked for work because they believe there are no jobs available to them...and of course, those who don't look for work aren't counted as unemployed..

February Trade Deficit Jumps 7.7% on Lower Exports of Gold, Petroleum Products, and Passenger Jets

the other important release of this past week was the report on our International Trade in Goods and Services for February from the Commerce Department, which showed our seasonally adjusted trade deficit jumped $3.0 billion in February to $42.3 billion, while January's trade deficit was also revised upwards from $39.1 billion to $39.0 billion...our seasonally adjusted exports decreased $2.0 billion to $190.4 billion as our exports of goods decreased $2.0 billion to $131.7 billion while our exports of services was nearly unchanged at $58.7 billion, and our imports of goods increased $1.0 billion to $232.7 billion as our imports of good rose $0.2 billion to $193.4 billion, while our imports of services increased $0.8 billion to $39.3 billion; the later was accounted for by an $0.8 billion increase in royalties and license fees, mostly for the rights to broadcast the Winter Olympics...the screenshot of our FRED bar graph below shows the monthly change in exports in blue and the monthly change in imports in red over the past two years, with the net of them resulting in the change in the balance of trade, which is shown in brown...each group of three bars represents one month’s of trade data, with positive changes above the ‘0’ line and negative changes below it; note that when exports (blue) increase in a given month, they add to the trade balance change in brown; and when exports decrease, they subtract from the brown trade balance bar, while the action of imports on the balance is just the reverse, ie, when imports increase in a given month, they subtract from the brown trade balance for the month, but when imports decrease, the balance of trade rises as a result…the interactive version of this bar graph at FRED loads with 20 years of trade data, which you can view monthly by moving your cursor across the graph, or use the sliders across the bottom of the graph to adjust the time period viewed...

end use categories of exports that saw seasonally adjusted decreases in February included industrial supplies and materials, which were down by $2,667 million on $1,207 million less exports of non-monetary gold, $851 million less exports of petroleum products other than fuel oil, and a $277 million decline in exports of fuel oil, and also $894 million less exports of capital goods, which was entirely accounted for by the $904 decrease in exports of civilian aircraft; exports which increased in February included consumer goods, which rose $1,187 million on a $471 million increase in exports of pharmaceuticals, $441 million more gem diamond exports, and $365 million more exports of jewelry, and exports of other goods not categorized by end use rose $636 million...exports of automotive vehicles, parts, and engines also rose by $96 million, while exports of foods, feeds, and beverages rose by just $18 billion as small increases in several line items were offset by a $250 million decrease in soybean exports...

end use categories of imports that saw seasonally adjusted increases for the month included vehicles, parts, and engines, which rose by $1,003 million to $25,886 million, consumer goods, which increased by $122 million on a $572 million increase in imports of pharmaceuticals and a $177 million increase in imports of cotton apparel and household goods, which were partially offset by $184 million lower imports of artwork and antiques, $163 million less imports of furniture and similar household goods, and $162 million lower imports of televisions and video equipment, and other goods not categorized by end use, imports of which rose $58 million...on the other hand, our imports of capital goods decreased by $1,157 million on $596 million less computer imports, $331 less imports of computer accessories, and $204 lower imports of telecommunications equipment, and our imports of industrial supplies were $307 million lower on an $845 million decrease in imports of crude oil, which more than offset increases of $337 million in fuel oil imports and $336 more natural gas imports, and our imports of foods, feeds, and beverages fell $51 million as a $89 million decrease in imports of in alcoholic beverages, $70 million less imports of feedstuffs and foodgrains, and $70 million less of food oils and oilseeds were offset by $149 greater imports of cocoa beans and $74 million more in imported meat products....
…

in other reports, the week began with a number of manufacturing surveys...on Monday, the Chicago Institute for Supply Management released the results of their survey of Midwest purchasing managers and found their overall Business Barometer decreased 3.9 points in March to 55.9, the lowest reading since last August, led by a decline in new orders, while their employment index fell from 59.3 to 50.0, indicating no growth; for the 1st quarter, the Chicago Business Barometer averaged 58.4, down from 63.3 in the 4th quarter of last year, indicating slower growth...also on Monday, the Dallas Fed reported that Texas Manufacturing Strengthened Further, as their general business activity index rose to a six-month high of 4.9 as their new orders index rose to a nine-month high of 14.7, wherein readings above zero indicated expansion...then on Tuesday, the two national Purchasing Managers' Indexes (PMIs) were released; the Institute for Supply Management (ISM) reported their PMI was at 53.7% in March, up from 53.2% in February, as its components all indicated modest growth; the employment index slipped to 51.1%, down from 52.3%, the new orders index rose to 55.1%, up from 54.5% in February, and the production index rose to 55.9%, a 7.7% jump from February's reading of 48.2%...meanwhile, the Markit US Manufacturing PMI for March (pdf) fell to from 57.1 in February to 55.5, a reading that still indicated expansion, as their output index fell from 57.8 to 57.5 and the new orders index fell from 59.6 to 58.1...on Thursday, the ISM released their Non-Manufacturing Index (NMI) for March, which came in at 53.1%, rebounding from the four year low of 51.6% in February, indicating that a modest expansion of service industries had resumed..

