Connect with us


Consumption leads (longer term) unemployment, too

  – by New Deal democratOnce again there is no new economic data, so let me follow up some more on the issue of longer term unemployment.Earlier this…




 - by New Deal democrat

Once again there is no new economic data, so let me follow up some more on the issue of longer term unemployment.

Earlier this week I pointed out that just as initial claims lead continuing claims, so does short term unemployment (under 5 weeks) lead long term unemployment (15 weeks and over). Think of unemployment as a pipeline, and the intake flows before the main body of the pipeline.

Yesterday I followed up by noting that just as initial claims lead the unemployment rate, so continuing claims lead long term unemployment.

Because one of my persistent themes over the years has been that consumption leads employment, let me take a little time and briefly examine a variant of this: does consumption lead *unemployment* as well?

The answer is, generally speaking, yes it does.

First, let’s look at the YoY% change in real retail sales going back 75 years to the inception of the series in 1948 (red) and compare it with the YoY% change in unemployment for 15 weeks and over (inverted, blue):

With the sole exception of the 2001 recession, where the consumer barely participated at all, the answer is pretty clear: while real retail sales are noisier, they clearly turn up and down before longer term unemployment turns.

Now let’s look at the post-pandemic record:

Once again real retail sales turned down YoY about 6 - 9 months before longer term unemployment rose. 

Next, let’s compare real retail sales with continuing claims, which as noted above, lead longer term unemployment as well:

Although sales are much noisier than continuing claims, and there is clearly no one-to-one relationship, in general sales turn up or down coincident with to slightly before the turn in  continuing claims.

Here is the post-pandemic look at that relationship as well:

Sales decayed first, although both crossed the zero line coincidentally. 

YoY real sales have been getting “less negative” and turned slightly positive in September. October’s retail sales will be reported next Wednesday. If the recent improving trend continues, this would be more confirmation suggesting that long term unemployment is not going to significantly worsen in coming months, contra the historical pattern highlighted by Cullen Roche and others.

Read More

Continue Reading


This popular flight route is 111% more expensive on Thanksgiving weekend

If you haven’t booked your Thanksgiving flight yet, driving may be the better option.



The busiest weekend for cross-country travel is fast approaching. A year ago, the Transportation Security Administration (TSA) saw more than 2.56 million travelers pass through the country's airports the Sunday after Thanksgiving — below the 2.8 million people seen in 2019 but the highest number observed since the resurgence of travel post-pandemic.

Any time from the Wednesday before the holiday to the weekend afterwards is a period when both airports and roads are crowded while flights, especially when booked last-minute, can get egregiously expensive.

Related: TSA has a very unusual (but helpful) approach for busy holiday travel

While an October report from Expedia Group EXPE earlier this month showed that flights during Thanksgiving weekend are on average 14% lower than what was seen in 2022, particular routes are filling up fast.

A plane landing on the tarmac on a snowy day.


These are the routes to avoid if you don't want to break the bank for Thanksgiving travel

Looking at Google Flights GOOGL prices for the same routes booked for the weekend before Thanksgiving or in the days around the holiday, sports betting platform identified Los Angeles to San Francisco as the domestic route with the biggest price difference — the $105.73 average price during Thanksgiving weekend is a 111.4% hike from the $50.02 on the weekend before.

More Travel:

Las Vegas to Los Angeles is not far behind with a 110.6% difference between $80.52 during Thanksgiving and $38.23 a week before. Shorter routes generally see a bigger difference. A cross-country flight between New York's JFK and LAX in Los Angeles rounds out the top three routes, but the $174.46 vs. $288.74 price difference is, at 65.5%, significantly less dramatic than the top two routes.

Those traveling to or from Georgia could have to brace for a more expensive experience since Atlanta was in three of the top routes on the list — Atlanta to Fort Lauderdale, Atlanta to New York's LaGuardia Airport and Atlanta to Orlando.

Ticket prices seem expensive? You should book now anyway

The last spot on the list was taken by a short flight within the state of Hawaii from Honolulu on Oahu to Maui's Kahului even if the difference between $72.39 on the weekend before Thanksgiving compared to the $77.67 over the holiday is not likely to significantly influence someone's decision to travel.

