Posts Tagged ‘ unemployment rate ’

Case-Shiller Indices Post Strongest Gain Since 2006

Case-Shiller Indices Post Strongest Gain Since 2006

03/26/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Home prices posted their strongest year-over-year gain in almost seven years in January, according to the Case-Shiller 10- and 20-city Home Price Indices released Tuesday. Home prices rose year-over-year in all 20 of the cities in the Case-Shiller survey.

Month-over-month, the 10-city index improved 0.2 percent in January, while the 20-city index was up 0.1 percent. Year-over-year, the 10-city index was up 7.3 percent, and the 20-city index rose 8.1 percent.

Economists had forecast the month-over-month gain in the 20-city index would be 0.1 percent and the year-over-year gain would be 8.2 percent.

Prices rose in nine cities in January over December while falling in eight. Prices were unchanged in the remaining three. December data were revised showing prices rose month-over-month in 10 cities compared with nine in the original report.

The 10-city index rose to 158.72, its highest level since October 2010, while the 20-city index improved to 146.14, its highest level since September 2010.

The report showed a steady improvement in prices in the West. Prices have increased in Phoenix for 16 straight months, in Los Angeles and San Francisco for 11 straight months, in Denver for 11 of the last 12 months, and in Las Vegas for 10 straight months.

By contrast, prices in cities in other regions have been more erratic: down for the last five months in Washington D.C. and Cleveland after improving for six straight months, down in Chicago for the last five months after improving for the previous five months, and down in Boston for four of the last five months.

The year-over-year price gains were led by Phoenix, where prices rose 23.2 percent, consistent with a sharp drop in that city’s unemployment rate, which fell to 7.3 percent from 8.3 percent in the same period.

Prices rose 17.5 percent year-over-year in San Francisco, which saw its unemployment rate tumble to 6.8 percent from 8.1 percent. In Las Vegas, where the unemployment rate fell to 10.4 percent from 13.3 percent in the last year, prices rose 15.3 percent.

Price rose 13.8 percent in Detroit despite an increase in the unemployment rate from 18.8 percent to 19.8 percent.

Three other cities saw double-digit percent gains in prices in the last year: Atlanta (+13.4 percent), Los Angeles and Minneapolis (+12.1 percent each). In Atlanta, the unemployment rate fell to 11.2 percent from 11.7 percent in the last year; in Los Angeles, the unemployment rate dropped to 12.1 percent from 13.3 percent from January 2012 to January 2013; and in Minneapolis, the unemployment rate increased to 5.8 percent from 5.5 percent in the last year.

Month-over-month price gains were led by Las Vegas (+1.6 percent), Phoenix (+1.1 percent), and Atlanta (+1.0 percent). Prices rose by less than 1.0 percent in January in Charlotte, Los Angeles, Miami, New York, San Francisco, and Tampa.

Prices fell 0.9 percent in January in Chicago and Detroit and 0.7 percent in Washington D.C. Prices fell by less than 0.6 percent in January in Cleveland, Minneapolis, Portland, and Seattle.

Prices were unchanged in January in Boston, Dallas, and Denver.

The 10-city index, at 158.72, is down 29.9 percent from its June 2006 high of 226.29 and the 20-city index, at 146.14, is off 29.2 percent from its July 2006 peak of 206.52.

Hear Mark Lieberman Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am EDT and again at 9:20 am EDT.

Fixed Rates Rise on Stronger Jobs Report

Fixed Rates Rise on Stronger Jobs Report

03/14/2013 BY: TORY BARRINGER

Unexpectedly positive employment and spending data drove mortgage rates to their highest level since August in the last week, according to reports from Freddie Mac and Bankrate.com.

Freddie Mac’s Primary Mortgage Market Survey showed the average interest rate for a 30-year fixed-rate mortgage (FRM) rose to 3.63 percent (0.8 point) for the week ending March 14, up from 3.52 percent last week. According to the GSE’s data, the last time the 30-year rate was this high was the week of August 23, 2012.

Last year at this time, the 30-year FRM averaged 3.92 percent.

The 15-year FRM this week averaged 2.79 percent (0.8 point), up from 2.76 percent previously.

