Is Yahoo! Truly Global?

Fuse/Thinkstock

Yahoo! has rolled out a new home page globally in the UK, Ireland, Germany, France, Italy, Spain, and South Africa.  But does this make them truly global?

Read:  Yahoo!'s New Homepage Starts Going Global

Retail Sales increased 0.7% in November

On a monthly basis, retail sales increased 0.7% from October to November (seasonally adjusted), and sales were up 4.7% from November 2012. Sales in October were revised up from a 0.4% increase to 0.6%. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for November, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $432.3 billion, an increase of 0.7 percent from the previous month, and 4.7 percent above November 2012. ... The September to October 2013 percent change was revised from +0.4 percent to +0.6 percent.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).


Retail sales ex-autos increased 0.4%. 

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 5.5% on a YoY basis (4.7% for all retail sales).

This was a solid report, and especially strong considering the upward revision to October sales.

Weekly Initial Unemployment Claims increase to 368,000

The DOL reports:

In the week ending December 7, the advance figure for seasonally adjusted initial claims was 368,000, an increase of 68,000 from the previous week's revised figure of 300,000. The 4-week moving average was 328,750, an increase of 6,000 from the previous week's revised average of 322,750.

The previous week was up from 298,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 328,750.

Weekly claims are frequently volatile around the holidays (Thanksgiving), and the level of the four week average of weekly claims suggests an improving labor market.

Thursday: Retail Sales, Unemployment Claims

Something to be aware of from Victoria McGrane And Jon Hilsenrath at the WSJ: Fed Moves Toward New Tool for Setting Rates

An experimental bond-trading program being run at the Federal Reserve Bank of New York could fundamentally change the way the central bank sets interest rates.

Fed officials see the program, known as a "reverse repo" facility, as a potentially critical tool when they want to raise short-term rates in the future to fend off broader threats to the economy.
...
"The Federal Reserve has never tightened monetary policy, or even tried to maintain short-term interest rates significantly above zero, with such abundant amounts of liquidity in the financial system," according to a draft of a new research paper by Brian Sack, the former head of the New York Fed's markets group, and Joseph Gagnon, an economist at the Peterson Institute for International Economics and a former Fed economist.

...
When it does want to raise rates, the Fed under the repo program would use securities it accumulated through its bond-buying programs as collateral for loans from money-market mutual funds, banks, securities dealers, government-sponsored enterprises and others.

The rates it sets on these loans, in theory, could become a new benchmark for global credit markets.

Thursday:
• 8:30 AM ET, 8he initial weekly unemployment claims report will be released. The consensus is for claims to increase to 325 thousand from 298 thousand last week.

• Also at 8:30 AM, Retail sales for November will be released. The consensus is for retail sales to be 0.6% in November, and to increase 0.3% ex-autos.

• At 10:00 AM, Manufacturing and Trade: Inventories and Sales (business inventories) report for October. The consensus is for a 0.3% increase in inventories.

Lawler on Fed Note: “Business Investor Activity in the Single-Family-Housing Market”

Economist Tom Lawler writes:

A “FEDS Note” (by Fed economists Malloy and Zarutskie), available on the Federal Reserve’s website, Business Investor Activity in the Single-Family-Housing Market, is a brief note on purchases of SF homes by “business investors” over the past few years. The data are based on an analysis of CoreLogic real estate transactions by analysts at Amherst Holdings. While the note does not give details on how a “business investor” was determined, the note says that this determination was made by looking at the names of the buyers of record. A link to the chart says that “(b)usiness investors are defined as business entities identified as purchasing homes for primarily for the purpose of earning a financial return.”

Here is a chart from the report on the Business Investor share of national home purchases.

Click on graph for larger image.

As noted above, this chart only reflects the BUSINESS INVESTOR” share of home purchases, and does not include INDIVIDUAL investors. Back in 2004 and 2005 the investor share of mortgage-financed home purchases was extremely high, with such purchases mainly being by individuals (many of whom purchased multiple properties.)

At first glance this share increase, while noticeable, may not seem “large.” However, these shares suggest that business investor purchase of SF homes from 2010 to 2013 (using full-year estimates for 2013) totaled over 950,000, more than double the total number of business investor purchases over the previous SIX years (2004-2009). If the bulk of these business investor purchases were bought with the intent to rent the properties out for “several” years, then the sharp decline in the number of residential properties from 2010 to early 2013 seems a bit more “explainable.”

The note has a table showing the business-investor share of SF home purchases for selected metro areas.

CR Note: The metro areas with the largest share of investor buying in 2012 were Atlanta at 16.43%, Phoenix at 13.99% and Las Vegas at 10.97%.

Mortgage Equity Withdrawal Slightly Negative in Q3

Note: This is not Mortgage Equity Withdrawal (MEW) data from the Fed. The last MEW data from Fed economist Dr. Kennedy was for Q4 2008.

The following data is calculated from the Fed's Flow of Funds data and the BEA supplement data on single family structure investment. This is an aggregate number, and is a combination of homeowners extracting equity - hence the name "MEW", but there is little MEW right now - and normal principal payments and debt cancellation.

For Q3 2013, the Net Equity Extraction was minus $24 billion, or a negative 0.8% of Disposable Personal Income (DPI).  This is the smallest negative equity extraction since Q1 2008.

Click on graph for larger image.

This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method.

There are smaller seasonal swings right now, perhaps because there is a little actual MEW (this is heavily impacted by debt cancellation right now).

The Fed's Flow of Funds report showed that the amount of mortgage debt outstanding increased by $10.0 billion in Q3. This was the first increase in mortgage debt since Q1 2008. Since some mortgage debt is related to new home purchases, net negative equity extraction was still slightly negative in Q3.

The Flow of Funds report also showed that Mortgage debt has declined by over $1.3 trillion since the peak. This decline is mostly because of debt cancellation per foreclosures and short sales, and some from modifications. There has also been some reduction in mortgage debt as homeowners paid down their mortgages so they could refinance. With residential investment increasing, and a slower rate of debt cancellation, it is possible that MEW will turn positive again soon.