Denver-Las Vegas, Denver-Phoenix and Los Angeles to Chicago's O'Hare Airport are some of the other routes to make the list of flights with the most stark differences between Thanksgiving and non-Thanksgiving travel.

While the above-mentioned Expedia report shows that the cheapest time to book a Thanksgiving flight is 28 to 35 days before departure, those who missed that timeframe and are hoping to find a last-minute deal may not have much luck.

With travelers increasingly desperate to not miss out on sharing turkey with family, airfare tends to rise dramatically the closer one gets to the day itself — in past years, some travelers reported paying up to 400% more after finding themselves stranded over Thanksgiving.

Many of the conditions that help some score cheap last-minute flights, such as being flexible with the timing and destinations, are also not applicable when one needs to be in a specific place (typically, the family home) for the holiday.

Read More

Continue Reading


Consumer favorite retailer files Chapter 11 bankruptcy

A major provider of party supplies has filed for Chapter 11 bankruptcy seeking to sell its assets.



Retail suppliers are essential to the survival of retailers, since without adequate inventory to sell, stores can't generate necessary revenue to remain in business. Suppliers occasionally have hard times and sometimes need to file bankruptcy to stay afloat. Some of those suppliers will reorganize and continue operating. Others will sell their assets to a new operator or may have such severe financial distress that they will need liquidate and go out of business.

Fresno, Calif.-based Prima Wawona, the nation's largest peach producer that supplies grocers like Walmart and Kroger KR, filed for Chapter 11 on Oct. 13 seeking to sell its assets to its lenders or a third party buyer. The debtor's lenders have agreed to allow the company to use its cash to fund operations and keep paying vendors and suppliers while the bankruptcy case proceeds.

Related: Beloved fast-food chain files for Chapter 11 bankruptcy

Instant Brands, maker of Instant Pot, Corning and Pyrex kitchenware, filed for Chapter 11 in June to seek a sale of its assets. The company, which sells its products to numerous retailers, including Walmart and Target TGT, reached an agreement in bankruptcy to sell its assets to private equity firm Centre Lane Partners. The deal is expected to close in the fourth quarter. 

Party supply retailer Party City filed Chapter 11 in January to restructure its debts after rising inflation, supply chain issues, a helium shortage and fallout from the Covid pandemic caused financial distress. The retailer emerged from bankruptcy in October. One of Party City's suppliers also ran into some financial distress that led to a bankruptcy filing.

Anagram Balloons seeks sale in Chapter 11

Party City's affiliate and a top supplier Anagram Balloons on Nov. 8 filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas in Houston seeking to sell its assets to its first-lien note lenders. The company listed $100 million to $500 million in assets and liabilities in its petition.

The Eden Prairie, Minn., balloon retailer manufactures and sells foil balloons and inflated décor domestically and internationally to party supply specialty stores, grocers, mass marketers, parks, drugstores and discount variety stores. The wholly owned subsidiary of Party City provides products directly to retailers like Walmart WMT, Dollar Treen DLTR and Canadian Tire and through domestic and international distributors. The balloon maker was not a debtor in Party City's Chapter 11.

Anagram currently employs about 350 employees and operates a 500,000 square-foot manufacturing, production and distribution facility.

Anagram has faced financial distress resulting from unsustainable debt on its balance sheet, lingering effects from the Covid-19 pandemic, global inflation and helium shortages that put strain on its balance sheet. Party City had filed a motion to reject Anagram contracts in its Chapter 11 case, but it did not follow through with that motion. Anagram sought a restructuring solution with its creditors, but was unable to reach a consensus on a reorganization transaction, according to a declaration from the company's Chief Restructuring Officer Adrian Frankum of Ankura Consulting Group. 

Debtor Anagram Holdings filed a motion seeking $22 million in senior secured debtor-in-possession financing with $10 million available immediately on approval of a interim order in order to fund the bankruptcy case and sales process. The remainder would be available on final order approval. It also seeks a $15 million first-lien asset-based loan facility from its prepetition ABL lender Wells Fargo that will roll up prepetition ABL obligations.

Anagram Balloons seeks a sale of its assets in bankruptcy.

