I conjecture that the jobless claims numbers are obfuscated by the impact of under-the-table jobs going away, plus under-employment. Of course, these are metrics that are difficult if not impossible to prove or disprove, so I rely on leap of faith.
Re jobless numbers: inventories (not of houses, but of goods) are very low, due to changed practices of using computers and just-in-time. Not only was hiring during the expansion very modest, but inventories did not build up. Instead they declined. This means businesses do not have to cut back production sharply (not so far, and....who knows?).
AC:
You have to remember what kind of workers the builders have been using the past few years. They aren't the kind that will get unemployment or even be reported as being laid off.
I get the feeling that this will be the last decent job report for a while. Restaurant claims should rise as some places shut down after NYE and they're not 1099ing waitstaff yet.
AC:
You have to remember what kind of workers the builders have been using the past few years. They aren't the kind that will get unemployment or even be reported as being laid off.
I've made that argument myself, but what's more curious to me is how they've collapsed in recent weeks from elevated levels.
I also heard a report yesterday on "perma temps". Full time "employees" who are actually freelancers. They can't file for unemployment benefits when they get fired.
Just another wonderful example of american businesses treating their employees really well.
Looks like the stimulus package could be $300 per person, including children, up to $1,200.
The folks who already spent $1,600 but don't have children are screwed.
Like a lot coming out of Washington, the headlines were bigger than delivery. It's great stimulus to build up consumer expectations and then disappoint.
Recalling some of the most recently published trends (sorry, can't cite), the best employment hope for recent college grads might just be the military. Hell of an option. Mid-level baby-boomers, being too old for military service, are toast.
We are witnessing the destruction of the American middle-class.
How'd the employment numbers get so screwed? Self-employment. Self-employment takes you off the grid. Used to be an employee, but now a "contractor" doing the same job? You don't exist. (if you are counted, it's only as a positive - if you end up without work, you simply go away).
It is difficult to believe we're in a recession with jobless claims at these levels. I'm concerned that we could still be headed there, but there's not much to suggest we're there now.
hbhh,
Agree. Business I/S ratios are very low (all time lows in fact) and are not spiking, which is what you typically see in recessions. Here's a good chart.
It is difficult to believe we're in a recession with jobless claims at these levels. I'm concerned that we could still be headed there, but there's not much to suggest we're there now.
It's completely at odds with the recent household data though.
"Looks like the stimulus package could be $300 per person, including children, up to $1,200.
The folks who already spent $1,600 but don't have children are screwed.
Like a lot coming out of Washington, the headlines were bigger than delivery. It's great stimulus to build up consumer expectations and then disappoint."
I think the check-in-every-mailbox part of the stimulus package is designed to distract the public and the press from studying "other" provisions of the stimulus packages. Look for business tax breaks and even yet-to-be-announced bailouts to be hiding amid the blizzard of rebate checks.
My company learned from the dot com bust. We really didn't go crazy hiring like last time. People just cranked out the OT,but we were told to remember it could go away at any time. As of Nov there has been little to no OT available. I figure we have pulled back about 30% and are still profitable with everyone staying pretty busy. We are now starting this year,going to run into the little problem of retirements. But thats a whole nuther post...
I think it's early for unemployment numbers to show a lot. In some parts of the country, construction work is at a seasonal low right now, and people expect to be cooling their heels. They are always collecting unemployment in January. When they get up to go back to work in the spring, they may be in for a shock.
The shocks in other businesses are still in the pipeline. Stores and restaurants are not shutting down in droves. Yet. Businesses other than mortgages, realtors and so forth are not yet in panic mode and they won't be quick to lay off their secretarial and administrative type people until they are convinced they are facing a long-term slump.
In other words, the whole economy doesn't shut down all at once.
If you ever doubt the value of your blog (and I'm sure you don't), please read this comment from Tony Crecenzi, the well-regarded economist at Miller Tabak:
"The National Association of Realtors reported a little while ago that the level of unsold homes fell to 3.905 million from 4.217 million in November. The level of unsold homes is still more than 1.5 million above normal, but the improvements are notable. The inventory figure is foremost in terms of what is next for home prices."
A year or more after the bubble burst, and mainstream wall street economists still don't understand even the basic seasonality of home inventories.
--
Seasonally, inventory declines in Nov-Dec the most amd more than the decline in sales. Months of supply goes down in Nov-Dec primarily due to seasonality and it says nothing about improved demand compared to Sep-Oct.
Okay, I'll fess up. I lost my job right before Christmas (residential construction in OC) but shorting my employers has been so profitable I haven't signed up for unemployment.