the hard data on manufacturing came from the February Full Report on Manufacturers’ Shipments, Inventories and Orders (pdf) from the Census bureau, more commonly referred to as just "factory orders", which reported that seasonally adjusted new orders for manufactured goods increased $7.5 billion, or 1.6% in February to $488.8 billion, while January's decrease in new orders was revised from 0.7% to 1.0%...like last week's advance report on durable goods, the increase in new orders was driven by the volatile new orders for civilian aircraft, which rose 13.4% in February, revised slightly from the 13.6% gain reported last week, although the 2.2% increase in durable goods orders overall was unrevised ...excluding the transportation sector, new factory orders rose 0.7% for the month, as new orders for non-durable goods rose 1.0% to $259.7 billion...meanwhile, factory shipments increased $4.5 billion or 0.9% to $493.5 billion, nearly recovering the pullbacks of 0.3% in December and 0.7% in January shipments, while factory inventories increased $4.1 billion or 0.7% to a new record high at $642.1 billion; inventories of transportation equipment, which were up $1.9 billion or 1.6% to $125.1 billion, led the increase...and despite the recent weakness in new orders, unfilled orders for manufactured goods rose for the 12th month of the last 13 months by 0.3% to $1,062.5 billion, also a new record high for unfilled factory orders....and in a separate report on Tuesday, light vehicle sales rose to an estimated seasonally adjusted annual rate of 16.38 million in March, a seven year high, 7.2% over February's sales and 7.3% above sales a year ago...the graph below, from Bill McBride’s coverage, shows new vehicle monthly since January of 2006; the slow climb in car sales from an annual rate below 10 million in early 2009 to the precession level currently is readily apparent…

also on Tuesday, the Census bureau reported on Construction Spending for February (pdf), a preliminary report that is often subject to revision... during February, construction spending was estimated to be at a seasonally adjusted annual rate of $945.7 billion, which would be 0.1% (±1.3%)* above the revised January estimate of $944.6 billion, and 8.7 percent (±1.6%) above construction spending estimate of last February...January's construction was revised up more than 0.1% from the originally reported $943.1 billion...both private and public spending increased by the same small fraction of a percent; private construction was at a seasonally adjusted annual rate of $680.0 billion, up 0.1% from the revised January estimate of $679.1 billion, while public construction spending was estimated at a seasonally adjusted annual rate of $265.7 billion, also 0.1% above the revised January estimate of $265.5 billion...private residential construction fell from an annual rate of 363,215 million in February to a $360,352 million rate in March, while private non-residential spending rose from a $315,843 million annual rate to a $319,626 million rate...for the year preceding this report, private residential construction rose 13.5%, private non-residential construction rose 12.5%, and public construction was down 1.0%...

(the above is the commentary that accompanied my regular sunday morning links emailing, synopses which in turn were mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)

How To Misuse a Warp Drive - deGrasse Tyson

3rd estimate of 4th quarter GDP; February personal income and spending; new reports on home sales and prices, et al

it's been a fairly busy week for economic news releases, with the two important reports, the 3rd and final estimate of 4th quarter GDP, and data on Personal Income and Spending for February, coming at the end of the week; earlier we saw several reports on home prices, the Census survey on new home sales, and the report on pending home sales from the NAR, and also March reports on consumer confidence from the Conference Board and Reuters / U Michigan; for manufacturing, the Census released the monthly report on shipments, inventories, and new orders for durable goods, and there were regional reports on manufacturing from the Richmond Fed and Kansas City Fed, as well as a report from the labor department on productivity and costs by manufacturing industry...in addition, the labor dept also released their monthly report on employment and unemployment by state for February, which gives us a more detailed breakdown of the same data we saw in the employment situation reports we saw three weeks ago...

  on Monday, we saw the release of the Chicago Fed National Activity Index for February (pdf), a composite of 85 different economic metrics grouped into four broad categories of data: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories, and constructed such that index values above zero indicate growth above the historical trend, while negative values in the index indicate below trend growth; in February, the Chicago Fed found that 3 out of 4 of the broad categories of indicators that make up the index increased from January, and 2 of the 4 categories were positive, as the index increased to +0.14 in February from –0.45 in January, while the less noisy 3 month moving average decreased to –0.18 from +0.02 in January, its first negative reading in six months...production-related indicators reversed their January weakness, adding 0.26 to the February index, after subtracting 0.38 in January; employment-related indicators subtracted 0.02 from the index, after adding 0.13 in January, while the sales, orders, and inventories category added 0.6% to the index in February after a neutral reading in January, finally, the contribution from the consumption and housing category, which was negative in both months, subtracted 0.16 in February after subtracting 0.19 from the index in January...

on Tuesday, the Census Bureau and HUD released New Home Sales for February, a report that typically has the largest margin of error and is subject to the largest revisions of any census construction series; sales of new single-family houses were reported at a seasonally adjusted annual rate of 440,000 in February, which was 3.3 percent (±17.9%)* below the revised January rate of 455,000, and 1.1 percent (±15.2%)* below the estimate of 445,000 in February last year...again, the asterisk on the numbers in a Census report indicates that due to the small sampling and the possibility of errors, they don't have sufficient data to determine whether new home sales rose or fell in February or over the preceding year...the expression "3.3 percent (±17.9%)" for February indicates that it's 90% likely that at the rate of new home sales for the month, when projected over an entire year, would be in a range between 375,760 and 533,280...similarly, new home sales from a year ago might have been an increased 14.1% or decreased 16.3%; they just don't have enough data to know one way or the other...based on field agents reporting, an estimated 35,000 new homes actually sold in February, up from 33,000 in January; the median new home sales price in February reportedly was $261,800, and the average sales price was $317,500...

