- $1 billion Empire State Building IPO: why it won't be like Facebook IPO
- In surprise move, GOP leaders admit defeat in payroll tax battle
- More than 30,000 Germans turn out against anti-piracy treaty ACTA
- Does Obama blueprint reduce budget deficit fast enough? (+video)
- Pentagon budget: Does it pit active-duty forces against retirees? (+video)
- Murdoch media crisis deepens with five new arrests
- How Pinterest combines the best parts of Facebook, Tumblr, and Etsy
- US, China face 'trust deficit' as China's heir apparent visits
Paper Economy
This chart shows the price of residential property in Hong Kong since 1997. Since suffering through the Asian financial crisis in 1997, property prices rose sharply in 2010. (SoldAtTheTop)
Signs of a Hong Kong real estate bubble?
Today, the University of Hong Kong released their Hong Kong Residential Real Estate Series (HKU-REIS) indicating that, in December, the price of residential properties declined a notable 3.82% since November but still remained 7.87% above the level seen in December 2010.
It appears that after a stunning run of monthly increases that saw prices climb dramatically, prices are beginning to show a notable pullback with all measures declining on the month.
The HKU-REIS is a set of property price indices constructed monthly using a “modified” repeat-sale methodology similar to that of the S&P/Case-Shiller indices yet suited to the Hong Kong property market.
This chart shows the annual change in consumer sentiment since 2000. Current results indicate that consumer sentiment is at its lowest level since 1980. (SoldAtTheTop)
Consumer confidence slides
Friday's early release of the Reuters/University of Michigan Survey of Consumers for February indicated a decline in consumer sentiment with a reading of 72.5 dropping 6.45% below the level seen last year while one year inflation expectations declined slightly to 3.2%.
The Index of Consumer Expectations (a component of the Conference Board's Index of Leading Economic Indicators) declined to 68, and the Current Economic Conditions Index dropped to 79.6.
It's important to recognize that consumer sentiment has seriously eroded over the past few months with the current results remaining near levels not seen since 1980, a major indication that consumers are in the process of tightening even further on spending.
This chart shows the number of initial and continued jobless claims filed over the past two years. Since peaking in 2009, the number of claimants has declined steadily. (SoldAtTheTop)
Jobless claims drop
Today’s jobless claims report showed a decline to initial unemployment claims and an increase to continued unemployment claims as seasonally adjusted initial claims continued to trend below the closely watched 400K level.
Seasonally adjusted “initial” unemployment declined 15,000 to 358,000 claims from last week’s revised 373,000 claims while seasonally adjusted “continued” claims increased by 64,000 resulting in an “insured” unemployment rate of 2.8%.
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 3.50 million people receiving federal “extended” unemployment benefits.
Taken together with the latest 4.05 million people that are currently counted as receiving traditional continued unemployment benefits, there are 7.55 million people on state and federal unemployment rolls.
This chart shows the average contract interest rate for 30 year and 15 year fixed rate mortgages since 2006. Rates have declined steadily over the past five years with little sign of letting up. (SoldAtTheTop)
Mortgage rates: How low can they go?
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) declined 6 basis point to 3.33% since last week while the purchase application volume increased 0.1% and the refinance application jumped 9.4% over the same period.
With rates trending ever lower, the economy seemingly near recession and the FOMC members becoming more dovish by the day, it will be interesting to see how far rates on the long end can decline. All things being equal, falling home prices, declining purchase applications and record low long lending rates all appear to indicate a deflationary for the macro-economy.
The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).
This chart shows the monthly and annual change in private sector job openings since 2004. The number of openings has been recovering steadily since plummeting in 2009. (SoldAtTheTop)
Job openings increase
Today, the Bureau of Labor Statistics released their latest monthly read of job availability and labor turnover (JOLT) showing that private non-farm job “openings” increased 8.79% since November climbing 20.36% above the level seen in December 2010 while private non-farm job “hires” declined 2.28% from November but rose 3.69% above the level seen in December 2010.
Job “layoffs and discharges” declined 4.74% from November falling 1.36% below the level seen last year while quitting activity declined 2.45% from November remaining 3.41% above the level seen in December 2010.
It’s important to understand that job “quits” are included as a component of the “separations” data series as “quitting” is a valid means of workers “separating” from employers but their inclusion tends to create an overall procyclical trend in what would otherwise be logically thought of as a countercyclical process (i.e. downturn leads to increase in separations not decrease).
This chart shows the rise in food stamp participation as it correlates to the unemployment rate since 2005. Food stamp participation has risen steadily in the years since the economic downturn. (SoldAtTheTop)
Food stamp use continues to rise
As a logical consequence of the prolonged economic downturn it appears that participation in the federal food stamp program is continuing to rise.
In fact, household participation has been climbing so steadily that it has far surpassed the last peak (which looks like a minor blip by comparison) set as a result of the immediate fallout following hurricane Katrina.
The latest data released by the Department of Agriculture shows that in November, 94,086 recipients were removed from the food stamps program with the current total still increasing 5.82% on a year-over-year basis while household participation increased 7.46%.
Individual participation as a ratio of the overall civilian non-institutional population has increased 5.06% over the same period.
Participation continues to increase with nominal benefit costs climbing a lofty 6.86% on a year-over-year basis to $6.20 billion for the month.
This chart shows total private nonfarm payrolls from 2001 to 2011. Totals are rising again after hitting bottom in 2009. (SoldAtTheTop)
Private sector payrolls and jobs are up
Today’s Employment Situation Report indicated that in January, net nonfarm payrolls increased with private nonfarm payrolls adding 257,000 jobs and the unemployment rate declining to 8.3% over the same period.
Net private sector jobs increased 0.23% since last month climbing 2.06% above the level seen a year ago but but remained a whopping 4.47% below the peak level of employment seen in December 2007.
This chart shows the number of people who have been unemployed for 27 weeks and over since 2000. The rate has declined since it hit peak in 2010. (SoldAtTheTop)
Long term unemployment still epically distressed
Today's employment situation report showed that conditions for the long term unemployed were mixed in January and remained epically distressed by historic standards.
Workers unemployed 27 weeks or more declined to 5.518 million or 42.9% of all unemployed workers while the median number of weeks unemployed increased to 21.1 weeks and the average stay on unemployment declined to 40.1 weeks, the highest level ever recorded.
Looking at the chart above (click for super interactive version) 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 chart compares the traditional unemployment rate (U3) with the total unemployment rate (U6) that includes marginally attached workers. (SoldAtTheTop)
Unemployment rate drops to 8.3 percent
Today’s Employment Situation report showed that in January “total unemployment” including all marginally attached workers declined to 15.1% from the prior month's level of 15.2% while the traditionally reported unemployment rate also declined to 8.3%.
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 chart shows the change in the number of initial and continued unemployment claims over the past two years. The number of Americans filing for unemployment benefits has been in steady decline since peaking in 2009. (SoldAtTheTop)
Jobless claims drop by 12,000
Today’s jobless claims report showed declines to both initial and continued unemployment claims as seasonally adjusted continued to trend below the closely watched 400K level.
Seasonally adjusted “initial” unemployment declined 12,000 to 367,000 claims from last week’s revised 379,000 claims while seasonally adjusted “continued” claims declined by 130,000 resulting in an “insured” unemployment rate of 2.7%.
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 3.49 million people receiving federal “extended” unemployment benefits.
Taken together with the latest 4.06 million people that are currently counted as receiving traditional continued unemployment benefits, there are 7.56 million people on state and federal unemployment rolls.
Become part of the Monitor community
36K on Facebook | 12K on Twitter | 2,250 on YouTube