note on the graphs used here

sometime during the third week of March, 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 had used in creating our static graphs, and also left us with less options we had available and used before the upgrade...as a result, many of the FRED graphs we've included on this website previous to that date, all of which were all stored at the FRED site and which we'd always hyperlinked back there, were reformatted, which in many cases changed our bar graphs to line graphs, and some cases rendered them unreadable... however, you can still click the text links we've always used in referring to them to view versions of our graphs as interactive graphs on the FRED site, or in the case where an older graph has gone missing, click on the blank space where it had been in order to view it in the new format....





Monday, April 9, 2012

notes on march unemployment, february’s LPS mortgage monitor, et al, week ended Apr 7th

FRED Graph  the employment report for March, released this week by the BLS, was worse in its internals than the headline numbers would lead you to believe; the two important metrics, for which we had been seeing progress in over recent months, both retreated on a seasonally adjusted basis: the employment-population ratio, ie, the percentage of us employed, decreased to 58.5% from february's 58.6% (see adjacent graph), & the labor force participation rate, ie, the percentage of the noninstitutional population who meet the criteria to be counted in the BLS stats, decreased to 63.8% in march from february's 63.9%, which is mostly indicative of those gave up looking for work this month...the number of people 'not in the labor force' is now at an all time high of 87,897,000; none of these people are counted in the headline percentages...preliminary numbers from the establishment survey, which you'll recall covers one-third of the country's businesses & government agencies, indicates that 121,000 private non-farm jobs were added in March, with only 1000 government jobs eliminated; revisions of previous reports were a virtual wash; total jobs added in feruary were revised to 240,000 from 227,000, while january was revised to 275,000 from 284,000; amazingly, a number of news media outlets finally noted that there is a large (100,000) margin of error in these reports, with the Economist even producing an alternate report expressing the numbers in a range of possibilities; considering that we thought seasonal adjustments might have produced inflated numbers earlier in the year due to abnormally warm weather, we have to consider the possibility that unwinding seasonality might have weakened this report (and may also weaken next months, since the reference week for this survey was during the March heatwave), but that wasnt apparent in retail, which lost jobs in both february (-29,000) and march (-34,000) on a seasonally adjusted basis, nor construction, which lost 13,000 jobs last month and was unchanged in this report; the strong sectors were manufacturing, which added 37,000 jobs, food services and drinking places, which also added 37,000 (and may have a seasonal component), and health care, which added 26,000 jobs...

the average workweek for all employees fell by 0.1 hour to 34.5 hours in march, while the manufacturing workweek fell by 0.3 hour to 40.7 hours, with factory overtime unchanged at 3.4 hours...reported average hourly earnings for all payrolls rose by 5 cents to $23.39, bringing the gain since last march to 1.7%, a record YoY low...the adjacent chart from “Behind the Decline in Labor’s Share of Income” by analysts at the Cleveland Fed shows how compensation that workers have received in return for their labor has grown at a much slower rate than the output that they contributed to producing since the year 2000...

the headline percentage of unemployed fell from 8.3% to 8.2%; you'll recall this comes from the household survey, which is based on a midmonth survey of 60,000 households, about twice as many as gallup surveys...in that household survey, the number of employed fell by 31,000, but the number of unemployed fell even more, by 133,000, as job seekers gave up & hence were no longer counted as unemployed; thus, with 333,000 of the jobless no longer counted in the labor force, the percentage of those counted as unemployed fell...additionally, 7.7 million employed workers were categorized as in part time jobs who said they wanted full time work; this was down from the seasonally adjusted 8.1 million who were so catagorized last month, thus the U-6 unemployment rate dropped sharply to 14.5% from 14.9% in february...of the 12.7 million who still counted as being unemployed, 5.3 million, or 42.5% had been looking for work for over 27 weeks, which is longer than the typical length of state-funded unemployment rations...

State Unemploymenthowever, because of the improving unemployment rates in several states, Federal extended rations will now be cut off in 15 states; Kansas, Kentucky, Massachusetts. Missouri, Ohio, Oregon, South Carolina, Tennessee and Wisconsin, as of April 7th; and Indiana, Alabama, Delaware, Georgia, Maryland and Washington by April 21st...the BLS reports state and regional unemployment stats in a separate report in the last week of the month following the reference month, so last week we saw the Regional and State Employment and Unemployment Summary for Febraury; month over month, 29 states showed unemployment rate decreases, 8 states showed jobless rate increases, and 13 states and DC had no change; forty-nine states and DC registered unemployment rate decreases from a year earlier, while only new york state experienced an increase, largely due to job losses in new york city, whose unemployment rate increased from 8.8% to 9.6% over the past year...bill mcbride produced the adjacent state unemployment chart from the data from this state summary; the red bars indicate the unemployment rate in each state as of february; the blue bars represents the high water mark for unemployment in the respective state; you can see jobless rates have declined in each state, with only nevada at 12.3%, rhode island at 11.0%, and california at 10.9% still having state unemployment rates above 10% by the BLS methods; north dakota registers the lowest jobless rate at 3.1% due to the oil boom in the bakken shale; unfortunately, the well paid roughnecks & drivers working up there have a shortage of housing, which is something the rest of the country has in surplus...(click on any chart for a larger view)