January Case-Shiller Home Prices Index Up 13.2% from a Year Earlier

as it was the last week of the month, Tuesday also saw the release of the Case-Shiller home price indexes for January, which indicated that prices received for homes sold over the three month period from November to January slipped 0.1% in the 20 cities covered compared to home prices vis-a-vis the 3 months ending December, but were nonetheless 13.2% higher than the same period last year... 12 of the metro areas saw home prices decline, with Chicago area prices, off by 1.2%, declining the most, while Las Vegas prices, up 1.1, seeing the largest increase...this was the third small monthly decline in the price index in row, typical for this time of year, and we wouldn't be surprised to see next month's index, covering the heart of winter, see a decline as well...the Composite 20 index, which was formulated so that home prices in the 20 metro areas included equaled to 100.00 in 2000, was at 165.50, off 18.7% from the peak of 206.61 set in April of 2006, and up 20.8% from the recent low of 137.05 set in February 2012...

as a result of the recent changes at the St Louis Fed's FRED graphs website, the pair of FRED graphs we created to show the historical track of home prices in each of the cities in the 20 city index can now be viewed interactively, although not on all websites, nor via email; for now, we are including interactive versions of each of those graphs below; you can move your cursor across the graph and view the monthly history of the changes in the price indices for all 20 cities...recall that these indices do not reflect prices, just the difference in price relative to other months on the chart, and relative to the setting of 100.00 that all cities were set at in 2000 when the index was established, which is the start date for both of the charts below... in the first FRED graph, we have the tracks of home price indexes for Atlanta in bright blue, Boston in bright red, Charlotte in dark green, Chicago in orange, Cleveland in purple, Dallas in grey, Detroit in mauve, Denver in mustard, Las Vegas in dull blue, and Los Angeles with the highest price track on this chart in beet red (for the larger interactive view of this graph at FRED, click here) 

the second FRED graph shows the the historical price track of each of the metro home price indexes for Miami in bright blue, Minneapolis in bright red, New York in dark green, Phoenix in orange, Portland in violet, San Diego in grey, San Francisco in mauve, Seattle in mustard, Tampa in dull blue and Washington DC in beet red; in addition, this second chart includes the track of the Case-Shiller Composite 20 shown as a heavier black line…again, click here for the larger 1000 pixel interactive version of this graph at the St Louis Fed web site, where all the lines can be easily traced with their interactive tool…

we have recently learned that FRED will discontinue carrying data from S&P, which includes all 179 series of S&P/Case-Shiller Home Price Index data, from which the above graphs were created...we intend to leave these interactive versions of the graphs here above, where they'll viewable until they stop functioning or the data becomes obsolete, after which time they’ll be replaced with still pictures...the interactive FRED graphs have performed differently using different operating systems and browsers, so if you have trouble viewing them, let me know, i'll pass it on to the site developers...

the other widely watched housing market release this week was of the Pending Home Sales Index for February from the National Association of Realtors, which fell 0.8% to 93.9 from a downwardly revised 94.7 in January, the largest drop in 3 years and the 8th month in a row that this index has fallen...this index, which is now 10.5% lower than last February, is based on the level of home sales contract signings during 2001 being equal to 100, and it's drawn from a sample representing roughly 20% of transactions for existing-home sales; home sales are considered pending when the contract is signed but the sale has not yet closed, and this index generally leads existing home sales by a month or two...in terms of the period of home sale closings included in the Case-Shiller home price index for January which we've just reviewed, which includes closings from the beginning of November, then, these pending sales are 3 to 7 months in the future, which puts those delayed prices into a bit of perspective... although the NAR blamed the weakness in this report on the weather, the index for the South was off 9.3% year over year, while the index in the West was 16.5% below a year ago...

on Wednesday, the Census Bureau released the February Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders (pdf), which estimated that the widely watched new orders for manufactured durable goods increased $5.0 billion, or 2.2%, to $229.4 billion in February, after a 1.3% decrease in new orders in January...as is usually the case, new orders for civilian aircraft, which were up 13.6% in February, made all the difference; without the volatile transportation sector, new orders increased just 0.2%...new orders for defense aircraft were also up 21.1%, while the important new orders for nondefense capital goods were off 2.8%....this release also reported that February shipments of durable goods increased 0.9% over January to $234.0 billion, more than reversing the weather related January decline in shipments of 0.6%, while inventories of durable goods increased $3.2 billion or 0.8% to $392.3 billion, a new record high...unfilled orders for manufactured durable goods were also at a new record high in February, as they rose $2.9 billion or 0.3% to $1,062.6 billion...in other manufacturing reports, the Richmond Fed, whose district includes the Virginias, Maryland, the Carolinas, and the District of Columbia, reported that manfacturing in that region continues to contract, as their manufacturing composite came in at a minus 7 in March, slightly worse than February's minus 6, while the Kansas City Fed reports their month-over-month composite index was at 10 in March, up from 4 in February, indicating a greater expansion of manufacturing in their district, which includes western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico..

Fourth Quarter GDP Growth Rate Revised to 2.6%

the 3rd and final estimate of 4th quarter and full year GDP from the Bureau of Economic Analysis indicated that our real total output in goods and services grew at a 2.6% seasonally adjusted annual rate in the 4th quarter and by 1.9% for the full year, ie, from 2012 to 2013...in current dollars, before adjusting for inflation, our 2013 GDP was $16.7997 trillion, up 3.4% from the $16,2446 trillion GDP of 2012...recall that the first or advance GDP estimate had the 4th quarter growth rate at 3.2%, while the 2nd estimate a month ago lowered that to an annualized growth rate of 2.4%...major factors in this revision were larger than previously estimated personal consumption expenditures for services, which were partially offset by markdowns of investment in intellectual property and inventories...exports, imports and government investment and consumption were virtually unchanged from the second estimate...as we review the details, remember that the change in "real" GDP components reported here is not a measure of the change in dollar value of our goods and services, but a measure of the change in our units of output, and thus all percentage changes cited in this report are based on inflation adjusted chained 2009 dollars...also note all the quarterly percentage changes noted herein are at an annual rate, ie, written as if the actual growth in the quarter were extrapolated over an entire year... 

