Chapter 11 Filings Soar, C&I Lending Growth Stalls (Unpeaceful, Uneasy Feeling)

Real GDP growth is above 3%, unemployment rate is near 4%, and other economic indicators are flashing green. Yet, I have an unpeaceful, uneasy feeling.

Chapter 11 (bankruptcy) filings are rising and are back to Great Recession levels.

Source: https://www.abi.org/ and http://www.uscourts.gov/statistics-reports/caseload-statistics-data-tables

Another indicator, commercial and industrial lending from commercial banks, is approaching a flat stall. Even real estate lending is slowing again YoY.

Throw in our Federal government debt of over $20 trillion and skyrocketing consumer debt,

So, The Federal Reserve was wildly successful in terms of lowering interest rates and encouraging the Federal government and households to gorge on debt. Wait, households are responsible for the Federal debt!

Perhaps we are already gone!

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Manufacturing in the U.S. Accelerates to Its Best Year Since 2004 (Making Manufacturing Great Again?)

Making Manufacturing Great Again? MMGA?

(Bloomberg) U.S. manufacturing expanded in December at the fastest pace in three months, as gains in orders and production capped the strongest year for factories since 2004, the Institute for Supply Management said Wednesday.

HIGHLIGHTS OF ISM MANUFACTURING (DECEMBER)
* Factory index climbed to 59.7 (est. 58.2) from 58.2 a month earlier; readings above 50 indicate expansion
* Gauge of new orders advanced to 69.4, the highest in nearly 14 years, from 64

ismneworders
*Measure of production increased to 65.8, the strongest since May 2010, from 63.9

Key Takeaways
The survey-based measure of factory activity — the year’s second-highest behind September, when storm-related supply delays boosted the index — brings the 2017 average to 57.6, the best in 13 years. The latest gain extends a string of strong readings that’s been fueled by more domestic business investment, improving global economies and steady spending by American households.

The acceleration in bookings indicates production will remain robust in coming months as factories race to limit mounting order backlogs amid declining customer inventories. Increasing export orders underscore improvement in global markets.

The figures suggest manufacturing strength will persist into early 2018, even after the ISM’s semi-annual survey of purchasing managers published last month showed factories anticipate growth in capital spending to slow this year.

 

 

 

Do The Double-up! As Rents Rise, More Renters Turn to Doubling Up (L.A. The Worst!)

Zillow has a fascinating, yet troubling study.  It says that rent consumes a growing share of household income in many cities, some people must relocate or find ways to offset rising prices. An increasingly popular way to cut costs is by adding a roommate. Nationally, 30 percent of working-age adults—aged 23 to 65—live in doubled-up households, up from a low of 21 percent in 2005 and 23 percent in 1990.

Doubing up is a close relative of young adults continuing to live with their parents. Even though U-6 unemployment is at 8%, wage growth continues to be considerably lower than before the financial crisis. This offers a partial explanation for the doubling-up phenomenon.

Of course, doubling-up is typical is high cost of living areas like Los Angeles, San Francisco, New York City, Chicago and Washington DC. Not surprising is the doubling-up trend in Mexican border cities like El Centro California, Tucson and Yuma Arizona and El Paso and Laredo Texas.

zillowdoubleup

This nice graphic shows the trend over time, with Los Angeles leading the way.

Doubled-350180

And yes, The Federal Reserve’s super low rate policies have contributed to rent growth (but not wage growth).

effrent

So, let’s do the double-up with Archie Bell and the Drells from Houston Texas.

Even The Dude (aka, Jeffrey Lebowski) didn’t have to double-up with Donnie or Walter Sobchak in the film The Big Lebowski in 1998. Likely all three would have to live together if filmed in 2017.

-the-big-lebowski-the-room

 

 

Jobs Friday: NFP Increased By 228K In November, Wage Growth Cools To 2.5% YoY, Unemployment Near 17 Year Lows

Total nonfarm payroll employment increased by 228,000 in November, and the unemployment  rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today.

Employment continued to trend up in professional and business services, manufacturing,  and health care.

Household Survey Data

The unemployment rate held at 4.1 percent in November, and the number of unemployed persons was essentially unchanged at 6.6 million. Over the year, the unemployment rate and the number of unemployed persons were down by 0.5 percentage point and 799,000, respectively. (See table A-1.)

17yrlow.png

Among the major worker groups, the unemployment rate for teenagers increased to 15.9 percent in November. The jobless rates for adult men (3.7 percent), adult women (3.7 percent), Whites (3.6 percent), Blacks (7.3 percent), Asians (3.0 percent), and Hispanics (4.7 percent) showed little change. (See tables A-1, A-2, and A-3.)

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.6 million in November and accounted for 23.8 percent of the unemployed.  Over the year, the number of long-term unemployed was down by 275,000. (See table A-12.)

The labor force participation rate remained at 62.7 percent in November and has shown no  clear trend over the past 12 months. The employment-population ratio, at 60.1 percent,  changed little in November and has shown little movement, on net, since early this year. (See table A-1.)

The number of persons employed part time for economic reasons (sometimes referred to as  involuntary part-time workers), at 4.8 million, was essentially unchanged in November but was down by 858,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs. (See table A-8.)