For reference:

Dr. James Kennedy also has a simple method for calculating equity extraction: "A Simple Method for Estimating Gross Equity Extracted from Housing Wealth". Here is a companion spread sheet (the above uses my simple method).

For those interested in the last Kennedy data included in the graph, the spreadsheet from the Fed is available here.

Update: Looking for Stronger Economic Growth in 2014

Six weeks ago I wrote: Comment: Looking for Stronger Economic Growth in 2014. I listed several reasons for a positive outlook, and if anything, I'm a little more optimistic now.  Here are a few reasons:

1) The apparent budget deal takes a key downside risk off the table, and reduces the impact of the sequester.

2) Household balance sheets are in much better shape - and it appears that in the aggregate, household deleveraging is over.  The Fed just reported the first increase in total mortgage debt since Q1 2008.  See: Fed's Q3 Flow of Funds: Household Mortgage Debt increased slightly, First Mortgage Debt increase since Q1 2008, NY Fed: Household Debt increased in Q3, Delinquency Rates Improve, and Fed: Household Debt Service Ratio near lowest level in 30+ years

3) State and local government austerity is over (in the aggregate).

4) The housing recovery should continue. Housing has slowed recently (new home sales, housing starts), but the overall level is still very low and I expect further growth in 2014.

5) Commercial real estate (CRE) investment will probably make a small positive contribution in 2014.

Eliminating drags is important.  The drag from state and local governments is over. The drag from household deleveraging (in the aggregate) is ending. The threats of a government shutdown, not "paying the bills", and mindless austerity is over (assuming the budget deal is approved).  And  CRE investments are starting to appear.

All of these were impediments to growth over the last few years.

Yes, growth in the auto industry will slow in 2014, and housing has slowed recently (but I think we will see more growth in 2014).  However, overall it appears 2014 will probably be the best growth year for the recovery (the best was 2012 with 2.8% real GDP growth), and possibly the best year since Clinton was President.

Duty Free Model is Going Global

iStock/Thinkstock

Qatar Duty Free is preparing to expand internationally, with Senior Vice President Keith Hunter saying the company will look at opportunities around the world.

“We’ll [says Hunter] be looking all around the world [for] any opportunities where it may be a business opportunity for us or a partnership or an association.”

Read the entire article: Qatar Duty Free Signals Ambitions For International Expansion

MBA: Mortgage Applications Increase in Latest Survey

From the MBA: Mortgage Applications Fall During Holiday-Shortened Week

Mortgage applications increased 1.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 6, 2013. The previous week’s results included an adjustment for the Thanksgiving holiday. ...

The Refinance Index increased 2 percent from the previous week and was 16 percent lower than the week prior to Thanksgiving. The seasonally adjusted Purchase Index increased 1 percent from one week earlier and was 3 percent lower than the week prior to Thanksgiving. ...
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.61 percent, the highest rate since September, from 4.51 percent, with points decreasing to 0.26 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index.

The refinance index is down sharply - and down 68% from the levels in early May.


The second graph shows the MBA mortgage purchase index.  

The 4-week average of the purchase index is now down about 8% from a year ago.

Note: It appears these small independent lenders (not included in the MBA survey) are focusing on the purchase market.  A result of this change in market share is the Purchase Index is probably understating the increase in purchase activity.

Update: Budget Deal is Reached

Some good news ...

From the NY Times: Congressional Negotiators Reach Budget Deal

The agreement eliminates about $65 billion in across-the-board domestic and defense cuts while adding an additional $25 billion in deficit reduction by extending a 2 percent cut to Medicare through 2022 and 2023, two years beyond the cuts set by the Budget Control Act of 2011.
...
Under the agreement, military and domestic spending for the current fiscal year that is under the annual discretion of Congress would rise to just over $1 trillion, from the $967 billion level it would hit if spending cuts known as sequestration were imposed next month. Spending would be capped at $1 trillion in fiscal year 2015 as well.

And from the WSJ: House, Senate Negotiators Announce Budget Deal

Revenues to fund the higher spending would come from changes to federal employee and military pension programs, and higher fees for airline passengers, among other sources. An extension of long-term unemployment benefits, sought by Democrats, wasn't included.

In 2013, the key downside risk to the economy was Congress (specifically the House), and unfortunately they delivered. Hopefully this eliminates that risk for 2014.

On the economics, the sequester cuts were a disaster (they probably hurt the economy more than it helped reduce the deficit), so reducing the sequester cuts for 2014 is a positive. I'd like to see an extension of emergency unemployment benefits for another 6 months or a year, but that isn't included in this deal.

The bottom line: Although this deal was expected (and I expect the bill to pass), this is another reason to be optimistic about 2014. Also - even though Fed officials will deny it - I think this increases the odds of the Fed tapering in December or January 2014.

Lawler: Preliminary Table of Distressed Sales and Cash buyers for Selected Cities in November

Economist Tom Lawler sent me the preliminary table below of short sales, foreclosures and cash buyers for several selected cities in November.  First, from Lawler on November sales:

"While I do not have enough reports to produce an accurate estimate of existing home sales for November, reports I’ve seen so far suggest that home sales declined again on a seasonally adjusted basis last month."

From CR: This is just a few markets, but total "distressed" share is down significantly, mostly because of a decline in short sales.  Foreclosure are down in most areas too.


The All Cash Share (last two columns) is mostly declining year-over-year.  As investors pull back in markets the share of all cash buyers will probably decline.