the seasonally adjusted 4th quarter growth rate in real personal consumption expenditures at 3.29% actually came in closer to the first estimate of 3.34% than the revised estimated growth rate of 2.6% reported in the 2nd estimate last month; however, consumption of goods in this 3rd estimate were somewhat lower; the entire change in increased PCE came from increased consumption expenditures for services, which grew at a 3.5% annual rate and accounted for 1.57% of the quarterly growth rate in GDP by themselves, which was a major revision of the 2.2% growth rate and an 1.00% addition to GDP reported in the 2nd estimate....more than a third of 4th quarter growth in  consumption of services was an increase in spending for health care services, which increased by a seasonally and inflation adjusted $24.4 billion rate in the quarter, while there were also sizable upticks in spending for food services and accommodations and increased outlays for financial services and insurance...spending for durable goods, meanwhile, increased at a 2.8% annual rate, not the 2.5% rate reported last month, and added .21% to GDP while consumption of non-durables was marked down from a 3.5% growth rate to a 2.9% rate and added 0.45% to GDP, as real purchases of food increased at a 3.15% rate in the 4th quarter...

there were also some significant revisions to previously reported figures for the components of 4th quarter real gross private domestic investment....real fixed private investment, which had been reported growing at seasonally adjusted 3.8% annual rate, is now revised to have increased at a 2.8% annual rate, as real investment in non-residential structures is now reported to have contracted at a 1.8% rate rather than the 0.2% growth rate reported last month, and the reported increase in investment in intellectual property was cut from an 8.0% rate to a 4.0% rate; meanwhile, the real increase in investment in equipment has been increased from a 10.6% rate to a 10.9% growth rate, and real residential investment is now seen contracting at a 7.9% annual rate rather than the 8.7% rate of contraction reported in the 2nd estimate...as a result of these revisions, the increase in non-residential fixed investment added .68 percentage points to the 4th quarter GDP growth rate, with equipment accounting for .58% of that, while non-residential structures subtracted .05% and intellectual property added .15%...meanwhile, the contraction in real residential investment subtracted 0.26% from the 4th quarter growth rate, not the 0.29% originally reported...in addition, instead of the increase in private inventories reported in earlier reports, inventories are now seen to have shrunk by an inflation adjusted $4.0 billion and thus subtracted 0.02% from GDP, a marked contrast to the 1.67 percentage points that inventory building added to the 3rd quarter GDP growth rate...thus, real final sales of domestic product, a metric which subtracts the change in unsold private inventories from GDP, increased 2.7% in the 4th quarter, compared with an increase of 2.5% in the 3rd, despite the fact that headline 3rd quarter GDP was up at a 4.1% pace, the strongest growth rate over the past two years...

as we mentioned earlier, there was little change in reported figures for exports and imports...to review, exports add to gross domestic product because they represent that part of our production that is not consumed or added to investment in our country, while imports subtract from GDP because they represent either consumption or investment that was not produced here...in the 4th quarter, real exports of goods and services increased at a 9.5% rate, which was up a tad from the 9.4% rate of increase reported a month ago, while real imports of goods and services increased at a 1.5% rate, same as was reported previously...as a result, the increase in exports added 1.23% to the 4th quarter growth rate, while the increase in imports subtracted .24% from it, making the total impact from an improving trade deficit nearly a point improvement in GDP..

in like manner, there were just minor revisions to the previously reported change in government consumption and investment...as you should recall, the 4th quarter of last year included a partial shutdown of the Federal government during October, hence that sector was a major drag on 4th quarter GDP figures, as real federal government consumption expenditures and gross investment fell at a 12.8% annual rate, which included a reduction in defense spending at a 14.4% rate, which reduced GDP by 0.70%, and a decrease in Federal investment and consumption expenditures at a 10.0% rate, which subtracted 0.29% from 4th quarter growth..since they still add up to a total 1.00% hit to GDP, any change from the 2nd estimate was not statistically significant...meanwhile, consumption and investment outlays by state and local governments is now reported as unchanged in the 4th quarter, and hence had no impact on the change in GDP; that was a minor positive revision from the previously reported decrease at 0.5% rate in state and local outlays..

below we have a screenshot of our regular FRED graph for this report, which has been updated with these latest revisions...each group of seven color coded bars shows the inflation adjusted contribution from each of the major GDP components for each quarter since the beginning of 2011... within each quarterly grouping of seven bars, the quarterly change in real personal consumption expenditures are shown in blue, the change in gross private investment, including structures, equipment and intangibles, are shown in red, the change in imports is shown as a negative in green, the change in exports are shown in purple, the change in private inventories is in yellow, the change in state and local government spending and investment is shown in pink, while the change in Federal government spending and investment is shown in grey...those components of GDP that contracted in a given quarter are shown below the zero line and subtracted from GDP in that quarter, those that are above the line grew during that quarter and added to GDP; the exception to that is imports in green, which subtract from GDP, and which are shown on this chart as a negative, so when imports shrink, they will appear above the line as an addition to GDP, and when they increase, as they have in the recent quarter, they'll appear below the zero line...we have removed the dating from this chart because it was in error, but you can view the accurate quarterly listing of all the data below using the interactive version of this graph at the FRED website...even without that, it's still clear from the chart below that the major contributions to growth in the 4th quarter were personal consumption expenditures in blue and exports in violet, while the Federal government shutdown was the major negative, as lower Federal outlays shown in grey took a whole point off the 4th quarter's growth rate...

