by Calculated Risk on 9/01/2011 08:30:00 AM

The DOL reports:

In the week ending August 27, the advance figure for seasonally adjusted initial claims was 409,000, a decrease of 12,000 from the previous week's revised figure of 421,000. The 4-week moving average was 410,250, an increase of 1,750 from the previous week's revised average of 408,500.

The following graph shows the 4-week moving average of weekly claims since January 2000 (longer term graph in graph gallery).

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased this week to 410,250.

Weekly claims declined slightly, but the 4-week average is still elevated. Next week claims will probably increase due to Hurricane Irene.

Note: The Verizon strike added to claims the previous two weeks.

by Calculated Risk on 9/01/2011 12:12:00 AM

• From the WSJ: Germany's Resiliency Buoys Europe

A pair of bullish reports, on German employment and manufacturing, were reassuring on Wednesday: Unemployment remained at its lowest level in nearly two decades last month, while July machine orders jumped 9% from a year earlier. The latest data suggest that Europe's largest economy, which is expected to grow 3% this year, remains resilient ...

• This is similar to the recession measure graphs I posted from Doug Short: Real GDP per Capita

[Doug's] preferred GDP metric is the per-capita variant. I take real GDP and divide it by the mid-month population estimates from the Census Bureau, which has reported this data from 1959 (hence my 1960 starting date). By this measure, Q2 2011 GDP is 3.4% off its peak.

Check out the 2nd graph at Doug's site.

Earlier:
• ADP: Private Employment increased 91,000 in August
• CoreLogic: Home Price Index increased 0.8% in July
• Restaurant Performance Index declined in July
• Fannie Mae and Freddie Mac Serious Delinquency Rates mostly unchanged in July

by Calculated Risk on 8/31/2011 07:22:00 PM

Update from Lawler: Yesterday I gave some stats on the "states" with the highest and lowest shares of owner-occupied homes owned free and clear. Those %'s were incorrect; they were %'s for the % of ALL occupied homes owner free and clear. (My bad).

From economist Tom Lawler:

While Census has not released “Summary File 1” for the US as a whole, it has released such data for all 50 states plus DC. As such, aggregate US data from these files, including homeownership rates by selected age groups, can be constructed using the mathematical tools called “addition” and “division.”

Note the sizable declines in homeownership rates over the last decade in the 25-54 year old age groups!

US Homeownership by Age Group (Decennial Census)
	1980	1990	2000	2010
15 to 24 years	22.1%	17.1%	17.9%	16.1%
25 to 34 years	51.6%	45.3%	45.6%	42.0%
35 to 44 years	71.2%	66.2%	66.2%	62.3%
45 to 54 years	77.0%	75.3%	74.9%	71.5%
55 to 64 years	77.6%	79.7%	79.8%	77.3%
65 years and over	70.1%	75.2%	78.1%	77.5%
Total	64.4%	64.2%	66.2%	65.1%

Here is a comparison of the decennial Census homeownership rates (which reflect April 1st) and the Housing Vacancy Survey (which are yearly average estimates). HVS data by age group only go back to 1982.

US Homeownership by Age Group (Housing Vacancy Survey)
	1980	1990	2000	2010
15 to 24 years	---	15.7%	21.7%	22.8%
25 to 34 years	---	44.2%	47.1%	44.4%
35 to 44 years	---	66.3%	67.9%	65.0%
45 to 54 years	---	75.2%	76.5%	73.5%
55 to 64 years	---	79.3%	80.3%	79.0%
65 years and over	---	76.3%	80.4%	80.5%
Total	---	63.9%	67.4%	66.9%

While the decennial Census data show that the homeownership rates for all age groups save for “geezers” in 2010 were down significantly from 1990, the HVS data do not show the same declines. Census officials are unsure of why there are such large discrepancies, but most – though not all -- feel that the decennial Census data are more accurate, and that there is “sumpin’ wrong” with the HVS data (the same is true for the HVS vacancy data), and not just for 2010, but for 2000 as well.

Some readers might be surprised at the sizable declines in the homeownership rates for younger householders from 1980 to 1990 – after all, they’ve been deluged with charts showing “aggregate” US homeownership rates over the last several years, but with little or no discussion of homeownership rates by age group. There was actually a fair amount written about the drop in younger householder homeownership rates from 1980 to 1990, with researchers attributing the decline to a number of factors – younger folks marrying later in life, job choices and labor mobility, and several other factors (I don’t plan to summarize the literature.)