In general it appears the housing market is slowly moving back to normal.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	Nov-13	Nov-12	Nov-13	Nov-12	Nov-13	Nov-12	Nov-13	Nov-12
Las Vegas	21.0%	41.2%	7.0%	10.7%	28.0%	51.9%	43.7%	52.7%
Reno	17.0%	41.0%	6.0%	9.0%	23.0%	50.0%
Phoenix	7.8%	23.2%	8.0%	12.9%	15.8%	36.1%
Mid-Atlantic	7.5%	11.9%	8.1%	8.7%	15.7%	20.6%	19.6%	20.0%
Tucson							32.2%	33.8%
Toledo							37.2%	40.9%
Omaha							21.6%	19.8%
Spokane			16.0%	9.1%
Memphis*			20.4%	24.4%
Springfield IL			17.0%	15.8%
*share of existing home sales, based on property records

Public and Private Sector Payroll Jobs: Reagan, Bush, Clinton, Bush, Obama

By request, here is an update on an earlier post through the November employment report.

In April, I posted two graphs comparing changes in public and private sector payrolls during the Bush and Obama presidencies. Several readers asked if I could add Presidents Reagan and Clinton (I've also added the single term of President George H.W. Bush).  Below are updates through the September report.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, so a different comparison might be to look at the percentage change.   Of course the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is declining now.  But these graphs give an overview of employment changes.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s).  President George H.W. Bush only served one term, and President Obama is in the first year of his second term. 

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble.  Mr. Obama (blue) took office during the financial crisis and great recession.  There was also a significant recession in the early '80s right after Mr. Reagan (yellow) took office.

There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.

Click on graph for larger image.

The first graph is for private employment only.

The employment recovery during Mr. G.W. Bush's (red) first term was very sluggish, and private employment was down 946,000 jobs at the end of his first term.   At the end of Mr. Bush's second term, private employment was collapsing, and there were net 665,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,490,000 private sector jobs added.

Private sector employment increased by 20,864,000 under President Clinton (light blue) and 14,688,000 under President Reagan (yellow).

There were only 1,933,000 more private sector jobs at the end of Mr. Obama's first term.  At this early point in Mr. Obama's second term, there are now 3,860,000 more private sector jobs than when he initially took office.

 A big difference between the presidencies has been public sector employment.  Note the bumps in public sector employment due to the decennial Census in 1990, 2000, and 2010. 

The public sector grew during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,748,000 jobs).

However the public sector has declined significantly since Mr. Obama took office (down 726,000 jobs). These job losses have mostly been at the state and local level, but more recently at the Federal level.  This has been a significant drag on overall employment.

Looking forward, I expect the economy to continue to expand for the next few years, so I don't expect a sharp decline in employment as happened at the end of Mr. Bush's 2nd term (In 2005 and 2006 I was warning of a coming recession due to the bursting of the housing bubble).

A big question is when the public sector layoffs will end.  It appears the cutbacks are mostly over at the state and local levels, but there are ongoing cutbacks at the Federal level - but overall public employment will probably start increasing soon.

Las Vegas Real Estate in November: Year-over-year Non-contingent Inventory up 77.4%

This is a key distressed market to follow since Las Vegas has seen the largest price decline of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported GLVAR reports home prices, sales, supply dip heading into holidays

GLVAR said the total number of existing local homes, condominiums and townhomes sold in November was 2,694. That’s down from 3,192 in October and down from 3,293 total sales in November 2012. Compared to October, single-family home sales during November decreased by 16.2 percent, while sales of condos and townhomes decreased by 12.7 percent. Compared to one year ago, single-family home sales were down 17.9 percent, while condo and townhome sales were down 19.3 percent. ...
...
In November, 21 percent of all existing home sales were short sales, unchanged from October. Another 7 percent of all November sales were bank-owned properties, up from 6 percent in October. The remaining 72 percent of all sales were the traditional type, down from 73 percent in October.
...
The total number of properties listed for sale on GLVAR’s Multiple Listing Service decreased in November, with 14,240 single-family homes listed for sale at the end of the month. That’s down 5.1 percent from 15,011 single-family homes listed for sale at the end of October and down 8.9 percent from one year ago. ...

By the end of November, GLVAR reported 6,830 single-family homes listed without any sort of offer. That’s down 3.4 percent from 7,072 such homes listed in October, but still up 77.4 percent from one year ago. For condos and townhomes, the 2,192 properties listed without offers in November represented a 2.4 percent decrease from 2,247 such properties listed in October, but an 80.0 percent increase from one year ago.
emphasis added

There are several key trends that we've been following:

1) Sales were down again in November, and down about 17.9% year-over-year.

2) Conventional sales are up solidly.  In November 2012, only 48.1% of all sales were conventional.  This year, in November 2013, 72.0% were conventional.  That is an increase in conventional sales of about 23% year-over-year.

3)  Most distressed sales are short sales instead of foreclosures (3 to 1).  Both foreclosures and short sales are down sharply year-over-year.

4) and most interesting right now is that non-contingent inventory (year-over-year) is now increasing rapidly.  Non-contingent inventory is up 77.4% year-over-year!

Inventory has clearly bottomed in Las Vegas (A major theme for housing in 2013).  And fewer distressed sales and more inventory means price increases will slow.

BLS: Job Openings "little changed" in October

From the BLS: Job Openings and Labor Turnover Summary

There were 3.9 million job openings on the last business day of October, little changed from September, the U.S. Bureau of Labor Statistics reported today. The hires rate (3.3 percent) and separations rate (3.1 percent) were also little changed in October. ...
...
Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. ... The number of quits (not seasonally adjusted) increased over the 12 months ending in October for total nonfarm and total private and was little changed for government.

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for October, the most recent employment report was for November.

Click on graph for larger image.

Notice that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Jobs openings increased in October to 3.925 million from 3.883 million in September.  The number of job openings (yellow) is up 7.7% year-over-year compared to October 2012 and openings are at the highest level since early 2008.

Quits increase in October and are up about 14.7% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").  This is the highest level for quits since 2008.

Not much changes month-to-month in this report - and the data is noisy month-to-month, but the general trend suggests a gradually improving labor market.  It is a good sign that job openings and quits (voluntary separations) are both at the highest level since 2008.