Movements in adjustable rates were mixed. The 5-year adjustable-rate mortgage (ARM) averaged 2.61 percent (0.6 point), making it the only measure to see a decline (last week’s average was 2.63 percent). The 1-year ARMaveraged 2.64 percent (0.4 point), up from 2.63 percent.

“Fixed mortgage rates rose this week on stronger signs of jobs growth and consumer spending,” said Frank Nothaft, VP and chief economist for Freddie Mac. “The economy added 236,000 new workers in February which helped push down the unemployment rate to 7.7 percent. This helped offset the effects of the payroll tax holiday expiration and led to a 1.1 percent increase in retail sales, which was well above the market consensus forecast.”

Bankrate reported even more dramatic shifts this week, with the 30-year fixed average climbing 12 basis points to 3.85 percent, the 15-year fixed moving up 7 basis points to 3.03 percent, and the 5/1 ARM rocketing 14 points to 2.82 percent.

“Mortgage rates jumped to a 7-month high following a report of robust job growth and encouraging economic data on business investment and retail sales. The benchmark 30-year fixed mortgage rate, now at 3.85 percent, is the highest since it was 3.91 percent on Aug. 22, 2012,” Bankrate said in a release. “Positive economic news leads to higher bond yields, as evidenced by the 10-year Treasury note climbing back above the 2 percent threshold.”

For the next week, 55 percent of panelists surveyed by Bankrate expect rates will continue to climb. How long that momentum will continue, however, is anybody’s guess.

“Mortgage rates are notching higher following last week’s employment report, and the trend may continue a while longer,” said Greg McBride, CFA, senior financial analyst for Bankrate. “But a pullback in the stock market is inevitable and will lead to lower bond yields and mortgage rates when it happens.”

Commentary: Impact of Sequestration–People Will Die

Commentary: Impact of Sequestration–People Will Die

03/01/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

The sad fact of the budget sequestration being played out in Washington is how avoidable it was. The sadder fact is that however temporary it might prove to be—and that appears from a distance to be more of a wish than a forecast—it will affect real people, and not well.

How we got here has been hashed and rehashed, and in the process has made Washington Post editor, columnist, author—Bob Woodward—a new parlor game in Washington because he pointed the finger at President Obama as the “author” of the sequester concept. That President Obama may have proposed the sequester—setting a deadline for harsh budget cuts as part of a deal to wrest an unnecessary debt-ceiling increase from recalcitrant Republicans—kinda doesn’t matter since the very same Republicans who criticized the arrangement voted for it.

The President has tried repeatedly to describe the impact of sequestration, a mandatory across-the-board cut in federal spending exempting only a small handful of social safety net programs. Despite those exemptions, a simple fact is that people will die as a result of these cuts and lives could be changed irrevocably.

If the Food and Drug Administration, as a result of the cuts, takes even longer to test and approve potentially life-saving medication or medical treatments, people will die. If the FDA cuts corners to approve medication, people will die.

If the US Department of Agriculture can’t keep up its schedule of food safety inspections, people will die.

If the US Department of Education is forced to cut back on Head Start or other early childhood education programs, someone—or several someones —15 years from now may not graduate from high school, not to mention college.

These effects are beyond the impact of jobs loss because defense or other contractors are not hired or because federal workers are furloughed, putting even more homeowners at risk of delinquency, or worse, foreclosure, just at a time when the housing sector is recovering.

Indeed the last few weeks have produced some strong housing numbers (despite flattening confidence among builders), with an increase in housing permits, a modest increase in existing-home sales, and a strong increase in new home sales—even as prices for both categories of homes showed some month-over-month transactional declines. On the other hand, the Case-Shiller home price index continues to improve.

The month-over-month price drops—despite weak inventories of both new and existing homes for sale—underscore the fragility of the housing recovery, a recovery put at risk if would-be homebuyers are unable to jump into a market fostered by lower prices and low interest rates,

The tragedy in this is not what might happen—although that’s pretty severe long-term—or any of the other impacts, both sides know or should know that. The tragedy is they also have the means to fix it without having to resort to face-saving techniques.