before we look at other economic reports from this week, we're going to catch up on what our congresscritters have done been up to over the past couple of weeks, or rather, what theyve failed to do...in shenanigans late last week the House took up a number of budget proposals for fiscal year 2013 and put each to a vote, passing only the ryan budget, which we discussed a couple weeks ago; a hard line faction of conservatives, the "Republican Study Group", introduced a budget which slashed social spending & Medicaid even more severely than the Ryan plan; it was defeated on a 136 to 285 vote; House democrats released their own alternative, by ranking budget committee member Van Hollen, which which would cut programs more slowly than the Republican plan, which failed last Thursday on a 163 to 262 vote, a separate bipartisan group, not having prepared a budget of their own, resurrected the proposals from the simpson-bowles catfood commission to take to the floor as an alternative, but it garnered only their 38 votes, & the progressive caucus budget, which was built around a $2.9 trillion front-loaded stimulus package and a repeal of the Budget Control act, which got 78 votes...additionally, Rep. Mulvaney of S.Carolina introduced a shell of the Obama budget, which was defeated by a 414-0 vote, a tactic designed both to embarrass the president & to shelve his plan for the remainder of the year...the 2013 Ryan budget, which passed on a 228 to 191 vote, with 10 Republicans opposed, slashes long-term mandatory spending to below the discretionary spending targets set by the debt limit deal, reduces taxes for the rich and corporations, changes Medicare to a voucher program, eliminates student Pell grants, and cuts food stamps by $133.5 billion, or 17 percent…
  however, attempts to arrive at a compromise on a comprehensive surface transportation bill failed as the House rejected the Senate version and vice-versa, so they passed another 90 day extension of the 4 year 2005 bill, the 9th such stop gap measure since 2009, which means they'll try again in June or pass a 10th extension…as we’ve mentioned before, without a guarantee that federal funding will stay in place through the life of a project, state & local infrastructure proposals remain shelved

Delinquency Rateamong the other economic releases we saw this week was the LPS Mortgage Monitor report for February; you'll recall that LPS (Lender Processing Services) interfaces with over 50 of the largest banks & thus provides a good overview of the condition of home loans nationally; as of febraury, 7.57% of mortgage loans were delinquent, down quite a bit from january's 7.97%, and down from 8.80% in february 2011; of the delinquent loans, 2,059,000 loans were less than 90 days delinquent, and 1,722,000 loans were over 90 days delinquent; in addition, 2,065,000 loans were in the foreclosure process, or 4.13% of mortgages nationally, little changed from the levels of january or february last year; both foreclosure starts & completions declined in february after rising in january, with completed foreclosures down 22% in judicial states & 19% overall; the chart that's included here from page 3 of the 30 page PDF shows both delinquencies & foreclosures as a percentage of active loans since 1995; you can see the declining in the number of new delinquencies has resumed after a rough year last year; as this report is for february, we are not yet seeing an increase in the number of completed foreclosures expected as a result of the administration's mortgage fraud whitewash...nationally, what LPS calls the "foreclosure pipeline ratio" is at 84 months for judicial states, compared to 33 months in non-judicial states; what that means is at the current rate that foreclosures are being completed, it will take 6 years for the backlog to clear in judicial states, and almost 3 years even where court action is unnecessary; the states with the largest backlog of homes in the foreclosure process continued to be New York and New Jersey, where backlogs remain at 846 and 772 months respectively (ie, over 60 years for both; see p 17 of pdf for the foreclosure pipeline bar graph)... only 1.9% of the homes in foreclosure in judicial states were completed in february, compared with 6.82% in states where a court action is unnecessary (see p 12 of pdf)...p 5 of the pdf provides a table of percentage of non-current loans by state, if you want to check yours, as of february, loans in florida were still in the worst shape, with 22.1% of homeowners not paying on their mortgages...also note that CoreLogic reported its house price index for February this week; recall last week’s case shiller index was for january; according to CoreLogic, february’s home prices declined by 0.8% compared to January, and were 2% lower than february 2011; these prices are at a post bubble low for CoreLogic, which is a weighted average of the previous three months and not seasonally adjusted…Moody’s Analytics forecasts that sales of repossessed properties will probably will rise 25 percent this year in the wake of the foreclosure fraud settlement, which they expect will reduce US housing prices by another 10%

other than employment, the two ISM (Institute for Supply Management) reports were the major economic releases this week; for the March ISM manufacturing index, the PMI (purchasing managers index) rose 1 percent to 53.4%, indicating accelerating expansion (over 50 is expansion); the production index was up 3% to 58.3%, and 15 of the 18 industries reported overall growth…the March ISM non-manufacturing index was at 56.0%, down from 57.3% in february, indicating slower expansion; the employment component  increased in March to 56.7%, up from 55.7% in february, while the new orders index decreased by 2.4% to 58.8 percent…census also released Manufacturers' Shipments, Inventories, and Orders for Febraury, typically called factory orders by the press, this covers both durable and non-durable manufacturing orders; new orders were reported to have increased 1.3% from January…we also had an estimate from Autodata of light vehicle sales, as reported, they were at a 14.37 million seasonally adjusted annual rate; this was down from the post recession high over 15 million in february, which you might recall we speculated might have been caused by abnormally warm weather spiking the seasonal adjustment; we’ll have to wait for april on a number of these seasonally adjusted reports to get a clearer picture of how much demand was pulled forward by the weather…& lastly, we’ll note the consumer credit report for febraury; you’ll recall we’ve watched this rather closely over the last 3 months as record near double digit increases in borrowing, mostly for student loans, were being reported; this month, seasonally adjusted borrowing moderated to an overall 4.2% increase, with a 3.3% decline in revolving credit, offset by a 7.7% increase in non-revolving credit, which was mostly driven by car and student loans....

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(the above is my weekly commentary that accompanied my sunday morning links mailing, which in turn was mostly selected from my weekly blog post on the global glass onion, and also includes other links of interest…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)

 

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