NFIB: Small Business Optimism Index increases in November

From the National Federation of Independent Business (NFIB): Small Businesses Optimism Up Slightly

Owner sentiment increased by 0.9 points to 92.5 ... Over half of the improvement was accounted for by the labor market components which is certainly good news, lifting them closer to normal levels.

Fifty-one percent of the owners hired or tried to hire in the last three months and 44 percent reported few or no qualified applicants for open positions. This is the highest level of hiring activity since October 2007.

Click on graph for larger image.

This graph shows the small business optimism index since 1986. The index increased to 92.5 in November from 91.6 in October.  

Another positive: During the recession, the single most important problem was "poor sales".  The percentage of owners naming "poor sales" has fallen significantly, and small business owners are once again complaining about taxes and government - this is what they complain about in good times!

Pack Light On Your Digital Devices When Traveling Internationally

iStock/Thinkstock

Oh how difficult it is to leave our digital devices behind when we travel internationally for leisure.  But that does not need to be the case.  You can travel overseas and still stay connected with the world.  Here's how - with some tips on considering a lightweight digital device packing mentality.

What to do (and not to do) when traveling overseas with Apple gear

(Note:  In my new book, "Exporting:  The Definitive Guide to Selling Abroad Profitably," I cover an entire chapter on international travel and security tips (Chapter 26).  The book will be published by Apress in nine (9) days!  

Tuesday: Small Business Survey, Job Openings

The FHFA will charge higher fees in certain states (slow judicial foreclosure states). From Nick Timiraos at the WSJ: Fannie, Freddie to Raise Loan Fees

Mortgage-finance giants Fannie Mae and Freddie Mac will boost certain fees that they charge lenders ... The firms’ federal regulator, the Federal Housing Finance Agency, said Monday it would direct the companies to increase by 0.1 percentage points the so-called “guarantee” fees that the companies charge to lenders. Those fees have nearly doubled since 2009.

But the latest increase will be muted in most states because the FHFA also said that it would direct the companies to eliminate separate fees that had been implemented in the aftermath of the financial crisis. ...

The upshot is that borrowing costs could rise slightly in the four states—New York, Florida, New Jersey and Connecticut—where the latest fee increases won’t be offset by the removal of the crisis-era fees.

It is clearly appropriate to charge higher fees in states with higher costs. Maybe there will be a move towards a national foreclosure law ...

Tuesday:
• 7:30 AM ET, NFIB Small Business Optimism Index for November.

• 10:00 AM, Job Openings and Labor Turnover Survey for October from the BLS. Jobs openings increased in September to 3.913 million from 3.844 million in August. This is a survey closely followed by the Fed.

• Also at 10:00 AM, Monthly Wholesale Trade: Sales and Inventories for October. The consensus is for a 0.4% increase in inventories.

Weekly Update: Housing Tracker Existing Home Inventory up 1.8% year-over-year on Dec 9th

Here is another weekly update on housing inventory ... for the eight consecutive week, housing inventory is up year-over-year.  This suggests inventory bottomed early in 2013.

There is a clear seasonal pattern for inventory, with the low point for inventory in late December or early January, and then peaking in mid-to-late summer.

The Realtor (NAR) data is monthly and released with a lag (the most recent data was for October).  However Ben at Housing Tracker (Department of Numbers) has provided me some weekly inventory data for the last several years.

Click on graph for larger image.

This graph shows the Housing Tracker reported weekly inventory for the 54 metro areas for 2010, 2011, 2012 and 2013.

In 2011 and 2012, inventory only increased slightly early in the year and then declined significantly through the end of each year.

Inventory in 2013 is now 1.8% above the same week in 2012 (red is 2013, blue is 2012).

We can be pretty confident that inventory bottomed early this year.  Inventory is still very low, but this increase in inventory should slow house price increases. 

Note: One of the key questions for 2014 will be: How much will inventory increase?  I'll post some thoughts on inventory at the end of the year.

Fed's Q3 Flow of Funds: Household Mortgage Debt increased slightly, First Mortgage Debt increase since Q1 2008

The Federal Reserve released the Q3 2013 Flow of Funds report today: Flow of Funds.

According to the Fed, household net worth increased in Q3 compared to Q2, and is at a new record. Net worth peaked at $69.1 trillion in Q3 2007, and then net worth fell to $55.7 trillion in Q1 2009 (a loss of $13.4 trillion). Household net worth was at $77.3 trillion in Q3 2013 (up $21.6 trillion from the trough in Q1 2009).

The Fed estimated that the value of household real estate increased to $19.0 trillion in Q3 2013. The value of household real estate is still $3.6 trillion below the peak in early 2006.

Click on graph for larger image.

This is the Households and Nonprofit net worth as a percent of GDP.  Although household net worth is at a record high, as a percent of GDP it is still below the peaks in 2000 (stock bubble) and 2006 (housing bubble).

This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations.

This ratio was increasing gradually since the mid-70s, and then we saw the stock market and housing bubbles. The ratio has been trending up and increased again in Q3 with both stock and real estate prices increasing.

This graph shows homeowner percent equity since 1952.

Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.

In Q3 2013, household percent equity (of household real estate) was at 50.7% - up from Q2, and the highest since Q2 2007. This was because of both an increase in house prices in Q3 (the Fed uses CoreLogic) and a reduction in mortgage debt.

Note: about 30.3% of owner occupied households had no mortgage debt as of April 2010. So the approximately 52+ million households with mortgages have far less than 50.7% equity - and millions have negative equity.

The third graph shows household real estate assets and mortgage debt as a percent of GDP.

Mortgage debt increased by $10.0 billion in Q3.  (Still declined as percent of GDP).  This is the first increase in mortgage debt since Q1 2008.

Mortgage debt has now declined by $1.32 trillion from the peak. Studies suggest most of the decline in debt has been because of foreclosures (or short sales), but some of the decline is from homeowners paying down debt (sometimes so they can refinance at better rates).