Image source: Shuttertock

Prepetition lenders will credit bid at bankruptcy auction

The debtor's first-lien and DIP notes lender will submit a stalking horse credit bid for the full amount of the DIP and first-lien debt in a Section 363 auction of the company. It currently owes $110 million in prepetition first-lien debt, $84.7 million in Second Lien Note debt and $15 million to Wells Fargo in ABL debt.

The debtor will seek higher and better offers for its assets from potential buyers through a bankruptcy auction that is proposed for Dec. 5. The debtor is proposing to close the sale Dec. 29. A hearing is scheduled for Nov. 17 to consider the debtor's bidding procedures.

Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.

Read More

Continue Reading


How Affluent Homebuyers Are Keeping Luxury Real Estate Market Afloat

How Affluent Homebuyers Are Keeping Luxury Real Estate Market Afloat

Submitted by Sam Bourgi of CreditNews

Undaunted by rapidly rising…



How Affluent Homebuyers Are Keeping Luxury Real Estate Market Afloat

Submitted by Sam Bourgi of CreditNews

Undaunted by rapidly rising mortgage rates, many rich Americans haven’t given up on their poolside pads and high-end condos just yet. Luxury home prices climbed 9% to hit $1.1 million, the highest third-quarter level ever recorded, reports Redfin. That’s almost three times faster than the price growth of non-luxury homes, which made it to a median $340,000 in the third quarter.

And while the overall housing market has been cooling thanks to a dwindling supply of affordable properties and mounting rates on home loans, the market for homes in higher price tiers has been chugging along relatively well.

“Wealthy homebuyers have more tools to weather the storm of high mortgage rates,” says Redfin senior vice president of real estate operations Jason Aleem.

Of course, their most powerful tool comes down to bucketloads of cash.

Affluent buyers have big cash cushions

Mortgage rates moving closer to 8% have pushed many middle-income Americans out of the housing market this year.

In the meanwhile, people who purchased homes and locked in 3% mortgage rates in 2020 and 2021 are now reluctant to sell, keeping inventory tight and prices high.

But some wealthy buyers can afford to sidestep high interest rates by shelling out the cash upfront. Bloomberg reported in September that the wealthiest 20% of Americans haven’t used up their excess pandemic savings just yet, citing Fed data.

And Redfin reveals over 42% of luxury homes were purchased in cash in the third quarter, up from 34.6% the same period last year.

The analysis defines luxury homes as those estimated to belong to the top 5% of their respective metro area based on market value, with non-luxury homes categorized as those estimated to be in the 35th to 65th percentile.

Other buyers could be opting for the riskier play: taking on a mortgage with a higher rate now, in the hopes they can refinance into a lower rate in the future—an option that many lower-income Americans can’t afford, Aleem notes.

“Affluent Americans are still spending big, in large part because of pandemic savings and resilient housing and stock values,” he explains.

While the supply of non-luxury homes for sale has shrunk by an alarming 20.8% since last year, active listings of luxury homes have risen nearly 3%.

There’s been a notable rise in homebuilding as well, with the number of housing starts rebounding in September by 7%, compared to the previous month, according to the latest government data.

Newly-built homes often fall into the luxury category, adding to its strong inventory.

But this trend might not last

Experts say some wealthy buyers could start pulling back if affordability conditions don’t improve.

“While many luxury buyers have the resources to forge ahead even when mortgage rates are elevated, stubbornly high rates and home prices will likely push some affluent house hunters to the sidelines in the coming months,” said Redfin chief economist Daryl Fairweather.

“High costs, along with the uptick in the number of high-end homes for sale, could cause luxury price growth to cool.”

And new construction could slow as well, with confidence among single-family homebuilders tumbling to a nine-month low in October due to ebbing demand, according to the National Association of Home Builders and Wells Fargo Housing Market Index.

“In the very short-term, single-family construction activity is likely to increase with permits rising in every month of 2023 thus far, but at some point mortgage rates are likely to put a lid on new construction activity for home purchase,” Conrad DeQuadros, senior economic advisor at Brean Capital in New York, told Reuters last month.

Redfin also notes that luxury home sales fell 10.6% in the third quarter compared to last year.

Although this figure is markedly smaller than the 17% plunge in non-luxury sales, it’s indicative that some wealthy buyers are already retreating in the face of high mortgage rates.

Tyler Durden Thu, 11/09/2023 - 15:25

Read More

Continue Reading