February Incomes Rise 0.3% on Government Transfers; Personal Consumption Also up 0.3%

the major monthly release this week, also from the Bureau of Economic Analysis, was on Personal Income and Outlays for February, which in addition to the important personal income data, also reports the monthly data on our personal consumption expenditures (PCE), which as we just saw is the major component of GDP...from that data, the BEA also computes personal savings and the national savings rate, as well as the price index for PCE, which is the inflation gauge the Fed supposedly targets and which is used in this report to adjust both personal income and consumption expenditures for inflation....like the GDP reports, all the dollar amounts referenced by this report are seasonally adjusted and at an annual rate; so the monthly dollar changes, which are not reported, are actually on the order of one twelfth of the reported amounts... however, the percentage changes are expressed as a month over month change and are used within the report as if they refer to the annualized amounts, so it's often been misreported that way...

total personal income increased in February by a seasonally adjusted and annualized $47.7 billion rate to $14,398.8 billion, which was 0.3% higher than in January, when personal income also increased by 0.3%....disposable personal income (DPI), which is income after taxes, increased at an annualized rate of $42.3 billion to $12,706.2 billion, which was also a 0.3% increase over January, while January's DPI was up 0.3% over December, revised from the 0.4% increase reported last month...special factors were again a major factor in the income increases, as wages and salaries only rose at a $13.0 billion annual rate, or less than 0.2% over January... like January, the greatest increase in February incomes was from increases in current transfer receipts from the government to individuals, which added $18.6 billion to February incomes, after an increase of $29.9 billion of transfers in January; by far the largest of those was from expanded Medicaid coverage under Obamacare, which increased at an $11.4 billion rate in February after jumping at a $19.3 billion in January; meanwhile, increases in current transfer payments were partly offset by the loss of expired emergency rations for the unemployed, which reduced transfer payments by an annualized $2.5 billion in February and $16.7 billion in January....other sources of February income increases included incomes of individual business owners, which rose at a $7.7 billion rate in February, a bit less than the $8.0 billion increase in January; $2.0 billion of that was income of farm owners, down a bit from the $2.1 billion income increase they saw in January...in addition, rental income of individuals increased $3.1 billion and income on assets, such as interest and dividends, increased at an annual rate of $2.5 billion...

meanwhile, seasonally adjusted personal consumption expenditures (PCE) rose at an annual rate of $30.8 billion to $11,742.7 billion, 0.3% higher than PCE for January, which was revised down to a $20.0 billion increase over December, from the originally reported $48.1 billion January increase...most of the February spending increase was for services, as outlays for services rose at a $25.6 billion rate to an annualized $7,840.2 billion...spending for durable goods, on the other hand, was down for the 3rd consecutive month, dropping at a $2.3 billion rate in February to $1,250.0 billion, after falling $6.0 billion in January and $33.5 billion in December...meanwhile, spending for non-durable goods rose at a $7.4 billion annual rate to $2,652.4 billion after falling at a $23.6 billion rate in January....

while personal consumption expenditures account for more than two-thirds of our national product, before they can be included in real GDP they must be adjusted for inflation; that's done with the price index for personal consumption expenditures, which is based on chained 2009 prices = 100...that index rose to 108.017 in February from 107.936 in January, a month over month inflation rate of less than 0.1%; thus, inflation adjusted or real personal consumption expenditures rose by 0.2% in January, as did real disposable personal income...the PCE index for durable goods again fell 0.2% after falling every month last year, while the PCE price index for non-durable goods was unchanged for the second month in a row, while the 0.2% increase in the PCE price index for services accounted for the rise in the overall inflation rate...on a annual basis, PCE inflation is now near a 4 year low at 0.87%, far below the 2.50% PCE inflation rate the Fed has allegedly been trying to hit..

by adding interest payments and personal transfer payments to governments to personal consumption expenditures we find total personal outlays were running at an annual rate of $12,161.7 billion in February, an increase of $30.8 billion over January...subtracting that from national disposable personal income at a $12,706.2 billion rate tells us that personal savings grew nationally at a $544.5 billion rate in February, up from $535.9 billion in January...that increase was enough to generate a statistical uptick in the personal savings rate, which is total personal savings as a percentage of disposable personal income, from 4.2% to 4.3%...the screenshot of our FRED graph for this report below shows the monthly personal savings rate in green since January 2007, with the savings rate indicated as a percentage on the right margin of the graph...also shown is real disposable personal income in blue and real personal consumption expenditures in red over the same time frame, with the scale in billions of chained 2009 dollars for both on the left...the recent spike in income and savings you see on that graph was generated by year end tax shenanigans that pulled normal bonuses and dividends back in to December 2012 to avoid fiscal cliff related tax increases; the earlier spikes were as a result of the tax rebates enacted as a fiscal stimulus under George Bush….we have now embedded the interactive version of this graph below, so you can step through the monthly changes in each of those metrics by moving your cursor across the graph...

also on Friday, the BLS released their monthly report on Regional and State Employment and Unemployment Summary for February, which showed non-farm payroll employment increased in 33 states and decreased in 17 states and the District of Columbia, while the unemployment rate rose in 10 states, fell in 29, and was unchanged in the rest…seasonally adjusted non-farm payrolls by state and selected industry sector are here; the unemployment rate and other labor force data by state and for a few large metro areas is here…the bar graph below is from Bill McBride's coverage of this report, and it shows the current unemployment rate by state in red, from the states with the highest unemployment rates starting with Rhode Island at 9.0% on the left, to the lowest unemployment rate at 2.6% for N.Dakota on the right, with the peak unemployment rate each state hit during this long recession, that began in 2007, in blue…click here to view it full sized...