The value of real estate, as a percent of GDP, was up in Q3 (as house prices increased), but still close to the average of the last 30 years (excluding bubble). However household mortgage debt, as a percent of GDP, is still historically high, suggesting a little more deleveraging ahead for certain households.

Update on "Small Ball" Budget Agreement

An agreement should be reached this week ...

From Ezra Klein and Evan Soltas at the WaPo: Wonkbook: The ‘Grand Bargain’ is over

The budget deal Patty Murray and Paul Ryan are crafting isn't a "grand bargain." ... But the deal does lift about a third of sequestration's cuts while giving agencies more flexibility to deal with the rest. It does mean the 2014 budget is the work of human hands rather than automatic cuts. It might be a vehicle for Capitol Hill to extend expiring unemployment benefits. And it would be a small but real boost to the economy.

Joel Prakken of Macroeconomic Advisors says the deal "would be a modest boost to GDP growth (relative to sequester). Maybe 1/4 percentage point." Moody's Mark Zandi adds in the possibility of extending unemployment insurance and estimates that "the lift to GDP next year compared to current law is .4. Small, but it matters."

Reducing the sequester budget cuts is good policy.  And it would be good economics (and good overall policy) to extend the emergency unemployment benefits too - but it isn't clear if that will happen.

The Human Element to Website Translation

iStock/Thinkstock

The human element to Web translations is crucial to entering global markets.  All too often ...

“Translating all but the smallest websites into multiple languages can be as grueling as producing original content,” said Henderson. “For one thing, translating web content is not as simple as translating print copy. The language is served live by host systems, and special inter-dependencies exist between multiple language versions for the sake of efficiency and accuracy.”

Read the entire article:  Website translation crucial to entering global markets

In my new book , "Exporting:  The Definitive Guide to Selling Abroad Profitably," I talk about web translation considerations in Chapter 15.  You're gonna love it.  The book will be published by Apress December 18, 2013 - in nine (9) more days!

Sunday Night Futures: Taper Talk and "Small Ball" Budget Agreement

This will be a light week for economic data, but there will be plenty of discussion about when the Fed will start to taper QE3 asset purchases. From Binyamin Appelbaum at the NY Times: Fed’s Plan to Taper Stimulus Effort Not Expected Until Next Year

Federal Reserve officials are in no hurry to retreat from their bond-buying campaign to stimulate the economy and are likely to postpone any cuts to the program until next year, according to public statements by Fed officials and interviews with some of them.
...
[I]nfluential Fed officials see little harm in postponing the decision, particularly compared with the risks of pulling back too soon. Significant details of the eventual retreat also remain the subjects of unresolved debates, according to the public statements and interviews. And some officials argue that the slow pace of inflation is itself a reason for the Fed to maintain its stimulus campaign.

I still think there is a chance that the taper will start in December, but the consensus seems to be early in 2014 (either at the January or March meeting).

Another key event this week will be the expected "small ball" budget agreement on Friday. From Lori Montgomery at the WaPo: Budget deal expected this week amounts to a cease-fire as sides move to avert a standoff

House and Senate negotiators were putting the finishing touches Sunday on what would be the first successful budget accord since 2011 ...

Senior aides familiar with the talks say the emerging agreement aims to partially repeal the sequester and raise agency spending to roughly $1.015 trillion in fiscal 2014 and 2015. That would bring agency budgets up to the target already in place for fiscal 2016. To cover the cost, Ryan and Murray are haggling over roughly $65 billion in alternative policies, including cuts to federal worker pensions and higher security fees for the nation’s airline passengers.

Cutting back the sequester is good economic policy, and we don't need more austerity right now ... so this agreement will be a positive for the economy.

Weekend:
• Schedule for Week of December 8th

• Update: Four Charts to Track Timing for QE3 Tapering

The Nikkei is up about 1.8%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up 2 and DOW futures are up 20 (fair value).

Oil prices are up with WTI futures at $97.76 per barrel and Brent at $111.58 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.24 per gallon.  If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

Graphs: Duration of Unemployment, Unemployment by Education, Construction Employment and Diffusion Indexes

Friday on the employment report:
• November Employment Report: 203,000 Jobs, 7.0% Unemployment Rate
• Employment Report: Decent Report, Solid Seasonal Retail Hiring


A few more employment graphs by request ...


Duration of Unemployment
This graph shows the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

The general trend is down for all categories, and both the "less than 5 weeks" and 6 to 14 weeks" are close to normal levels. 

The long term unemployed is at 2.6% of the labor force - the lowest since May 2009 - however the number (and percent) of long term unemployed remains a serious problem.

Unemployment by Education
This graph shows the unemployment rate by four levels of education (all groups are 25 years and older).

Unfortunately this data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with regards to the unemployment rate - and it appears all four groups are generally trending down.

Although education matters for the unemployment rate, it doesn't appear to matter as far as finding new employment!

Note: This says nothing about the quality of jobs - as an example, a college graduate working at minimum wage would be considered "employed".

Construction Employment
This graph shows total construction employment as reported by the BLS (not just residential).

Since construction employment bottomed in January 2011, construction payrolls have increased by 416 thousand.    According to the BLS, essentially no construction jobs have been over the last five months.  Historically there is a lag between an increase in activity and more hiring - and it appears hiring should pickup significant in 2014.

Diffusion Indexes
 The BLS diffusion index for total private employment was at 63.5 in November, up from 61.1 in October.

For manufacturing, the diffusion index increased to 63.0, up from 56.8 in October.

Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS. From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.

Job growth was widespread in November (a good sign).  

Update: Four Charts to Track Timing for QE3 Tapering

Here is an update of the four charts I'm using to track when the Fed will start tapering QE3 purchases.

In general the year-end data might be "broadly consistent" with the June (and September) FOMC projections.

However I suspect the FOMC is very concerned about the low level of inflation, and also the decline in the employment participation rate.

The December FOMC meeting is on the 17th and 18th.  Note: Another key is that a budget agreement is reached by December 13th.

Click on graph for larger image.

