Paper Economy
This chart shows private residential construction spending since 1993 since 2004. In November 2012, total residential spending remained 55.37 percent below the peak level seen in 2006. (SoldAtTheTop)
A mixed November for construction
Today, the U.S. Census Bureau released their latest read of construction spending showing generally better results in November with total construction spending and the residential component improving while the non-residential component worsened since October.
On a month-to-month basis, total residential spending increased 0.39% from October climbing 22.94% above the level seen in November 2011 while still remaining a whopping 55.37% below the peak level seen in 2006.
Single family construction spending climbed 1.33% since October rising 31.76% since November 2011 but remained a whopping 69.53% below it's peak in 2006.
Non-residential construction spending declined 0.70% since October but rose 3.84% above the level seen in November 2011 and remained a whopping 30.93% below the peak level reached in October 2008.
The Chicago Federal Reserve National Activity Index uses a weighted average of 85 indicators of national economic activity to chart the course of the economy. The latest reading suggests tepid improvement. (SoldAtTheTop)
National Activity Index signals slight economic improvement
The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated a slight improvement for the national economy with the index climbing to a tepid level of .10 from a notably weak level of -.64 in October while the three month moving average improved to a weak level of -0.20.
The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”.
The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth.
A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession.
This graph shows single family housing construction permits since 2001. (SoldAtTheTop)
A mixed November for home construction
Today’s New Residential Construction Report showed mixed results for November with a slight slip in single family permits and significant declines to total and single family starts but with gains to total permits.
Single family housing permits, the most leading of indicators, dropped 0.2% from October to 565K single family units (SAAR), and increased 25.3% above the level seen in November 2011 but still remained an astonishing 68.58% below the peak in September 2005.
Single family housing starts declined a whopping 4.1% from October to 565K units (SAAR), but rose 22.8% above the level seen in November 2011 but still remained 69.01% below the peak set in early 2006.
This graph shows the National Association of Home Builders' Housing Market Index since 1992. Conditions still remain fairly distressed by historic standards, according to SoldAtTheTop. (SoldAtTheTop)
Good signs for housing market in December
Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing continued improvement in December with the composite HMI index rising to 47 while the "buyer traffic" index improved to 36, a level not seen since early 2006.
While all indicators have made truly spectacular improvements this year, it's important to note that conditions still remain fairly distressed by historic standards.
Although, looking at the data, it is fairly clear that the last few months of results indicate a major change in builder sentiment likely coming as a result of improvements in confidence given the notable rise in buyer traffic, reduced inventory and a more balanced monthly supply.
This graph tracks the Empire State Manufacturing Survey since 2008. (SoldAtTheTop)
Manufacturing declines in short-term; Future looks brighter
The Empire State Manufacturing Survey consists of a series of diffusion indices distilled from a monthly survey of New York regional manufacturing executives and seeks to identify trends across 22 different current and future manufacturing related activities.
Today’s report showed a slight decline for current assessments of manufacturing activity and an improvement to future assessments with the current activity index falling to a notably weak level of -8.1 while future activity improved to 18.66.
Current prices paid rose to 16.13 while current new orders weakened to -3.7 as assessments of future new orders improved to 32.26.
This graph tracks US industrial production levels since 2005, according to the Federal Reserve. (SoldAtTheTop)
Industrial production jumps in November
Today, the Federal Reserve released their monthly read of industrial production and capacity utilization showing notable increase in November with total industrial production increasing 1.05% since October and rising 2.51% above the level seen in November 2011.
Capacity utilization also jumped 0.91% from October and climbing 0.93% above the level seen in November of 2011 to stand at 78.42%
It's important to recognize that though the "recovery" is well over two years old, both industrial production and capacity utilization are notably below the peaks set in late 2007.
This graph, dating back to 2000, tracks the number of people unemployed for 27 weeks and over. Today’s situation far exceeds even the conditions seen during the double-dip recessionary period of the early 1980s. (SoldAtTheTop)
Long term unemployment decreases in November
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Today's employment situation report showed that conditions for the long term unemployed improved in November remaining epically distressed by historic standards.
Workers unemployed 27 weeks or more decreased to 4.786 million or 40.1% of all unemployed workers while the median number of weeks unemployed dropped to 19.0 weeks and the average stay on unemployment declined to 40.0 weeks.
Looking at the chart above you can see that today’s sorry situation far exceeds even the conditions seen during the double-dip recessionary period of the early 1980s, long considered by economists to be the worst period of unemployment since the Great Depression.
This graph shows U6 and U3 unemployment rates since 2000. Traditionally reported unemployment (U3) declined to 7.7 percent in November. (SoldAtTheTop)
Unemployment rate drops to 7.7 percent
Today’s Employment Situation report showed that in November “total unemployment” including all marginally attached workers declined slightly to 14.4% while the traditionally reported unemployment rate also declined to 7.7%.
The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.
The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.
The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.
To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.
This graph shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006. (SoldAtTheTop)
Mortgage rates fall to 3.4 percent
The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.
The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.
The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) decreased 2 basis point to 3.43% since last week while the purchase application volume increased a slight 0.10% and the refinance application volume increased 6% over the same period.
Clearly, the Federal Reserve's QE3 announcement and implementation has had a notable effect on mortgage rates in recent weeks continuing to lift refinance application activity and possibly helping to establish a base of sorts to purchase applications. ( Continue… )
This graph shows total continued jobless claims since 2010. Currently there are some 2 million people receiving federal extended unemployment benefits. (SoldAtTheTop)
Jobless claims decline by 25,000
Today’s jobless claims report showed declines for both initial and continued jobless claims as initial claims dropped below the closely watched 400K level.
Seasonally adjusted “initial” unemployment claims declined by 25,000 to 370,000 claims from a revised 395,000 claims for the prior week while seasonally adjusted “continued” claims declined by 100,000 claims to 3.205 million resulting in an “insured” unemployment rate of 2.5%.
Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.
Currently there are some 2.04 million people receiving federal “extended” unemployment benefits.
Taken together with the latest 2.83 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.88 million people on state and federal unemployment rolls.
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