(the above is the commentary that accompanied my regular sunday morning links emailing, synopses which in turn were mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)

February reports on new home construction, existing home sales, consumer prices, and industrial production

 NOTE: sometime over the past week, the St Louis Fed, home to the FRED graphs, changed their graphs to an interactive format, which apparently necessitated eliminating some of the incompatible options which we've used in creating our graphs, and also left us with about half the differentiating color options we had available and used before the upgrade...as a result, most of the FRED graphs we've included here previously, which were all stored at the FRED site and which we'd always hyperlinked back there, were reformatted, which was an improvement in some cases, and in some cases made them virtually unreadable... however, you can now click the text links we've always used in referring to them to view our graphs as interactives...but since an interactive graph doesn't copy / paste into an email, this post was originally formatted with screenshots of the FRED graphs used, so we’re still experimenting with embedding the interactive graphs…if you see something that dont look right, we’re working on it, try back later...

reports we saw this week include those on consumer prices, industrial production, housing starts and existing home sales, and two regional Fed manufacturing surveys, in which the New York Fed and the Philadelphia Fed both reported improving conditions for that sector in their regions in March...there were also a few minor releases from the Bureau of Labor Statistics: Real Earnings for February, which adjusts the hourly earnings data from the employment report for inflation using the consumer price data published the same day; County Employment and Wages for the Third Quarter, and the Metropolitan Area Employment and Unemployment Summary for January...in addition, the Bureau of Economic Analysis reported that our current-account deficit shrunk to $81.12 billion in the 4th quarter of last year, it's lowest level in more than 14 years, as our trade deficit on goods fell from $178.4 billion in the 3rd quarter to $171.8 billion in the 4th, our surplus on services increased  from $56.9 billion in the 3rd to $57.9 billion in the 4th quarter, and our surplus on income increased from $59.1 billion in the third to $64.4 billion in the 4th quarter, as receipts on U.S.-owned assets abroad increased to $204.5 billion from $195.9 billion and payments on foreign-owned assets in the US increased to $137.8 billion from $134.6 billion....

on Tuesday, the Census Bureau released it's report on New Residential Construction for February (pdf), which you may recall is an inexact survey conducted by Census field agents that gives us a monthly estimate of new housing permits, starts and completions from a small sampling of sites and permit offices accessed....building permits were authorized at a seasonally adjusted annual rate of 1,018,000 housing units in February, which was "7.7 percent (±1.0%) above the revised January rate of 945,000" and "6.9 percent (±1.2%) above" last February's annualized rate of permit issuance....housing starts, which includes apartment units, were at a seasonally adjusted annual rate of 907,000, 2.0% (±12.1%)* below the revised January (annualized ) estimate of 909,000 and 6.4% (±9.9%)* below the February 2013 rate..note the asterisks indicate that Census does not have sufficiently accurate data to determine whether housing starts increased or decreased over the periods cited....based on data extrapolated from field reports, permits for 105,200 housing units were issued in February, 54,200 of which were for single family homes...similarly, the unadjusted monthly data on housing starts indicates an estimate of 62,400 units started, of which 40,100 were single family homes...

Existing Home Sales Slip to 19 Month Low in February

then on Thursday, the National Association of Realtors (NAR) reported on February Existing Home Sales, in which the ongoing slowdown in sales of existing homes was attributed to severe winter weather and higher prices caused by the tight inventory of homes available for sale...seasonally adjusted existing home sales fell 0.4% from an annual rate of 4.62 million in January to 4.60 million in February, a 19 month low, and 7.1% below the 4.95 million-unit annual rate homes were selling at last February...the median home price of homes sold in February was $189,000, 9.1% higher than a year earlier; with a $189,200 median for single family homes and a $187,900 median for condos and co-ops sold, while the average price of single family rose 7.1% to $236,900 and the average prices for co-ops and condos rose 9.4% to $240,400 (pdf source includes regional prices and sales)...it appears that a change in the mix of homes sold is a major factor in the average price increase, as distressed sales selling at a discount, ie, foreclosures and short sales, accounted for 16% of February sales, vis-a-vis 25% a year ago...the effect of this can be seen in the bar graph below, which is taken from an NAR graphics supplement (pdf) which shows that the number of homes selling below $100,000 has declined by 18.0% since last year, while homes selling for between $750,000 and a million and over $1 million have increased by 13.0% and 14.4% respectively over last February...

all cash sales continue to be a major factor in home sales; according to the NAR, all-cash transactions accounted for 35% of February sales, up from 33% of sales in January and 32% of sales a year ago...other sources put the percentage of all-cash transactions higher; RealtyTrac reports that all cash sales accounted for 44.4% of all home sales in January, while Goldman Sachs put the percentage of all cash home deals as high as 60%; since major institutional investors are pulling back from home buying, this suggests that the increase in cash deals is driven by either wealthy individuals or foreign buyers, although reports of such are usually anecdotal...the NAR reports that first time home buyers accounted for 28% of home purchases in February, up from 26% in January, but still down from 30% a year earlier and below their normal participation above 40%...it's widely assumed that student debt is having an impact on that; Freddie Mac reports that the average rate for a conventional 30-year fixed-rate mortgage fell to 4.30% in February, down from 4.43% in January, still low by historical standards despite being up from 3.53% a year earlier...