The first graph is for the unemployment rate.

The current forecast is for the unemployment rate to decline to 7.1% to 7.3% in Q4 2013.

We only have data through November, but it is pretty clear that the  unemployment rate is tracking the FOMC forecast (lower is better). 

However, in July, Bernanke said that the unemployment rate "probably understates the weakness of the labor market."  He suggested he is watching other employment indicators too, and I suspect the FOMC will also discuss the decline in the participation rate.

The second graph is for GDP.

The current forecast is for GDP to increase between 2.0% and 2.3% (the FOMC revised down their forecast from 2.3% and 2.6% in June).  This is the increase in GDP from Q4 2012 to Q4 2013.

Currently GDP is tracking the FOMC forecasts, and real GDP only has to increase 0.8% annualized in Q4 to reach the lower forecast.  Even with a negative contribution from inventories in Q4, it appears GDP will meet the lower forecast.

The third graph is for PCE prices.

The current forecast is for prices to increase 1.1% to 1.2% from Q4 2012 to Q4 2013.  This was revised up from 0.8% to 1.2% in June.

We only have data through October, but so far PCE prices are below this projection - and this projection is significantly below the FOMC target of 2%. Clearly the FOMC expects inflation to pickup, and a key is if the recent decline in inflation is "transitory".

The fourth graph is for core PCE prices

The current forecast is for core prices to increase 1.2% to 1.3% from Q4 2012 to Q4 2013.

Through October core PCE prices are below this projection - and, once again, this projection is significantly below the FOMC target of 2%.

Schedule for Week of December 8th

This will be a light week for economic data.

The key report this week will be retail sales for November.

----- Monday, December 9th -----
12:00 PM: Q3 Flow of Funds Accounts of the United States from the Federal Reserve.

----- Tuesday, December 10th -----
7:30 AM ET: NFIB Small Business Optimism Index for November.

10:00 AM: Job Openings and Labor Turnover Survey for October from the BLS.

This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings increased in September to 3.913 million from 3.844 million in August.  The number of job openings (yellow) is up 8.6% year-over-year compared to September 2012 and openings are at the highest level since early 2008.

Quits were mostly unchanged in September and are up about 18% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

10:00 AM: Monthly Wholesale Trade: Sales and Inventories for October. The consensus is for a 0.4% increase in inventories.

----- Wednesday, December 11th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, December 12th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 325 thousand from 298 thousand last week.

8:30 AM ET: Retail sales for November will be released.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales are up 29.1% from the bottom, and now 13.2% above the pre-recession peak (not inflation adjusted)

The consensus is for retail sales to be 0.6% in November, and to increase 0.3% ex-autos.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for October.  The consensus is for a 0.3% increase in inventories.

----- Friday, December 13th -----
8:30 AM: Producer Price Index for November. The consensus is for a 0.1% decrease in producer prices (and 0.1% increase in core PPI).

Unofficial Problem Bank list declines to 643 Institutions

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for December 6, 2013.

Changes and comments from surferdude808:

There were only two removals this week to the Unofficial Problem Bank List, which now stand at 643 institutions with assets of $219.8 billion. A year ago, the list held 849 institutions with assets of $316.2 billion.

The Federal Reserve terminated the Written Agreement against Peoples Bank, Lawrence, KS ($412 million). Metropolitan National Bank, Little Rock, AR ($973 million) merged with Simmons First National Bank, Pine Bluff, AR to exit the list.

There is nothing new to report on the status of the banking subsidiaries controlled by Capitol Bancorp, Ltd. Next week should be fairly quiet as we do not anticipate the OCC releasing its latest action activity until December 20th.

Note on the unofficial list:

Because the FDIC does not publish the official list, a proxy or unofficial list can be developed by reviewing press releases and published formal enforcement actions issued by the three federal banking regulators, reviewing SEC filings, or through media reports and company announcements describing that the bank is under a formal enforcement action. For the most part, the official problem bank list is comprised of banks with a safety & soundness CAMELS composite rating of 4 or 5 (the banking regulators use the FFIEC rating system known as CAMELS, which stands for the components that receive a rating including Capital adequacy, Asset quality, Management quality, Earnings strength, Liquidity strength, and Sensitivity to market risk. A composite rating is assigned from the components, but it does not result from a simple average of the components. The composite and component rating scale is from 1 to 5, with 1 being the strongest). Customarily, a banking regulator will only issue a safety & soundness formal enforcement when a bank has a composite CAMELS rating of 4 or 5, which reflects an unsafe & unsound financial condition that if not corrected could result in failure. There is high positive correlation between banks with a safety & soundness composite rating of 4 or worse and those listed on the official list. For example, many safety & soundness enforcement actions state in their preamble that an unsafe & sound condition exists, which is the reason for action issuance.

Since 1991, the banking regulators have statutorily been required to publish formal enforcement actions. For many reasons, the banking regulators have a general discomfort publishing any information on open banks especially formal enforcement actions, so not much energy is expended on their part ensuring the completeness of information in the public domain or making its retrieval simple. Given the difficulty for easy retrieval of all banks operating under a safety & soundness formal enforcement action, the unofficial list fills this void as a matter of public interest.

All of the banks on the unofficial list have received a safety & soundness formal enforcement action by a federal banking regulator or there is other information in the public domain such as an SEC filing, media release, or company statement that describe the bank being issued such an action. No confidential or non-public information supports any bank listed and a hypertext link to the public information is provided in the spreadsheet listing. The publishers make every effort to ensure the accuracy of the unofficial list and welcome all feedback and any credible information to support removal of any bank listed erroneously.

New Kid on the Block in Chicago: OfficeMax in the Streeterville Area!