It's completely at odds with the recent household data though.
We haven't seen the January jobs report. The December report (household and establishment) was pretty consistent with the level of jobless claims in December (340K-360K).
cnbc..... they were droning on about the drop in inventories.....
the comment was that "at least it is trending in the right direction....it could take until december to get to 6 mos supply... or something to that effect.
so, the nyt gets it per their front page article yesterday, but cnbc needs more time.
The current low unemployment rate is misleading. The US system doesn't count undocumented immigrants, the self-employed, and long-term unemployed, all of which are at historical highs. The employment-population rate is almost exactly where it was at the start of the 1990 recession, and has just taken the same moderate but sharp drop we saw then too.l
I look at the graphs and see:
360,000 sales in December.
3,800,000 inventory in December.
Dividing I get 10.6 months of inventory. This isn't really true since December sales are off Oct/Nov inventory but i won't quibble. The NAR pulled a fast one to try and claim 9.6 months.
The "typical" seasonal decline in national existing home inventories is NOT 13%; in fact, seasonal factors suggest that it is more like 8.5-9%. E.g., using inventories for both SF and condos (which only go back to 1999), the average Nov/Dec drop from 1999 to 2006 was 8.4%, and only one year saw a drop of 13% or more (13.2% 2001). Using just SF inventories from 1990-2006, the average Nov/Dec drop was 9.2%, with only one year seeing a drop of 13% or more (13.2%, 1998.
I took a look at Housingtracker earlier this week and noticed an increase in listings in almost every housing market. Gee--people want a break from keeping their home ready for a showing over the holidays (would that really happen that a prospective buying would show up in late December?). In any case, it looks like the inventory may be up again in time for next month's announcements.
Here is the cross post from Zacks.com, sorry if I repeat stuff that has already been said:
This morning the National Association of Realtors reported that existing home sales in December fell to a seasonally adjusted annual rate (SAAR) of 4.89 million, 2.2% below November, and down 22.0% from a year ago. The report was also below consensus expectations of a SAAR of 4.95 million. Existing home sales are recorded at the close of escrow, so these numbers reflect deals being made for the most part in November. The price of a median house was $208,400, down 6.0% from a year ago. Sales fell in all four regions with the Northeast slowing the most this month, down 4.6% for the month and 22.4% for the year. The West followed with a 2.1% decline for the month and down 24.8% year over year. Sales in the Midwest fell 1.7% for the month and are off 20.5% year over year. The South fared the best with only a 1.0% decline for the month and off 20.9% year over year. In terms of median prices, the more expensive the region, the more prices are falling. The West is the most expensive region with a current median price of $309,800, but that is down 11.1% year over year. The Northeast follows with a median price of $258,600 which is down 8.9% from a year ago. The median price in the South was $173,400, off 4.1% from a year ago and in the Midwest the median price fell 3.9% to $159,800.
The good news is that inventories fell 7.4% to 3.91 million. That reduced the months supply figure to 9.6 months from 10.1 months in November. However, housing inventories almost always fall in December (do you really want the prospective buyers touring your house on Christmas Eve?), so do not read too much into the decline in inventories. The decline was actually smaller than the average decline for December since 2001. We are far from out of the woods in the housing market, and it is very likely that inventories will swell again in the spring. Relative to historical relationships with rent and incomes, housing prices still have about another 15-20% decline to come nationwide (more in bubble areas).
Since the surprise rate cut by the Fed, the homebuilding stocks have had an incredible rally, think of it as not credible. There have been several other sharp rallies in these stocks on the way down. If you are not out of them, get out now. If you have a strong stomach, consider shorting them. The time to buy these is after two of the following stocks have declared Chapter 11 bankruptcy (then buy the rest of them): Beazer (BZH), Lennar (LEN), D.R. Horton (DHI), Toll Brothers (TOL), Standard Pacific (SPF), Hovnanian (HOV), Centex (CTX), KB Homes (KBH), M/I Homes (MHO), Ryland (RYL) and Pulte (PHM).
One glaring observation from the graph in addition to the falloff in Sep due to the mortgage crisis is what happened in the first quarter of 2006 and 2007. You will notice that in 2006, Jan ,Feb and March were tracking 2005, then in April there was a dropoff. Then in 2006, that dropoff in sales compared to previous year occured in March....Inference......we will not have to wait too long in Q1 2008 to see where the year is headed...I would speculate that the dropoff may reveal itself in Jan or Feb.....and if so , and "there will not be a key reversal in 2008"- no way , just not possible, one can extrapolate the full year numbers pretty closely for the year...at leaast a number that sales will go no higher than.....but probably will go even lower.