First, they have to acknowledge a simple truth that while the federal deficit is a problem, it is not a problem that requires an immediate solution. Congressional Republicans have sucked the White House into believing some form of immediate action is required. There is nothing the federal government should do that it can’t because we have a deficit. Nothing. It is not an immediate problem.

Just look at the GDP report for the fourth quarter for evidence of what reducing federal spending does to the economy. Though the revised report Thursday showed the economy “expanded” by 0.1 percent in the quarter (reversing the original report, which showed a 0.1 percent contraction), any real growth was held back by a 6.9 percent quarter-over-quarter drop in government spending, a 14.8 percent decline in federal spending.

The 0.1 percent “growth” was the weakest since the first quarter of 2011 when, guess what, all government spending fell 7.0 percent, led by a 10.3 percent drop in federal spending.

So the first budgetary rule has to be to defer any harsh reductions in government spending until we can afford them, perhaps setting a target of a 6.0 percent unemployment rate sustained over a set number of months. Cuts to reduce the deficit could be programmed but more importantly planned for. While they would still hurt, the shock could more easily be absorbed at a 6.0 unemployment rate than 7.9 percent.

And since the unemployment rate reduction would be achieved gradually, agencies would be able to adjust. Indeed, since so much of the federal budget goes to countercyclical spending—unemployment insurance and food stamps for example, some of the budget reductions would occur automatically as the unemployment rate falls.

In the last fiscal year, the food stamp program and unemployment insurance cost a combined $194 billion and the year before $226 billion. While the programs wouldn’t disappear even at a 6.0 percent unemployment rate, they would drop considerably (even more if the higher minimum wage proposed by the president were enacted). The sequester cuts which go into effect because of Washington inaction, are valued at $85 billion.

People will die.

Hear Mark Lieberman on P.O.T.U.S. Radio (SiriusXM 124) on Friday at 8:45 am EST and again at 11:45 am EST.

Firm Predicts Job Relocation Surge from Former Underwater Borrowers

Firm Predicts Job Relocation Surge from Former Underwater Borrowers

BY: ESTHER CHO

Challenger, Gray & Christmas, Inc., a nationwide outplacement firm, is predicting a relocation surge in 2013 by job-seeking homeowners who are finally able to list their properties.

As home prices improve, more homeowners have been lifted out of negative equity, and thus more free to sell their properties and relocate. According to a recent report from Zillow, 1.9 million homeowners were freed from negative equity in all of 2012.

“One factor that has kept unemployment rates high has been the inability of underwater homeowners to relocate for employment opportunities. With home prices bouncing back, even those who may now simply break even on a home sale might consider moving to a region where jobs are more plentiful. This could spark a more rapid decline in the unemployment rate over the next year,” said John A. Challenger, the firm’s CEO.

According to a December report from the Bureau of Labor Statistics (BLS), 130 metropolitan areas had an unemployment rate that was 8 percent or higher and 47 metros registered rates 10 percent or higher. At the same time, 20 metro areas have a rate that sits below 4.5 percent, well below the national average of 7.9 percent as of January 2013.

“It is likely that employers in these low-unemployment regions are actually struggling to find available workers with the skills need to fill job openings,” Challenger said.

As for trends the firm is seeing, Challenger says relocation increased for job seekers going through the firm. In 2012, an average of 13.3 percent of those finding new positions each quarter relocated for the opportunity, up from 11.7 percent in 2011. In 2009 and 2010, the relocation rate was at about 10 percent.

The firm also noted states that are showing the biggest gains in home prices are also the same states dealing with higher unemployment. Arizona has seen home prices rise 20.1 percent over a one-year period, according to data from the Federal Housing Finance Agency (FHFA), and the state also hosts metros with high unemployment rates such as Flagstaff (8.4 percent), Lake Havasu City (9.5 percent), and Prescott (8.6 percent).

In California and Nevada, home prices rose 7.2 percent and 8.7 percent, respectively, over a year, according to FHFA data, while their unemployment rates are above the national average. BLS reported California’s unemployment rate was 9.7 percent in December, while Nevada had a rate of 9.8 percent.