Photo courtesy:  OfficeMax

Photo courtesy:  OfficeMax

Photo courtesy:  OfficeMax

I had the great pleasure to connect with Kristin Muntean, vice president of Strategic Initiatives and Innovation at OfficeMax to discuss its new OfficeMax location in the heart of downtown Chicago. According to Muntean, the OfficeMax Business Solutions Center advances the third pillar in the OfficeMax “Road to Success” strategic plan—innovative and disruptive moves. As a leading worldwide supplier of workplace products, services and solutions that provides a seamless, multichannel network for delivering those solutions, OfficeMax is establishing a new way to partner with today’s growing businesses. Here’s an excerpt from our interview.

Laurel Delaney: Why did you open a location in the near North side of Chicago – Streeterville -- area?

Kristin Muntean: OfficeMax recognized the positive relationships that exist between the small business community and the city of Chicago. Chicago and OfficeMax both support small business, their growth initiatives and their innovation. With over 19,000 businesses within a one mile radius of the Streeterville location, there is a great opportunity for OfficeMax Business Solutions Centers to provide more focused support and solutions to the local businesses and the entrepreneurs in the area.

Delaney: Why the target on small and medium-sized businesses (SMEs)?

OfficeMax has a successful history of serving business customers of all sizes, which makes us uniquely positioned to introduce a retail format designed for local businesses and entrepreneurs. We understand that entrepreneurs have specific needs and the importance of providing a resource nearby that will work to understand and serve their business. The OfficeMax Business Solutions Center is a unique retail concept designed specifically to address the needs of local entrepreneurs and small businesses through a relationship-based service center focused on the services, products and solutions they need.

Delaney: Please explain your key differentiator at OfficeMax Business Solutions Center.

Muntean: Through this relationship-based retail service center, OfficeMax provides local businesses with a portfolio of specially tailored services and solutions. Key elements of the OfficeMax Business Solutions Center in Streeterville include:

1. Focus on small business customer: We understand the needs of small businesses and have services, products and solutions to help grow their businesses.

2. Services focused: The store has a wide array of services, specifically designed for business, including print and document services, computer repair and maintenance, hard drive recovery, 24/7 IT support, websites and web design, domain names, cloud storage, shipping, office space planning, payroll processing, credit card processing and more. In addition to services, the OfficeMax Business Solutions Center also has a full array of office supplies and technology products including laptops, tablets and printers.

3. Business Solutions Adviser: Our Business Solutions Adviser has an office in the store and partners with business customers to understand their needs and create customized programs and pricing specifically designed for each business.

4. Knowledgeable associates: Associates have received enhanced training to ensure the highest quality service to help connect entrepreneurs to the products and services they need.

5. Collaborative and technology enabled center: Business community space within the store includes free Wi-Fi that lets customers conduct informal meetings or simply bring in their laptop to plug in and work.

Delaney: What’s the biggest benefit to SMEs knowing about your Center?

Muntean: The OfficeMax Business Solutions Center provides local businesses and entrepreneurs with a relationship service center to meet their needs and help them grow. We are a “one-stop shop” that goes beyond office supplies and products and offers a full range of services and solutions to meet the needs of all types of businesses from start-up to those businesses that have years of experience. Every step of the process—from starting up and formalizing their business to setting up an office or website—OfficeMax can be their partner. Your readers can find out more about the service and product offering at the OfficeMax Business Solutions Center here: officemax.com/businesscenter.

So my dear readers, you want to grow your business?  Pay a visit to OfficeMax Business Solutions Center during the holidays!  The address is:  550 N. St. Clair Avenue, Chicago, Illinois, 60611, U.S.A. 

Note:  This is not a paid endorsement nor is it an advertisement.  This is merely our support to the great things OfficeMax is doing for SMEs in our neighborhood.

AAR: Rail Traffic increased in November

From the Association of American Railroads (AAR): AAR Reports Increased Intermodal, Carload Traffic for November

The Association of American Railroads (AAR) today reported increased U.S. rail traffic for November 2013 over November 2012. Intermodal traffic in November totaled 1,007,549 containers and trailers, up 7.8 percent (73,004 units) compared with November 2012. The weekly average of 251,887 intermodal containers and trailers per week in November 2013 was the highest weekly average for any November in history. Carloads originated in November 2013 totaled 1,145,353, up 1.3 percent (14,931 carloads) compared with the same month last year.
...
Excluding coal, U.S. carloads were up 5.3 percent, or 34,988 carloads, in November 2013 compared with November 2012. Excluding coal and grain, U.S. carloads were up 3.3 percent, or 19,303 carloads, in November.

“U.S. rail traffic in November 2013 saw a big decline in coal carloads that was more than offset by gains in carloads of grain and petroleum products,” said AAR Senior Vice President John T. Gray. “Carload traffic continues to be consistent with an economy that’s growing at a moderate pace. Meanwhile, rail intermodal volume was extremely strong in November, demonstrating the tremendous value that intermodal has become for rail customers.”
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA).  Green is 2013.

U.S. rail carloads were up 1.3% (14,931 carloads) in November 2013 over November 2012, totaling 1,145,353 carloads for the month. That’s the fourth consecutive year-over-year monthly increase, the first time that’s happened in two years. The weekly average in November 2013 was 286,338 carloads ...

Among the 20 commodity categories tracked by the AAR each month, grain had by far the biggest carload gain in November, with grain carloads up 15,685 (20.6%) over the same month last year. ... Carloads of petroleum and petroleum products averaged 14,532 per week in November 2013, up 20.0% over November 2012.

Graphs and excerpts reprinted with permission.

The second graph is for intermodal traffic (using intermodal or shipping containers):

Intermodal traffic is on track for a record year in 2013.

U.S. railroads originated an average of 251,887 intermodal containers and trailers per week in November 2013, easily the highest weekly average for any November in history and up 7.8% (73,004 intermodal units) over November 2012. That’s the biggest year-over-year percentage change in nine months.

To date, the peak full year for U.S. rail intermodal volume is 2006, when originations totaled 12.3 million containers and trailers. In order for 2013 not to set an annual record, intermodal volume in December 2013 would have to average no more than approximately 102,000 units per week. So far in 2013, the weekly average has been more than 247,000 units, so it’s a safe bet that next month in this space we’ll be reporting that 2013 was a record year for intermodal.