In November, 1.5 million persons were marginally attached to the labor force, down by
451,000 from a year earlier. (The data are not seasonally adjusted.) These individuals
were not in the labor force, wanted and were available for work, and had looked for a job  sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

Among the marginally attached, there were 469,000 discouraged workers in November, down by 122,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.0 million persons marginally attached to the labor force in November  had not searched for work for reasons such as school attendance or family responsibilities. (See table A-16.)

Establishment Survey Data

Total nonfarm payroll employment increased by 228,000 in November. Employment continued to trend up in professional and business services, manufacturing, and health care. Employment growth has averaged 174,000 per month thus far this year, compared with an average monthly gain of 187,000 in 2016. (See table B-1.)

Employment in professional and business services continued on an upward trend in November (+46,000). Over the past 12 months, the industry has added 548,000 jobs.

In November, manufacturing added 31,000 jobs. Within the industry, employment rose in machinery (+8,000), fabricated metal products (+7,000), computer and electronic products  (+4,000), and plastics and rubber products (+4,000). Since a recent low in November 2016,  manufacturing employment has increased by 189,000.

Health care added 30,000 jobs in November. Most of the gain occurred in ambulatory health care services (+25,000), which includes offices of physicians and outpatient care centers.  Monthly employment growth in health care has averaged 24,000 thus far in 2017, compared with an average increase of 32,000 per month in 2016.

leisure hospitality

Within construction, employment among specialty trade contractors increased by 23,000 in  November and by 132,000 over the year.

Employment in other major industries, including mining, wholesale trade, retail trade,
transportation and warehousing, information, financial activities, leisure and hospitality,
and government, changed little over the month.

The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.5 hours in November. In manufacturing, the workweek was unchanged at 40.9 hours, and overtime remained at 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours. (See tables B-2 and B-7.)

In November, average hourly earnings for all employees on private nonfarm payrolls rose  by 5 cents to $26.55. Over the year, average hourly earnings have risen by 64 cents, or 2.5 percent. Average hourly earnings of private-sector production and nonsupervisory
employees rose by 5 cents to $22.24 in November. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for September was revised up from +18,000 to +38,000, and the change for October was revised down from +261,000 to +244,000. With these revisions, employment gains in September and October combined were 3,000 more than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)  After revisions, job gains have averaged 170,000 over the last 3 months.

Wage growth cooled to 2.5% YoY in November. Despite all the monetary stimulus, wage growth never exceeded 3% since The Great Recession ended in June 2009.

wagereport

Nothing in this jobs report will change the likely out come of the next FOMC meeting on December 13th. There is a 98.3% implied probability of a rate hike.

wirp120817

Existing Home Sales Inventory Tanks To 1.8M Units As Median Prices Remain Steady At 5.5% YoY (Low Wage Growth and Super Accomodative Monetary Policy, What Could Go Wrong?)

Existing home sales rose 2% in October to 5.48M units SAAR, according to the National Association of Realtors.

But what was interesting in the October report was the continuation of the shrinking inventory of existing home sales which shrank to 1.8 million units, less than half the available inventory during the housing bubble years of the last decade.

The good news is that existing home sales median price YoY remains steady at 5.5%.

This is good news, except for the fact that US Avg Hourly Earnings Private NFP Prod&NonSup In Nom$ YoY is only 2.3%. That is an (un)affordable gap of 5.5% price growth and 2.3% earnings growth for most Americans. That ratio is over 2X.

Limited inventory, low wage growth and super-accomodative monetary policy since 2008. As Parks and Recreation’s Ken Wotate said regarding a Native American tribe making a deal with the government, “What could go wrong?”

jonathan-joss-parks-and-rec-e1507040384851

 

 

Initial Jobless Claims Near 44 Year Low! (Too Bad Wage Growth Is Roughly 1/3rd Of 1973 Wage Growth YoY)

US initial jobless claims rose slightly to 239k for the week ending November 4th. But initial jobless claims remain near the 44 year low.

joblessclaims

If we look at the 4 week moving average of initial claims, it too is at a 44 year low.

monthlyavg

Now that is an impressive feat! Now if only earnings growth would return to 1973 levels. Current YoY wage growth is roughly 1/3rd of 1973 wage growth.

 

 

Hey Bartender! U-6 Underemloyment Rate Drops To GWBush Lows of 7.9%, U-3 Lowest Since 2001 (But Wage Growth Declines)

Another jobs Friday and this one has some good news: The U-6 Underemployment Rate* fell to 7.9% in October. The last time the US hit this low level was under President George W Bush in December 2006 before all hell broke look in the housing market.u6back

The U-3 unemployment rate is now at the lowest level since early GW Bush (2001).

u3cool

Unfortunately, average hourly earnings YoY tumbled to 2.4% YoY.

avgheyoy

What were the jobs added?  Bartenders and waitstaff! This helps explain the decline in hourly wage earnings.

Oct Jobs by type

Hey Bartender! 

bartender-juniorryan-thumb-625xauto-332900

*U-6 underemployment rate equals the total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.