House prices continued to tumble in March, according to the Case-Shiller index. Time to see what the futures say (keeping in mind the forecasting capacity of the Case Shiller futures are not well known).

Figure 2: Case-Shiller 10 city price index, (blue line), CME futures prices, 26 May 2009 (red triangle), and CME futures prices, 21 Sep 2008 (green diamond). NBER-defined recessions shaded gray, and start date dashed gray line Source: Standard and Poors' [xls], ino.com, St. Louis FRED II, NBER, and author's calculations.

So as of March, the 10 city is 40% lower than its May 2006 peak, in log terms (37%, in percent terms). The CME futures indicate that the 10 city index will be 52.7% lower by May 2010 (41% in percent terms). Compared to last September, the trough has moved up (the trough back then was slated to be in May 2011).

...

Highlights include D.R. Horton, Inc. (DHI), Whirlpool Corp. (WHR) and Fortune Brands, Inc. (FO).A recent academic paper by Atif Mian and Amir Sufi, both of the University of Chicago and the NBER, took a very close look at the effect of mortgage equity withdrawal on the overall economy during the housing bubble. "Mortgage equity withdrawal" is the more technical name for the housing ATM.It was very actively pushed by the banks during the housing bubble, with ads showing money hidden in people's houses that they were not taking advantage of. I knew it was significant, but this paper indicates that it was even more important than I thought it was. Here is an abstract from the paper:"Using individual-level data on homeowner debt and defaults from 1997 to 2008, we show that borrowing against the increase in home equity by ...

Just a quick post to highlight the OECD's recent forecast [0] for the US (-7.2% SAAR decline in 2009Q1), and e-forecasting's latest take (6.8% SAAR decline in 2009M03).

Figure 1: Real GDP from BEA (blue bars), and Macroeconomic Advisers 3/13 (red), e-forecasting 4/3 (blue). Tan shaded area indicates OECD 3/31 forecast for 2009Q1. Source: BEA, GDP release of 26 March 2009; Macroeconomic Advisers [xls], e-forecasting, OECD, and NBER.

Note that forecasted GDP (in the tan shaded area) is above the level implied by e-forecasting. E-forecasting's estimate is that GDP will be down by 9.9% (SAAR) in 2009Q1. If this more dire forecast proves accurate (Deutsche Bank predicts -8.0% SAAR), then -- as Brad Delong likes to say -- we'll need a bigger stimulus package.

See also Calculated Risk's discussion of the employment report: [1], [2], [3].

Side note: for those wanting to

...

From "Trade-Finance Pinch Hurts the Healthy," WSJ, 12/22/08:

The global financial crisis is drying up the financing that firms depend on for trade. That's making the global recession nastier and deeper than it otherwise would be.

As with all kinds of credit these days, financial institutions are making less trade finance available and charging more for it. But the squeeze in trade stands out because it pinches otherwise healthy companies that should be driving a recovery in global commerce. Already, the World Bank predicts trade will contract next year for the first time since 1982.

The Deteriorating Trade Outlook

Here's the IMF's recent forecasts for exports -- from October and then November -- for world trade, disaggregated into advanced and developing country groupings.

Figure 1: Real goods and services exports by country group. Source: IMF, World Economic Outlook Oct. 2008; Nov. 6 WEO update.

These developments in trade financing suggest that

...

Currencies trade in a tight range…  China…  Commodity prices to blame…  “Safe” Treasuries? And Now… Today’s Pfennig! Good day… And a Wonderful Wednesday to you! Well… I went “shopping” yesterday evening… At least I can say I did my bit to keep the economy afloat! HA! Thanks to all who sent along notes to me yesterday with kind words. I truly appreciate the kind words, you are all too kind! The automakers made their pleas to Congress yesterday, and they claim they are in deep dookie! GM says they need $4 Billion right now! And… The original $25 Billion figure has grown to $35 to $40 Billion…

The currencies were lifeless yesterday, with only

...

Here at "A Dash" we are always interested in things that become part of the conventional wisdom with little supporting evidence. To find the right terminology for this concept, we turned to a leading source, Stephen Colbert on "truthiness."  Here is the Wikipedia definition: Truthiness is a term first used in its current satirical sense by American television comedian Stephen Colbert in 2005, to describe things that a person claims to know intuitively or "from the gut" without regard to evidence, logic, intellectual examination, or facts. It is important at the outset to be very, very clear about our intention.  We are not saying that the CW is wrong, just that the evidence does ...

The typical Econbrowser reader might not be surprised at the NBER decision -- but some others will. From a May 2008 WSJ article:

"The data are pretty clear that we are not in a recession," Council of Economic Advisers Chairman Edward Lazear told a meeting of editors and reporters from the Wall Street Journal and Dow Jones Newswires.

...

"I would be very surprised if the NBER, looking back at this period, would date this as a recession," Mr. Lazear said. There are even indications that revised first-quarter estimates would be slightly stronger than 0.6%. "The optimists seem to have been closer to right on that than the pessimists," he said.

Just to reiterate, that quote is from May 2008.

Here's a picture of GDP and gross domestic income (as suggested by Jim in this post, and noted in the BCDC announcement).

Figure 1: Gross domestic product (blue), and ...

Article Source The President's press conference yesterday was meant to buttress consumer and investor confidence. I will leave it to others to evaluate whether he was successful in this endeavor [0]. I will also ignore his disingenuous remarks concerning how allowing drilling offshore and in ANWR [1] would somehow affect gasoline prices today in a noticeable manner, and focus instead on his repeated emphasis on the fact that the economy is still growing (although he never mentioned at what pace). This statement is indeed accurate if one focuses on real GDP. I present the log of real GDP in Chained 2000$, normalized to 0 at the NBER-defined trough in 2001Q4. I also present for reference log GDP in the previous two expansions, normalized to 0 in the previous troughs in 1991Q1 and 1982Q4. (For those interested in output gaps, the mean WSJ forecast predicts output will be ...

by Menzie Chinn New aggregate indicators on the macroeconomy are out. How do they compare against a summary measure of the macro series the NBER BCDC focus on? A week ago, Macroeconomic Advisers released their estimate of April GDP, while e-Forecasting released their estimate of May GDP. These two series are depicted in Figure 1. Recall that the NBER BCDC examines four other variables to gauge economic activity: payroll employment, industrial production, real manufacturing and trade sales, and real personal income less transfers [1]. To see how GDP has moved differently from these other measures of economic activity, see this post. Rather than providing a welter of series, I’ve tried to summarize the movement in these four variables by generating an index that is the first principal component of the four underlying series (all logged). This is the blue line in Figure 1. Figure 1: First ...

Article Source: Nonresidential investment has been increasing until 2008Q1, at which time it essentially stalled (-0.2 ppts. annualized in log terms). On the basis of past historical correlations, what's in store? Figure 1: Four quarter growth rate in nonresidential investment (blue) and residential investment (red) lagged one year, calculated as four quarter log difference. Source: BEA GDP release of 29 May 2008, NBER, and author's calculations.Figure 1 depicts the time series for year-on-year nonresidential investment growth, and residential investment growth lagged four quarters. There's an obvious correlation, but clearly it's not a particularly strong one. There are periods where business fixed investment levitates above residential growth, such as the latter part of the 1980s (due to the dollar's depreciation), and during the 1990s, as well as the most recent few quarters. The relationship ...