February Consumer Prices Increase 0.1% on Higher Rents, Meat and Fruit Prices

the Consumer Price Index for for All Urban Consumers (CPI-U) for Febraury indicated modest price changes for most everything except food as seasonally adjusted prices rose 0.1%, and the change in prices overall from a year earlier was just 1.13%...the unadjusted index itself, which is based on prices of 1982 through 1984 equal to 100.0, rose from 233.916 to 234.781...since energy prices were down while food prices were up in February, the core CPI, which is the index for all items except food and energy, was also up 0.1 in February, from 235.367 to 236.075, while the year over year change in core prices was essentially unchanged at 1.62%...

the seasonally adjusted energy index fell 0.5% in February after rising 0.6% in January and 1.6% in December, but was still down 2.5% over the preceding year...despite the fact that fuel oil rose 4.1% for the month, the energy commodities index was down 1.3% because prices for gasoline, which accounts for more than 90% of the index, fell 1.7% and was 8.1% lower than last February...prices for other fuel commodities, ie, propane, kerosene, and firewood rose 10.7% in February and were up 37.5% year over year ...the price index for energy services rose 0.7% on a 3.6% increase for utility gas service while the cost of electricity fell 0.2%; in the year ending February, electricity prices rose 3.8% and natural gas prices rose 8.3%..

the seasonally adjusted food price index rose 0.4% in February as the food at home index rose 0.5% and the food away from home index rose 0.3%, as prices at full service restaurants rose 0.4%, fast food prices rose 0.2%, while meals at work and schools were 0.6% lower; for the year ending February, the food index had increased by 1.5% on a 0.9% uptick in the food at home index and a 2.2% increase in prices for food away from home....higher prices for meats and fruits, typically attributed to drought in California and Texas, were the primary driver of the higher food at home index...the meats, poultry, fish, and eggs index was up 1.2% on beef prices that were 4.0% higher, egg prices that rose 2.2%, and fish and seafood prices that were 0.9% higher than in January; for the year, meat prices rose 3.6%, poultry prices rose 2.5%, and egg prices were 5.7% higher...in addition, the fruit and vegetable index rose 1.1% in February but was still down 0.4% for the 12 month period highlighted here; driving the higher prices in February were a 3.4% increase in both apples and oranges and a 4.0% increase in other fresh fruits, while fresh vegetables fell 0.2% on 3.5% cheaper lettuce, while the processed fruits and vegetable index rose 0.5%...dairy products were also 0.7% higher in February, as cheese and related products were priced 1.6% higher, but the full year increases were less, at 0.6% for the dairy group and just 0.2% for cheese...meanwhile, the index for cereals and bakery products was 0.4% lower in February as breakfast cereals were priced 1.1% lower, the rice, pasta, & cornmeal group fell 0.9%, bread was 0.1% lower while prices for flour and mixes rose 1.6% and cookie prices rose 0.7%...prices for beverages were also modestly lower, by 0.3%, as juices fell 0.2% and roast coffee prices averaged 0.4% lower, while prices in the miscellaneous category of other foods at home rose 0.2% as pickles and relishes rose 2.8%, salad dressings rose 0.4%, peanut butter prices fell 0.5% and soups were priced 1.5% cheaper...on a year over year basis, only 2 food line items showed price changes greater than 10%; lettuce prices fell 20% while oranges were up 12.2% over a year earlier...

excluding food and energy, most of the seasonally adjusted price changes to core CPI components were modest in February, with a 0.2% increase in the major shelter index accounting for half the rise in the core price index, as both rent and owner's equivalent rent rose by 0.2% and lodging away from home rose 0.6%....prices for apparel, on the other hand, were down 0.3% as women's apparel fell 1.3%, women's footware rose 2.1%, men's apparel rose 1.2%, and prices for men's footware fell 0.8%...meanwhile, the index for medical care rose 0.3%. as prices for medical care commodities rose 0.6% on prescription drug prices that were 0.9% higher while prices for personal medical equipment fell 0.4%, and the index for medical care services rose 0.2% as hospital services were 0.6% higher while physician's services fell 0.1%...in addition, the index for transportation commodities not including fuel was unchanged as new cars and trucks prices that were 0.1% higher were offset by used car and truck that were down 0.1% and tire prices that were 0.3% lower, while prices for transportation services were up 0.3% on 0.5% higher car and truck leasing and a 1.2% hike in airline fares, while motor vehicle registration and license fees were unchanged and prices for other intercity transportation fell 1.2%.... also, the recreation price index was up 0.1% as recreation commodities were unchanged as 0.9% lower TV prices and a 4.1% drop in prices for photographic equipment were offset by 1.2% higher prices for audio equipment and toy and bicycle prices that were 0.7% higher, while recreation services rose 0.1% as pet services rose 0.4%, admission to sporting events rose 1.0% and rental of video and audio discs and other media fell 0.8%...and lastly, the education and communication index was also up 0.1% as education and communication commodities fell 0.5% on 2.2% lower prices for telephone hardware and similar consumer information items. while textbooks and school supplies were priced 0.9% higher; then education and communication services were 0.2% higher on 2.4% higher postage and delivery services and 0.7% higher tuition, while prices for telephone services fell 0.4%...on a year over year basis, only two line items among CPI components showed price changes greater than 10%; video disc and similar media services have declined by 11.8%, and televisions are 12.6% cheaper than they were a year earlier...

the screenshot of our new FRED graph below shows the monthly change in each of the major component indexes of the CPI since January 2000, with all of the indexes reset to the beginning of the recession of March 2001; admittedly, that’s odd, but at the present time FRED is refusing to save graphs reformatted to observation dates other than from the beginning and end of a recession (i have already complained)…as you may recall, we’ve formatted CPI graphs similarly in the past in order to compare the price growth of each of these components over time, and because a few of there indexes were created based on 1997 prices = 100 while the rest are 1982-84 prices = 100, we’ve remarked them all to the same date to make for an apples to apples comparison…so in blue, we have the relative track of the price index for food and beverages; in red, we have the reset price index for housing, which includes rent, homeowners equivalent rent, utilities, insurance & everything to do with household operations; in violet, we have the price changes for apparel, which is obviously the only index to show a net price decline over the decade; meanwhile, changes in the volatile transportation price index, in brown, are showing the impact of gas prices on the cost of transportation, while the relative change in the index for medical care in orange has obviously risen the most over the period…next, the price changes for education and communication are tracked in dark green, and our last reset index, in bright green, is for recreation prices...