My speculation as to why the green graph shows more extreme dropoffs in Dec-Feb every year.....the homes that do not sell in the middle to fall of the year are PULLLED from inventory.... only to be reloaded in the following spring.....inference....q1 2008 will have "extreme amounts" of inventory......we shall see pretty soon. The only saving grace is the "nice" 30 year mortgage rates.
Any ideas on why we're still seeing healthy jobless claims numbers?
It's the opposite of the jobless recovery -- the jobful recession.
CR, Will you be posting the commenter forecast results from last summer?
Thanks for the site!!!
Third!
I conjecture that the jobless claims numbers are obfuscated by the impact of under-the-table jobs going away, plus under-employment. Of course, these are metrics that are difficult if not impossible to prove or disprove, so I rely on leap of faith.
ac,
Who ya' gonna' believe - their numbers or your own lying eyes?
Re jobless numbers: inventories (not of houses, but of goods) are very low, due to changed practices of using computers and just-in-time. Not only was hiring during the expansion very modest, but inventories did not build up. Instead they declined. This means businesses do not have to cut back production sharply (not so far, and....who knows?).
barely, yes, I was going to go look for those predictions. The winning number is 5.652 million.
The key in this report is the small decline in inventory. We are starting 2008 with a shockingly high level of inventory.
Best to all.
AC:
You have to remember what kind of workers the builders have been using the past few years. They aren't the kind that will get unemployment or even be reported as being laid off.
I get the feeling that this will be the last decent job report for a while. Restaurant claims should rise as some places shut down after NYE and they're not 1099ing waitstaff yet.
Who ya' gonna' believe - their numbers or your own lying eyes?
I actually don't know anyone who's lost a job, much unlike 2001. But I don't associate with many people in real estate and finance related fields.
as always, love the charts!
I suspect that, given the < usual percentage drop for December is do to sellers leaving the market.
Cheers,
AC:
You have to remember what kind of workers the builders have been using the past few years. They aren't the kind that will get unemployment or even be reported as being laid off.
I've made that argument myself, but what's more curious to me is how they've collapsed in recent weeks from elevated levels.
I also heard a report yesterday on "perma temps". Full time "employees" who are actually freelancers. They can't file for unemployment benefits when they get fired.
Just another wonderful example of american businesses treating their employees really well.
ac,
West Coast, I know several framers laid off, as well as two high priced but very talented IT guys. Real Estate people, well, it's getting ugly.
Cheers,
OT
Looks like the stimulus package could be $300 per person, including children, up to $1,200.
The folks who already spent $1,600 but don't have children are screwed.
Like a lot coming out of Washington, the headlines were bigger than delivery. It's great stimulus to build up consumer expectations and then disappoint.
aside from undocumented workers, the question is how many real estate-related jobs (agents, brokers, etc.) are 1099 jobs.
some people have suggested "a lot," but I don't know the answer.
Recalling some of the most recently published trends (sorry, can't cite), the best employment hope for recent college grads might just be the military. Hell of an option. Mid-level baby-boomers, being too old for military service, are toast.
We are witnessing the destruction of the American middle-class.
How'd the employment numbers get so screwed? Self-employment. Self-employment takes you off the grid. Used to be an employee, but now a "contractor" doing the same job? You don't exist. (if you are counted, it's only as a positive - if you end up without work, you simply go away).
Numbers. Heh.
12th,
I'm not sure how pervasive perma-temps are, but they don't get much but a paycheck.
It's really not a good strategy.
Cheers,
It is difficult to believe we're in a recession with jobless claims at these levels. I'm concerned that we could still be headed there, but there's not much to suggest we're there now.
hbhh,
Agree. Business I/S ratios are very low (all time lows in fact) and are not spiking, which is what you typically see in recessions. Here's a good chart.
Steve,
It's ok, we will accept you in the real world whenever you're ready. The door is open. It's ok....
It is difficult to believe we're in a recession with jobless claims at these levels. I'm concerned that we could still be headed there, but there's not much to suggest we're there now.
It's completely at odds with the recent household data though.
Something isn't measuring right.
"Looks like the stimulus package could be $300 per person, including children, up to $1,200.
The folks who already spent $1,600 but don't have children are screwed.
Like a lot coming out of Washington, the headlines were bigger than delivery. It's great stimulus to build up consumer expectations and then disappoint."