Furthermore, data from Zillow showed Phoenix, Los Angeles, Riverside were among the top metros where the most homeowners were freed from negative equity in 2012.

Fixed Rates Barely Budge After Spiking

Fixed Rates Barely Budge After Spiking

02/07/2013 BY: TORY BARRINGER

After spiking last week, fixed mortgage rates held their ground this week as the economy showed signs of stability, at least for the near future.

According to Freddie Mac’s Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 3.53 percent (0.8 point) for the week ending February 7, unchanged from last week. This time last year, the average FRM was 3.87 percent.

The 15-year fixed average dipped, meanwhile, dropping to 2.77 percent (0.7 point) from 2.81 percent.

Adjustable rates saw more movement, with the average 5-year adjustable-rate mortgage (ARM) dropping 7 basis points to 2.63 percent (0.6 point) and the average 1-year ARM falling 6 basis points to 2.53 percent (0.4 point).

“Mortgage rates were either unchanged or lower this week following a mostly positive employment data report for January,” said Frank Nothaft, VP and chief economist at Freddie Mac, adding that “[t]he only downside to the report was that the unemployment rate ticked up to 7.8 to 7.9 percent in January, which is still historically high.”

Bankrate reported similar findings. According to the site’s weekly survey, the 30-year fixed average was 3.76 percent this week, down a single basis point from last week. The 15-year fixed average settled down to 3.00 percent from 3.03 percent previously.

At the same time, the 5/1 ARM slipped from 2.78 percent to 2.76 percent.

“Mortgage rates ticked lower after the Federal Reserve indicated plans to maintain the pace of bond-buying efforts and another report of steady job growth. With the fiscal cliff averted, the debt ceiling debate delayed, and even overtures of postponing the significant federal spending cuts known as the sequester, any immediate risk of the wheels coming off the economy seems remote,” Bankrate said. “As a result, bond yields and mortgage rates are more or less holding steady, awaiting a catalyst for the next big move.”

Consumer Confidence Held Back by Payroll Tax Hike

Consumer Confidence Held Back by Payroll Tax Hike

02/01/2013 BY: TORY BARRINGER

Consumer confidence picked up somewhat in January, but the recent payroll tax hike put a ceiling on any major gains, according to the latest survey of consumers from Thomson Reuters and the University of Michigan (UMich).

The Index of Consumer Sentiment climbed slightly to 73.8 in January from December’s 72.9. The index read 75.0 in January 2012.

Meanwhile, the two components of the index moved in opposite directions: The Expectations Index posted a gain to 66.6 in January from 63.8 in December, while the Current Conditions Index declined to 85.0 in January from 87.0 in December.

According to a release accompanying the survey, January’s potential gains were dulled by the payroll tax increase, which has had a significant impact on lower income households; most of January’s improvement in confidence actually came from households with incomes above $75,000.

“The personal finances of consumers has weakened considerably compared with the closing months of 2012,” Thomson Reuters/UMich said. “The January decline was due to households with incomes below $75,000 reporting more frequent losses than could be offset by upper income households.”

According to the survey, 13 percent of lower income households reported gains in disposable income in January (down from 21 percent in December) compared to 38 percent of upper income households (up from 25 percent).

While concern about disposable income has some households fretting their current situation, more consumers expressed optimism that economic conditions will improve rather than worsen in 2013. However, while respondents are less fearful of a downturn this year, nearly 60 percent expect a downturn sometime in the next five years.

Overall, consumers said they do not anticipate a significant decline in the unemployment rate in 2013, though they do anticipate a slowly falling rate.

Fannie Mae: Slow Economic Growth May Be the Near-Term Norm

Fannie Mae: Slow Economic Growth May Be the Near-Term Norm

01/24/2013 BY: ESTHER CHO

While some are asking when the economy will return to normal, others are wondering if this prolonged period of below-potential GDP growth is actually the “new normal,” according to a report from Fannie Mae’s (FNMA/OTC) Economic & Strategic Research Group.

For 2013 and 2014, Fannie Mae projects a continuation of below-potential economic growth, with a 2 percent growth rate expected for 2013, similar to the lackluster performance seen in 2012.