Also from Tom Lawler: Number of Homes Owned Free and Clear

Here is a table derived from the decennial Census 2010 on the number of owner-occupied homes with a mortgage vs. those owned free and clear.

Owner-Occupied Homes (Census 2010)
Total	75,986,074
Owned with a mortgage or loan	52,979,430
Owned free and clear	23,006,644

Update: By state with correction:

% of OO Homes owned free and clear, 2010
US Total	30.3%
Alabama	36.6%
Alaska	31.2%
Arizona	27.9%
Arkansas	38.9%
California	22.3%
Colorado	22.3%
Connecticut	26.4%
Delaware	28.2%
District of Columbia	19.6%
Florida	33.0%
Georgia	25.6%
Hawaii	29.3%
Idaho	29.1%
Illinois	28.3%
Indiana	27.9%
Iowa	34.8%
Kansas	33.3%
Kentucky	35.9%
Louisiana	40.9%
Maine	33.5%
Maryland	21.2%
Massachusetts	25.8%
Michigan	31.3%
Minnesota	27.2%
Mississippi	41.5%
Missouri	31.5%
Montana	38.5%
Nebraska	33.7%
Nevada	21.4%
New Hampshire	27.5%
New Jersey	27.1%
New Mexico	37.7%
New York	33.0%
North Carolina	30.3%
North Dakota	42.9%
Ohio	30.0%
Oklahoma	37.7%
Oregon	28.2%
Pennsylvania	35.0%
Rhode Island	26.2%
South Carolina	33.9%
South Dakota	39.1%
Tennessee	34.1%
Texas	34.4%
Utah	23.7%
Vermont	31.9%
Virginia	25.3%
Washington	25.6%
West Virginia	47.7%
Wisconsin	30.3%
Wyoming	36.5%

CR Note: So, in 2010, about 30.3% of owner-occupied homes were owned free and clear. There will be much more on the 2010 Census data once the Summary File is released.

by Calculated Risk on 8/31/2011 04:15:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate was unchanged at 4.08% in July. This is down from 4.82% in July of 2010. The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Freddie Mac reported that the Single-Family serious delinquency rate increased to 3.51% in July from 3.50% in June. This is down from 3.89% in July 2010. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are loans that are "three monthly payments or more past due or in foreclosure".

Note that the Fannie and Freddie serious delinquency rates are much lower than the overall serious delinquency rate (LPS reported that the overall serious delinquency rate and in-foreclosure was 7.72% in July).

Click on graph for larger image in graph gallery.

Some of the rapid increase in 2009 was probably because of foreclosure moratoriums, and also because loans in trial mods were considered delinquent until the modifications were made permanent.

Although the delinquency rate was unchanged in July, the serious delinquency rate has been falling as Fannie and Freddie work through the backlog of delinquent loans.

The normal serious delinquency rate is under 1%, and it doesn't look like the delinquency rate will be back to "normal" for a number of years.

by Calculated Risk on 8/31/2011 01:41:00 PM

From the National Restaurant Association: Restaurant Industry Outlook Softened in July as Restaurant Performance Index Slipped to Its Lowest Level in 11 Months

As a result of softer same-store sales and traffic levels and a dampened outlook among restaurant operators, the National Restaurant Association’s (www.restaurant.org) Restaurant Performance Index (RPI) fell below 100 in July. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 99.7 in July, down from 100.6 in June and the lowest level in 11 months.

“Although same-store sales and customer traffic levels remained positive in July, restaurant operators’ outlook for the economy took a pessimistic turn,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “This survey month was burdened with the debt ceiling crisis and the downgrade in the nation’s credit rating, which added an additional layer of uncertainty in an already fragile economic recovery.”
...
Restaurant operators reported somewhat softer same-store sales results in July. ... Restaurant operators also reported softer customer traffic levels in July.

Click on graph for larger image in graph gallery.

The index declined to 99.7 in July (above 100 indicates expansion).

Unfortunately the data for this index only goes back to 2002.

This is a minor report, but still interesting (barely "D-List" data).

by Calculated Risk on 8/31/2011 10:10:00 AM

• First on the Chicago PMI Chicago Business Barometer™ Slipped: The overall index decreased to 56.5 from 58.8 in July. This was above consensus expectations of 53.5. Note: any number above 50 shows expansion. The employment index increased to 52.1 from 51.5. The new orders index decreased to 56.9 from 59.4.