I think the check-in-every-mailbox part of the stimulus package is designed to distract the public and the press from studying "other" provisions of the stimulus packages. Look for business tax breaks and even yet-to-be-announced bailouts to be hiding amid the blizzard of rebate checks.
If you're looking at the unemployment number to go bad, you'll be way to late when it does.
Workforce participation rate is the number you need to get past the BS.
ac | 01.24.08 - 10:33 am |
My company learned from the dot com bust. We really didn't go crazy hiring like last time. People just cranked out the OT,but we were told to remember it could go away at any time. As of Nov there has been little to no OT available. I figure we have pulled back about 30% and are still profitable with everyone staying pretty busy. We are now starting this year,going to run into the little problem of retirements. But thats a whole nuther post...
Chris
Yes I work for a large mnc you have heard of...
I think it's early for unemployment numbers to show a lot. In some parts of the country, construction work is at a seasonal low right now, and people expect to be cooling their heels. They are always collecting unemployment in January. When they get up to go back to work in the spring, they may be in for a shock.
The shocks in other businesses are still in the pipeline. Stores and restaurants are not shutting down in droves. Yet. Businesses other than mortgages, realtors and so forth are not yet in panic mode and they won't be quick to lay off their secretarial and administrative type people until they are convinced they are facing a long-term slump.
In other words, the whole economy doesn't shut down all at once.
The DOW went negative. I think the Fed should give us another 75 bps cut today bc the market should only go up...
CR,
If you ever doubt the value of your blog (and I'm sure you don't), please read this comment from Tony Crecenzi, the well-regarded economist at Miller Tabak:
"The National Association of Realtors reported a little while ago that the level of unsold homes fell to 3.905 million from 4.217 million in November. The level of unsold homes is still more than 1.5 million above normal, but the improvements are notable. The inventory figure is foremost in terms of what is next for home prices."
A year or more after the bubble burst, and mainstream wall street economists still don't understand even the basic seasonality of home inventories.
Thank goodness we have Calculated Risk!
--
Seasonally, inventory declines in Nov-Dec the most amd more than the decline in sales. Months of supply goes down in Nov-Dec primarily due to seasonality and it says nothing about improved demand compared to Sep-Oct.
Jas
Okay, I'll fess up. I lost my job right before Christmas (residential construction in OC) but shorting my employers has been so profitable I haven't signed up for unemployment.
I'll do that today if it makes y'all happy.
It's completely at odds with the recent household data though.
We haven't seen the January jobs report. The December report (household and establishment) was pretty consistent with the level of jobless claims in December (340K-360K).
Here's the max inventory and supply predictions thread:
HaloScan.com - Comments
Here's the sales predictions thread:
HaloScan.com - Comments
"We will be greeted as liberators."
"The insurgency, if you will, is in its last throes."
"We know where the WMD are."
"We can report that unemployment claims went down."
If I believe that this White House doesn't consistently pull all the numbers out of its A$$ for political gain, I need way more medication.
Dumb question....
How did the NAR get a 2.2% annual decline in median house prices for 2007?
I got at least 10% zillowed away, and I don't live in a hot housing area?
I'll take the 5.65 slot.
poszi | 07.25.07 - 2:56 pm | #
I think poszi is the winner for sales.
Someone get him a framed picture of Bernanke and the Mortgage Pig.
Oh yea....
cnbc..... they were droning on about the drop in inventories.....
the comment was that "at least it is trending in the right direction....it could take until december to get to 6 mos supply... or something to that effect.
so, the nyt gets it per their front page article yesterday, but cnbc needs more time.
Expired
Median price dropped 1.8 percent to $217,000.
CR, when you do a post on the predictions, could you please link to the original post from this past summer. I couldn't find it.
Thanks!
Aha! Thanks Fred Frederson!
I'll take the 5.65 slot.
poszi | 07.25.07 - 2:56 pm |
Yeah, looks like poszi nailed it -- off by 0.002.
CR,
Can you put the top 5 up -- you know, so the also-rans can tell their grandchildren.
I think Curley Dan should get an honorary mention with his prediction of 5,666,666. Armageddon was so close.
Morgan Stanley announced today they are cutting 1000 jobs.
The financial layoffs are starting.
The current low unemployment rate is misleading. The US system doesn't count undocumented immigrants, the self-employed, and long-term unemployed, all of which are at historical highs. The employment-population rate is almost exactly where it was at the start of the 1990 recession, and has just taken the same moderate but sharp drop we saw then too.l
The predictions are at:
HaloScan.com - Comments
I look at the graphs and see:
360,000 sales in December.
3,800,000 inventory in December.