“What we view as sub-par economic growth may actually continue to be par for the course for the near term,” said Fannie Mae Chief economist Doug Duncan. “We expect the fiscal policy climate to act as a drag on growth this year with possible implications on the direction of the economy in the long term.”

According to Fannie Mae’s report, potentially strong headwinds such as the fiscal cliff and ongoing debt ceiling are likely to suppress consumer spending in the first half off 2013.

But, as Fannie Mae points out, “[o]nce policy makers resolve the short-term fiscal policy problems, growth should accelerate in the second half of 2013 and carry forward into 2014.”

While GDP growth was described as “subdued” in 2012, Fannie Mae noted a couple noteworthy events: the unemployment rate falling below 8 percent for the first time since 2009 and the improvement in home prices, which coincided with a positive annual contribution from residential investment to GDP growth.

The housing sector continues to be viewed as the bright spot in the economy, and Fannie Mae says housing’s contribution to economic growth should increase this year and in coming years.

The GSE also pointed to the labor market and low mortgage rates as key driving forces behind the housing recovery.

With home sales, home prices, and home building activity appearing to trend upwards, Fannie Mae expects to see further increases.

Housing starts are expected to grow from about 775,000 units to 950,000 units in 2013. The report did point out that the projected level is far below the peak of more than 2 million units in 2005, but it will still be more than 60 percent above the annual record low in 2010.

As for home sales, Fannie Mae expects existing home sales to rise to an annual pace of around 5 million units in 2013 and 2014 and eventually reach nearly 6 million units in 2016.

Mortgage rates are expected to end 2013 slightly under 4 percent at around 3.8 percent and rise to around 4.2 percent at the end of 2014.

Mortgage originations should also increase and reach $642 billion in 2013 from a forecast of $518 billion in 2012, while refinance activity is expected to slow down and fall to $961 billion from a projected $1.4 trillion in 2012.

Hard-Hit Markets Improving; Inventory Shrunk in Most Markets

Hard-Hit Markets Improving; Inventory Shrunk in Most Markets

01/18/2013 BY: KRISTA FRANKS BROCK

After price gains in the first half of the year, the housing market ended 2012 with a national median price matching the year-ago level, according to Realtor.com. A closer look at regional data, however, reveals some markets are continuing to strengthen while others falter.

“National data masks pronounced regional differences in strength of the housing market,” Realtor.com stated in its recent report.

Consistent with 2012 trends, the group finds Florida, California, and Arizona, “markets that were once the epicenter of the housing crisis,” are improving, while markets in the Midwest and Northeast continue to struggle.

List prices increased in 66 of the 146 markets Realtor.com observes. Prices remained unchanged in 31 markets and decreased in 49.

One trend that remained relatively consistent across most markets was inventory, which declined in 145 of the 146 markets observed.

Inventory declined most year-over-year in Sacramento, California (-67.77 percent); Stockton-Lodi, California (-64.99 percent); and Oakland California (-64.24 percent). Nine of the top 10 markets for declining inventory were located in California.

California markets also dominated the list of top 10 markets for list price increases year-over-year in December. Sacramento, California topped the list with a 43.57 percent increase, followed by Santa Barbara-Santa Maria-Lompoc, California, with a 35.72 percent increase and San Francisco, California, with a 25.04 percent increase.

California’s dominance on this list is a new phenomenon this year. A look at the top 10 markets for year-over-year price increases in December 2011 includes not a single California market. Instead, Florida markets take seven of the top 10 spots.

The greatest list price declines in December 2012 were recorded in the Northeast and Midwest. Peoria-Pekin, Illinois, topped the list with a 14.29 percent decline over the year, followed by Reading, Pennsylvania, with a 7.84 percent decline and Charleston, West Virginia, with a 7.78 percent decline.

The previous December’s top 10 list included just two Midwestern markets, and four California markets earned rankings.

Also notable in Realtor.com’s recent report is its spotlight on Shreveport, Louisiana.

In 2003, after accepting more than 25,000 hurricane evacuees, Shreveport struggled with an unemployment rate that reached its highest point in a decade.