• Notes: This CoreLogic Home Price Index is for July. The Case-Shiller index released yesterday was for June. Case-Shiller is the most followed house price index, but CoreLogic is used by the Federal Reserve and is followed by many analysts. The CoreLogic HPI is a three month weighted average of May, June and July (July weighted the most) and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic® July Home Price Index Shows Fourth Consecutive Month-Over-Month Increase

CoreLogic ... today released its July Home Price Index (HPI) which shows that home prices in the U.S. increased for the fourth consecutive month, inching up 0.8 percent on a month-over-month basis. On a year-over-year basis, however, national home prices, including distressed sales, declined by 5.2 percent in July 2011 compared to July 2010. In June 2011, prices declined by 6.0 percent* compared to June 2010. Excluding distressed sales, year-over-year prices declined by 0.6 percent in July 2011 compared to July 2010 and by 1.9* percent in June 2011 compared to June 2010. Distressed sales include short sales and real estate owned (REO) transactions. [*CR note: June index was revised up]

“While July’s numbers remained relatively positive, particularly for non-distressed sales which have been stable, seasonal influences are expected to fade in late summer. At that point the month-over-month growth will most likely turn negative. The slowdown in economic growth and increased uncertainty caused by the recent stock market volatility will continue to exert downward pressure on prices,” said Mark Fleming, chief economist for CoreLogic.

Click on graph for larger image in graph gallery.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was up 0.8% in July, and is down 5.2% over the last year, and off 30.6% from the peak - and up 5.5% from the March low.

As Mark Fleming noted, some of this increase is seasonal (the CoreLogic index is NSA) and the index is still off 5.2% from last July. Month-to-month prices will probably turn negative later this year (the normal seasonal pattern).

Yesterday:
• Case Shiller: Home Prices increased in June
• Real House Prices and Price-to-Rent
• LPS: Average Loan in Foreclosure Is Delinquent for Record 599 Days

by Calculated Risk on 8/31/2011 08:15:00 AM

ADP reports:

Employment in the U.S. nonfarm private business sector rose 91,000 from July to August on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated advance in employment from June to July was revised down modestly to 109,000, from the initially reported 114,000.
...
Employment in the service-providing sector rose by 80,000 in August, marking 20 consecutive months of employment gains. Employment in the goods-producing sector rose by 11,000 in August, up from a loss of 2,000 jobs last month. Manufacturing employment slipped 4,000 in August.

Note: ADP is private nonfarm employment only (no government jobs).

This was slightly below the consensus forecast of an increase of 100,000 private sector jobs in August. The BLS reports on Friday, and the consensus is for an increase of 67,000 payroll jobs in August, on a seasonally adjusted (SA) basis.

Of course the ADP report has not been very useful in predicting the BLS report.

by Calculated Risk on 8/31/2011 07:13:00 AM

The MBA reports: Mortgage Applications Decrease in Latest MBA Weekly Survey

The Refinance Index decreased 12.2 percent from the previous week. The seasonally adjusted Purchase Index increased 0.9 percent from one week earlier.
...
"Refinance application volume declined for a second week from recent highs, despite rates staying near a 10-month low, while purchase volume remained near 15-year lows," said Mike Fratantoni, MBA's Vice President of Research and Economics.
...
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.32 percent from 4.39 percent, with points increasing to 1.30 from 0.88 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The following graph shows the MBA Purchase Index and four week moving average since 1990.

Click on graph for larger image in graph gallery.

The four week average of the purchase index is now at the lowest levels since August 1995!

This doesn't include the large number of cash buyers ... but purchase application activity was especially weak over the last three weeks, and this suggests weak home sales in the coming months.

by Calculated Risk on 8/30/2011 08:14:00 PM

LPS Applied Analytics released their July Mortgage Monitor Report today. From LPS: LPS' Mortgage Monitor Report Shows Average Loan in Foreclosure Is Delinquent for Record 599 Days; First-Time Foreclosure Starts Near Three-Year Lows

The July Mortgage Monitor report released by Lender Processing Services, Inc. shows that foreclosure timelines continue their steady upward trend, as a payment has not been made on the average loan in foreclosure in a record 599 days. Of the nearly 1.9 million loans that are 90 or more days delinquent but not yet in foreclosure, 42 percent have not made a payment in more than a year with an average delinquency of 397 days, also a new record. At the same time, first-time foreclosure starts in June were near three-year lows, and first-time delinquencies accounted for only 25 percent of new delinquent inventory.