Rail traffic and the economy usually grow together, so this is a good sign for the overall economy.

CBO: Federal Deficit declined Sharply in October and November compared to last year

From the Congressional Budget Office (CBO): Monthly Budget Review for November 2013

The federal government ran a budget deficit of $231 billion for the first two months of fiscal year 2014, $61 billion less than the shortfall recorded in October and November of last year, CBO estimates.
...
Receipts for the first two months of fiscal year 2014 totaled $380 billion, CBO estimates—$34 billion more than receipts during the same period last year.

...
Outlays for the first two months of fiscal year 2014 were $27 billion less than they were during the same period last year, CBO estimates. That decrease would have been slightly larger if not for shifts in the timing of certain payments from December to November (because December 1 fell on a weekend in both years). Without those timing shifts, CBO estimates, spending would have declined by $29 billion (or 5 percent).

The most recent CBO projection put the fiscal 2014 deficit at 3.3% of GDP, down from 4.1% in fiscal 2013. These monthly deficits suggest even more improvement in fiscal 2014 than originally forecast.

Personal Income decreased 0.1% in October, Spending increased 0.3%

Still catching up ... the BEA released the Personal Income and Outlays report for October:

Personal income decreased $10.8 billion, or 0.1 percent ... in October, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $32.7 billion, or 0.3 percent.
...
Real PCE -- PCE adjusted to remove price changes -- increased 0.3 percent in October, compared with an increase of 0.1 percent in September. ... The price index for PCE decreased less than 0.1 percent in October, in contrast to an increase of 0.1 percent in September. The PCE price index, excluding food and energy, increased 0.1 percent in October, the same increase as in September.

On inflation, the PCE price index decreased at a 0.4% annual rate in October, and core PCE prices increased at a 0.9% annual rate.  This is very low and far below the Fed's 2% target.

The following graph shows real Personal Consumption Expenditures (PCE) through October 2013 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

This is just one month of Q4, but this suggests an increase in the PCE contribution to growth (compared to Q3).  Also Q4 this year should be better than Q4 2012 (there was essentially no growth in Q4 2012).

I expect the change in private inventories to be a negative in Q4 2013 (inventories subtracted 2.0 percentage points in Q4 2012), but we won't see the large negative contribution from government this year (subtracted 1.3 percentage points in Q4 2012).

Preliminary December Consumer Sentiment increased to 82.5

Catching up ...


Click on graph for larger image.

The preliminary Reuters / University of Michigan consumer sentiment index for December was at 82.5, up from the November reading of 75.1.

This was well above the consensus forecast of 75.5. Sentiment has generally been improving following the recession - with plenty of ups and downs - and one big spike down when Congress threatened to "not pay the bills" in 2011.  The decline in October and early November was probably also due to the government shutdown and another threat to "not pay the bills".

As usual sentiment rebounds fairly quickly following event driven declines, and I expect to see sentiment at post-recession highs very soon.

Employment Report: Decent Report, Solid Seasonal Retail Hiring

A few key points:

• Most of the employment impact from the government shutdown was reversed in the November report.

• Earlier I noted four items that the Fed would probably be looking at to taper in December. Here were the two related to employment:

1) "If the unemployment rate declines back to 7.2% or so in November (the September rate), then the FOMC might taper." Since the unemployment rate declined to 7.0%, this was met.

2) "If the year-over-year change in employment is still around 2.2 million for November, the FOMC might taper." Employment was up 2.293 million year-over-year in November.

The other two items for the Fed are inflation (core PCE is only up 1.1% year-over-year), and a budget agreement by next week (seems likely).   At this point, inflation is the question mark for the Fed.

• Seasonal retail hiring remained solid. See the first graph below - this is a good sign for the holiday season ("Watch what they do, not what they say")

Seasonal Retail Hiring

Click on graph for larger image.

Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.

This graph really shows the collapse in retail hiring in 2008. Since then seasonal hiring has increased back close to more normal levels. Note: I expect the long term trend will be down with more and more internet holiday shopping.

Retailers hired 471 thousand workers (NSA) net in November.  This was just below the level in 2012, and suggests that retailers expect decent holiday sales. Note: this is NSA (Not Seasonally Adjusted).

Note: There is a decent correlation between seasonal retail hiring and holiday retail sales.

Employment-Population Ratio, 25 to 54 years old

Since the participation rate declined recently due to cyclical (recession) and demographic (aging population) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the employment-population ratio for this group was trending up as women joined the labor force. The ratio has been mostly moving sideways since the early '90s, with ups and downs related to the business cycle.

These numbers declined sharply in October due to the government shutdown, and bounced back in the November report. 

Percent Job Losses During Recessions


This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at maximum job losses.  At the recent pace of improvement, it appears employment will be back to pre-recession levels next year (Of course this doesn't include population growth).

In the earlier post, the graph showed the job losses aligned at the start of the employment recession.

This financial crisis recession was much deeper than other post WWII recessions, and the recovery has been slower (the recovery from the 2001 recession was slow too). However, if we compare to other financial crisis recoveries, this recovery has actually been better than most.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) fell by 331,000 to 7.7 million in November. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

This more than reversed the increase in part time workers that happened in October due to the government shutdown.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 13.2% in November from 13.8% in October.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 4.066 million workers who have been unemployed for more than 26 weeks and still want a job. This was up slightly from 4.063 million in October. This is generally trending down, but is still very high.  Long term unemployment remains one of the key labor problems in the US.

State and Local Government

This graph shows total state and government payroll employment since January 2007. State and local governments lost jobs for four straight years. (Note: Scale doesn't start at zero to better show the change.)

In November 2013, state and local governments added 14,000 jobs, and state and local employment is up 76 thousand so far in 2013.

I think state and local employment has bottomed.  Of course Federal government layoffs are ongoing.

Overall this was a decent employment report.