However, between June and November of last year, Shreveport’s unemployment rate plummeted from 8.4 percent to 4.6 percent.

Amid the economic turnaround, home prices rose 2.91 percent over the year, and Realtor.com expects further improvement this year.

Home Prices Drop In Oct; 1st Dip Since March

Home Prices Drop In Oct; 1st Dip Since March

12/26/2012 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Home prices fell in October for the first time since March according to the monthly Case Shiller Home Price Index released Wednesday.

Both the 10-city index and the 20-city index decreased 0.1 percent from September to 158.77 and 146.08 respectively. The value of the 10 city index fell 0.10 and of the 20-city index dropped 0.09. The 10-city index for October was 3.4 percent higher than it was in October 2011 and the 20-city index showed a 4.3 percent year-year gain.

Economists had expected the 20 city index to dip 0.3 percent in October but show a 4.1 percent year-year improvement. The Federal Housing Finance Administration index for October, reported last week, showed a 0.5 percent month-month increase and a 5.6 percent year-year gain. The median price of an existing single family home, according to the National Association of Realtors, fell 0.8 percent in October but still registered a 10.0 percent year-year increase.

According to the Case Shiller Index, prices fell in October in12 of the 20 cities tracked compared with September when prices fell month-month in seven cities. Prices had increased in 19 of the 20 cities in July and August and in all 20 cities in May and June.

Prices declined 1.5 percent in Chicago in October as the unemployment rate there rose to 9.9 percent from 9.4 percent in September. Prices dropped 1.4 percent in Boston and Phoenix in October though the unemployment rate in Boston improved to 6.3 percent in October from 6.5 percent in September. The unemployment rate in Phoenix was unchanged in the month remaining at 7.1 percent. Price drops in the other nine cities where prices fell in October were less than 1.0 percent.

Half of the cities which showed price drops were in the South, three in the Midwest, two in the Northeast and one in the West.

Prices rose 2.8 percent in October in Las Vegas which also saw its unemployment rate improve in the month to 11.6 percent from 11.9 percent and 1.3 percent in San Diego where the unemployment rate fell to 8.5 percent from 9.8 percent one month earlier. Price gains in the other five cities which showed improved were less than one percent. Prices were unchanged in the month in Denver.

Year over year prices improved in 18 of the 20 cities in October, matching September. Only Chicago and New York showed year-year price declines: 1.3 percent in Chicago and 1.2 percent in New York. The unemployment rate in Chicago dropped from 11.6 percent in October 2011 to 9.9 percent in October 2012 but in New York rose to 9.2 percent from 9.1 percent one year earlier.

Phoenix showed the strongest year-year price increase, up 21.7 percent from October 2011 to October 2012 with Detroit a distant second recording a 10.0 percent price gain. While the unemployment rate in Phoenix fell 1.6 percentage points year-year, it increased 0.3 percent points to 18.9 percent in Detroit from October 2011 to October 2012.

The 10-city index in October was down 29.8 percent from its June 2006 peak and the 20-city index is down 29.3 percent from its July 2006 peak.

Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:40 am and again at 9:40 eastern time.

 

Private sector misses job expectations

Private sector misses job expectations

The private sector created 118,000 jobs in November, primarily thanks to service-related jobs, a number that missed expectations ahead of Friday’s closely watched government report. Economists had expected the report to show 125,000 total private jobs. ADP said the service sector created 114,000 new positions, while goods-producing businesses accounted for the balance of 4,000 jobs. Gains of 23,000 construction jobs offset a loss of 16,000 in manufacturing. The report is often used as a precursor to the monthly nonfarms payroll report, which the government will release Friday. The economy is expected to have created 80,000 new jobs in November, with the unemployment rate likely to hold steady at 7.9%. While the report can change economists’ views, the ADP and government numbers often show wide differences. As a result, ADP partnered last month with Moody’s Analytics in an effort to provide a more accurate number. For October, ADP reported 157,000 new jobs – re vised lower by 1,000 – while the government showed a total of 184,000 new payroll positions. The bulk of the November job creation also came from large businesses, with 66,000 new positions, while medium-sized firms with 50 to 499 employees created 33,000 and small businesses added 19,000.