As of the end of June, 4.1 million loans were either 90 or more days delinquent or in foreclosure, as delinquencies remain two times and foreclosures eight times pre-crisis levels. Foreclosure sales remain constricted, with foreclosure starts outnumbering sales by a factor of almost three to one.

According to LPS, 8.34% of mortgages were delinquent in July, up from 8.15% in June, and down from 9.31% in July 2010.

LPS reports that 4.11% of mortgages were in the foreclosure process, down slightly from 4.12% in June, and up from 3.74% in July 2010. This gives a total of 12.45% delinquent or in foreclosure. It breaks down as:

• 2.48 million loans less than 90 days delinquent.
• 1.90 million loans 90+ days delinquent.
• 2.16 million loans in foreclosure process.

For a total of 6.54 million loans delinquent or in foreclosure in July.

Click on graph for larger image in graph gallery.

This graph shows the total delinquent and in-foreclosure rates since 1995.

The total delinquent rate has increased recently (part of the increase is seasonal), but the rate has fallen to 8.34% from the peak in January 2010 of 10.97%. A normal rate is probably in the 4% to 5% range, so there is a long long ways to go.

However the in-foreclosure rate at 4.11% is barely below the peak rate of 4.21% in March 2011. There are still a large number of loans in this category (about 2.16 million) - and the average loan in foreclosure has been delinquent for a record 599 days!

This graph provided by LPS Applied Analytics shows the number of loans entering the foreclosure process each month and the number of foreclosure sales.

Looking at this graph, one might expect the number of loans in the foreclosure process to be increasing sharply since there are so many more starts than sales.

And there are very few cures too - what is happening is a large number of loans each month have been moving from "in foreclosure" back to "90+ days delinquent" status - so the number of loans "in foreclosure" hasn't increased recently.

The third graph shows mortgage origination by the original term.

This graph is interesting because of the surge in shorter duration loans.

This is probably being driven by two factors: 1) older borrowers are hoping to pay off their loans as part of their retirement planning and are taking out 15 year mortgages, and 2) many jumbo borrowers are probably taking out 5 year loans with a balloon payment since 30 year jumbo rates are much higher.

Earlier:
• Case Shiller: Home Prices increased in June
• Real House Prices and Price-to-Rent

by Calculated Risk on 8/30/2011 05:39:00 PM

By request, here is an update to four key indicators used by the NBER for business cycle dating: GDP, Employment, Industrial production and real personal income less transfer payments.

Note: The following graphs are all constructed as a percent of the peak in each indicator. This shows when the indicator has bottomed - and when the indicator has returned to the level of the previous peak. If the indicator is at a new peak, the value is 100%.

These graphs show that most major indicators are still way below the pre-recession peaks.

Click on graph for larger image in graph gallery.

This graph is for real GDP through Q2 2011 and shows real GDP is still 0.5% below the previous pre-recession peak. However Gross Domestic Income (red) is now back to the pre-recession peak. (For a discussion of GDI, see here).

At the worst point, real GDP was off 5.1% from the 2007 peak. Real GDI was off 5.7% at the trough.

And real GDP has performed better than other indicators ...

This graph shows real personal income less transfer payments as a percent of the previous peak through July.

With the revisions, this measure was off almost 11% at the trough - a significant downward revision!

Real personal income less transfer payments is still 4.8% below the previous peak.

This graph is for industrial production through July.

Industrial production had been one of the stronger performing sectors because of inventory restocking and some growth in exports.

However industrial production is still 6.5% below the pre-recession peak, and it will probably be some time before industrial production returns to pre-recession levels.

The final graph is for employment. This is similar to the graph I post every month comparing percent payroll jobs lost in several recessions.

On the timing of the trough of the recession, GDP and industrial production would suggest the end of Q2 2009 (and June 2009). The other two indicators would suggest later troughs.

And of course the recovery in all indicators has been very sluggish compared to recent recessions.

Earlier:
• Case Shiller: Home Prices increased in June
• Real House Prices and Price-to-Rent