Dividing I get 10.6 months of inventory. This isn't really true since December sales are off Oct/Nov inventory but i won't quibble. The NAR pulled a fast one to try and claim 9.6 months.
The Foreclosure Crisis: What it means for Northeast Ohio /$1 homes
The Foreclosure Crisis: What it means for Northeast Ohio | Metro - cleveland.com - cleveland.com
The "typical" seasonal decline in national existing home inventories is NOT 13%; in fact, seasonal factors suggest that it is more like 8.5-9%. E.g., using inventories for both SF and condos (which only go back to 1999), the average Nov/Dec drop from 1999 to 2006 was 8.4%, and only one year saw a drop of 13% or more (13.2% 2001). Using just SF inventories from 1990-2006, the average Nov/Dec drop was 9.2%, with only one year seeing a drop of 13% or more (13.2%, 1998.
Where in the world did you get 13%?????????
I took a look at Housingtracker earlier this week and noticed an increase in listings in almost every housing market. Gee--people want a break from keeping their home ready for a showing over the holidays (would that really happen that a prospective buying would show up in late December?). In any case, it looks like the inventory may be up again in time for next month's announcements.
Morgan Stanley announced today they are cutting 1000 jobs.
Do they get tax rebates?
Here is the cross post from Zacks.com, sorry if I repeat stuff that has already been said:
This morning the National Association of Realtors reported that existing home sales in December fell to a seasonally adjusted annual rate (SAAR) of 4.89 million, 2.2% below November, and down 22.0% from a year ago. The report was also below consensus expectations of a SAAR of 4.95 million. Existing home sales are recorded at the close of escrow, so these numbers reflect deals being made for the most part in November. The price of a median house was $208,400, down 6.0% from a year ago. Sales fell in all four regions with the Northeast slowing the most this month, down 4.6% for the month and 22.4% for the year. The West followed with a 2.1% decline for the month and down 24.8% year over year. Sales in the Midwest fell 1.7% for the month and are off 20.5% year over year. The South fared the best with only a 1.0% decline for the month and off 20.9% year over year. In terms of median prices, the more expensive the region, the more prices are falling. The West is the most expensive region with a current median price of $309,800, but that is down 11.1% year over year. The Northeast follows with a median price of $258,600 which is down 8.9% from a year ago. The median price in the South was $173,400, off 4.1% from a year ago and in the Midwest the median price fell 3.9% to $159,800.
The good news is that inventories fell 7.4% to 3.91 million. That reduced the months supply figure to 9.6 months from 10.1 months in November. However, housing inventories almost always fall in December (do you really want the prospective buyers touring your house on Christmas Eve?), so do not read too much into the decline in inventories. The decline was actually smaller than the average decline for December since 2001. We are far from out of the woods in the housing market, and it is very likely that inventories will swell again in the spring. Relative to historical relationships with rent and incomes, housing prices still have about another 15-20% decline to come nationwide (more in bubble areas).
Since the surprise rate cut by the Fed, the homebuilding stocks have had an incredible rally, think of it as not credible. There have been several other sharp rallies in these stocks on the way down. If you are not out of them, get out now. If you have a strong stomach, consider shorting them. The time to buy these is after two of the following stocks have declared Chapter 11 bankruptcy (then buy the rest of them): Beazer (BZH), Lennar (LEN), D.R. Horton (DHI), Toll Brothers (TOL), Standard Pacific (SPF), Hovnanian (HOV), Centex (CTX), KB Homes (KBH), M/I Homes (MHO), Ryland (RYL) and Pulte (PHM).
One glaring observation from the graph in addition to the falloff in Sep due to the mortgage crisis is what happened in the first quarter of 2006 and 2007. You will notice that in 2006, Jan ,Feb and March were tracking 2005, then in April there was a dropoff. Then in 2006, that dropoff in sales compared to previous year occured in March....Inference......we will not have to wait too long in Q1 2008 to see where the year is headed...I would speculate that the dropoff may reveal itself in Jan or Feb.....and if so , and "there will not be a key reversal in 2008"- no way , just not possible, one can extrapolate the full year numbers pretty closely for the year...at leaast a number that sales will go no higher than.....but probably will go even lower.
My speculation as to why the green graph shows more extreme dropoffs in Dec-Feb every year.....the homes that do not sell in the middle to fall of the year are PULLLED from inventory.... only to be reloaded in the following spring.....inference....q1 2008 will have "extreme amounts" of inventory......we shall see pretty soon. The only saving grace is the "nice" 30 year mortgage rates.