Industrial Production Up 0.6% in February, Rebounding from January Downturn

for February industrial production, the surprising weakness that was seen when January's data disappointed with a downturn was more than reversed with a 0.6% increase in February, as the Fed's G17 report on Industrial production and Capacity Utilization for the month showed that the seasonally adjusted industrial composite index for all industry, which was set in 2007 equal to 100.0, rose to 101.6 in February from 101.0 in January; although it was occasionally reported that January's change was revised upward to a 0.2% decline, this occurred because the December index was revised down from 101.4 to 101.2; January's index remained unchanged...combining that with a similar revision to November in the opposite direction left the industrial production for all industry 2.8% above it's level of a year earlier...the manufacturing index, which accounts for three-fourths of total production, rose 0.8%, from 96.4 to 97.2, which, when combined with the revision to January, left it at the same level as in December and 1.5% above the year earlier reading...the mining index, which includes gas and oil production, rose 0.3%, from 122.8 to 123.2, bringing its year over year increase to 6.1%....and while the utility index fell 0.2%, from 107.2 in January to 107.0 in February, it was still 3.6 above the December level of 103.4, and 8.3% above a year earlier...since these seasonally adjusted readings for January and February represent utility usage above the seasonal norms, we can expect this index to retreat when temperatures return to a more seasonal level...

in addition to the breakdown of industrial production into its three industry groups, this release also reports on industrial production by market group...among final products and nonindustrial supplies, which accounted for 53.22% of industrial output in 2013, February production of consumer goods rose 0.8% after falling 0.5% in January, as seasonally adjusted production of durable goods rebounded from a 2.7% downturn to a show a 2.1% increase; that was in turn driven by a 4.6% increase in production of automotive products, which were rebounding from a 5.1% pullback in January that was said to be weather related; production of durable appliances, furniture and carpeting, however, fell 1.7% in February after falling 0.4% in January...for the 12 months ending February, durable goods production rose 4.6% on a 6.9% increase in production of automotive products, while home electronics production rose 2.5%, production of appliances, furniture and carpeting rose 4.9%, and production of miscellaneous durable goods rose 1.1% from February 2013 to February this year...production of non-durable goods, meanwhile, rose 0.5% in February after rising 0.1% in January and was 2.0% ahead of last year's output; among non-energy non-durable categories, food and tobacco production rose 1.0% in February after falling 0.7% in January but still remained 1.0% below the year earlier output; clothing production fell 0.7% after falling 0.6% previously but was still 1.2% ahead of last years pace, in addition, output of paper products increased 1.1% in February after falling 1.2% in January and was now off 2.7% in the year ending with this report, while output of chemical products rose 0.9% in February and 2.1% for the year...meanwhile, output of energy, also included in non-durable totals, fell 0.8% in February after rising 2.3% in January and was now 8.4% higher than last February...

production of business equipment rose 1.3% in February after being down three out of the previous four months; production of transit equipment rose by 2.0% after falling 1.6% in January, while production of industrial equipment rose 1.6%, and production of information processing equipment fell 0.1%...since last February, production of business equipment has risen 2.8%, with production of transit equipment up 3.8%, production of industrial equipment up 2.1%, and production of information processing equipment up 2.1% from a year earlier...in addition, production of defense and space equipment rose 0.2% In February, which was 2.6% higher than a year earlier, and production of construction supplies rose 0.2%, but were only up 0.1% year over year, while output of business supplies rose 0.7% and posted a year over year growth rate of 3.1%...both supply indexes remain well below the 2007 level of 100.0 with the construction supply index at 82.9 and the business supply index at 93.7.....meanwhile, production of raw and intermediate materials that would input into other production processes rose 0.4% and were up 3.2% for the year ending February...

as we would expect with a sizable increase in production, the capacity utilization rate for all industry, expressed as the percentage of our plant and equipment that was in use during the month, also rose, from 78.5% in January to 78.8% in February; which is up from our capacity utilization rate of 78.1 in February of 2013...capacity utilization by all manufacturers rose from 75.9% to 76.4%, with the operating rate for NAICS classified durable goods manufacturers at 76.6% and capacity utilization by NAICS classified manufacturers of non-durables at 77.6%…among the durable goods manufactures, both makers of machinery at 82.5% and manufacturers of fabricated metal products at 87.5% saw their operating rates rise by 1.0% in February, while among the non-durable goods manufacturers, the operating rate for the paper products industry rose from 81.2% to 82.0%...meanwhile, capacity utilization by the 'mining' industry slipped 0.1%, from 89.2% to 89.1%, which given their higher production, suggests that oil and gas rig counts probably rose during the month; while the operating rate for utilities fell from 83.5% to 83.3%...

a screenshot of our FRED graph for this report below shows the seasonally adjusted industrial production index for all industry in black, the manufacturing production index in blue, the utility production index in green, and the mining production index in red from the beginning of the index year of 2007, at which time they were all benchmarked to equal 100.0; also shown below is the track of capacity utilization for total industry since 2007 in pink; note that it’s a percentage, rather than an index number like the other metrics we’re tracking on the same graph...

(the above is the commentary that accompanied my regular sunday morning links emailing, synopses which in turn were mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links that accompanies these commentaries, most from the aforementioned GGO posts, contact me…)