by Calculated Risk on 5/12/2020 10:19:00 AM

This is mostly pre-COVID. The second quarter will see a large increase in delinquencies (forbearance will be included as delinquent in Q2).

From the MBA: Mortgage Delinquencies Rise in First Quarter of 2020

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 4.36 percent of all loans outstanding at the end of the first quarter of 2020, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

The delinquency rate was up 59 basis points from the fourth quarter of 2019 and down 6 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the first quarter fell by 2 basis points to 0.19 percent.

“The mortgage delinquency rate in the fourth quarter of 2019 was at its lowest rate since MBA’s survey began in 1979. Fast-forward to the end of March, and it is clear the COVID-19 pandemic is impacting homeowners. Mortgage delinquencies jumped by 59 basis points – which is reminiscent of the hurricane-related, 64-basis-point increase seen in the third quarter of 2017,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “The major variances from the fourth quarter of 2019 to this year’s first quarter are tied to the increase in early-stage delinquencies for all loan types. For example, the 30-day FHA delinquency rate rose by 113 basis points, the second-highest quarterly ramp-up in the survey series. The 30-day VA delinquency rate rose by 78 basis points – the highest quarterly increase.”

The seriously delinquent rate in the first quarter decreased by 9 basis points and was down 29 basis points from a year ago. The foreclosure inventory rate – the percentage of loans in the foreclosure process – was at its lowest level last quarter since 1984. Foreclosure starts were down 2 basis points from the previous quarter.

“Mortgage delinquencies track closely with the U.S. job market. With unemployment rising from historical lows in early 2020 to a record 14.7 percent in April, it is inevitable that mortgage delinquencies would increase as well. 33.5 million U.S. workers applied for unemployment benefits in the past seven weeks, and with signs of economic distress continuing into the second quarter, mortgage delinquencies will likely further increase,” said Walsh.

According to Walsh, there may be a flattening in foreclosure starts in future quarterly surveys due to COVID-19-related foreclosure moratoria and borrower forbearance guidelines under the CARES Act. Almost 4 million homeowners are on forbearance plans as of May 3, but MBA’s survey asks servicers to report these loans as delinquent if the payment was not made based on the original terms of the mortgage – in the same manner that delinquency data is collected during natural disasters.

“Once foreclosure moratoria are lifted and forbearance periods end, borrower repayment and modification options, combined with year-over-year equity accumulation and home-price gains, may present alternatives to foreclosure for the millions of distressed homeowners affected by this unfortunate pandemic and economic crisis,” added Walsh.
emphasis added

Click on graph for larger image.

This graph shows the percent of loans delinquent by days past due.  Delinquencies increased in Q1.

The increase was mostly in the 30 day bucket that increased from 2.17% in Q4 to 2.67% in Q1.   There will be a huge spike in delinquencies in Q2.

The percent of loans in the foreclosure process declined further, and was at the lowest level since at least 1985.

by Calculated Risk on 5/12/2020 09:43:00 AM

Most of this survey is noise, but there is some information, especially on the labor market.

From the National Federation of Independent Business (NFIB): April 2020 Report

Small business optimism took another dive in April, falling 5.5 points to 90.9, with owners expressing certainty the economy will weaken in the near-term, but expecting it to improve over the next six months. The Optimism Index has fallen 13.6 points over the last two months, with nine of 10 Index components declining in April and one improving.
.
[J]ob creation plans fell eight points to a net one percent, the lowest level since December 2012.
emphasis added

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index decreased to 90.9 in April.

by Calculated Risk on 5/12/2020 08:34:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.8 percent in April on a seasonally adjusted basis, the largest monthly decline since December 2008, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.3 percent before seasonal adjustment.

A 20.6-percent decline in the gasoline index was the largest contributor to the monthly decrease in the seasonally adjusted all items index, but the indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well. In contrast, food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974. The energy index declined mostly due to the decrease in the gasoline index, though some energy component indexes rose.

The index for all items less food and energy fell 0.4 percent in April, the largest monthly decline in the history of the series, which dates to 1957. Along with the indexes mentioned above, the indexes for used cars and trucks and recreation also declined. The indexes for rent, owners’ equivalent rent, medical care, and household furnishings and operations all increased in April.

The all items index increased 0.3 percent for the 12 months ending April, the smallest 12-month increase since October 2015. The index for all items less food and energy increased 1.4 percent over the last 12 months, its smallest increase since April 2011.
emphasis added

Overall inflation was below expectations in April. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

by Calculated Risk on 5/11/2020 08:05:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Start Strong But End Day Higher

Mortgage rates began the day slightly lower compared to last Friday, but that didn't last long. Underlying bond markets were under pressure from the outset. When bond prices fall, rates move higher, all other things being equal.

The bond market has a few concerns at the moment--many of them "relative." In fact, it's hard to complain too much about mortgage rates "moving higher" when this afternoon's final destination was still in the low 3% range for top tier 30yr fixed rate quotes. [30YR FIXED 3.20%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for April.

• At 8:30 AM, The Consumer Price Index for April from the BLS. The consensus is for 0.7% decrease in CPI, and a 0.2% decrease in core CPI.

by Calculated Risk on 5/11/2020 05:14:00 PM

The US might be able to test 400,000 to 600,000 people per day sometime in May according to Dr. Fauci - and that might be enough for test and trace.

However, the US might need more than 900,000 tests per day according to Dr. Jha of Harvard's Global Health Institute.

There were 394,711 test results reported over the last 24 hours.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 4.5% (red line). The US probably needs enough tests to keep  the percentage positive well below 5%. (probably much lower based on testing in New Zealand).

This is the best day so far.

by Calculated Risk on 5/11/2020 04:01:00 PM

Note: To put these numbers in perspective, the MBA notes "For the week of March 2, only 0.25% of all loans were in forbearance."

From the MBA: Share of Mortgage Loans in Forbearance Increases to 7.91%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased from 7.54% of servicers’ portfolio volume in the prior week to 7.91% as of May 3, 2020. According to MBA’s estimate, almost 4 million homeowners are now in forbearance plans.
...
“With the calendar turning to May, the share of loans in forbearance increased, but the pace of the increase and incoming forbearance requests continued to slow,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The dreadful April jobs report showed a decline of more than 20 million jobs, and a spike in the unemployment rate to the highest level since the Great Depression. It will not be surprising if the forbearance numbers continue to rise. As we anticipated, FHA and VA borrowers have been most impacted by the job losses thus far, with the share of Ginnie Mae loans in forbearance at almost 11 percent.”

Added Fratantoni, “Although the pace of forbearance requests slowed this week, call volume picked up – which could be a sign that more borrowers are calling in to check their options now that May due dates have arrived.”
emphasis added

Click on graph for larger image.

This graph shows the weekly forbearance requests as a percent of servicer's portfolio volume.

The requests peaked in the week of March 30th to April 5th, but might pick up again.

The MBA notes: "Forbearance requests as a percent of servicing portfolio volume (#) dropped across all investor types for the fourth consecutive week relative to the prior week: from 0.63% to 0.51%."

by Calculated Risk on 5/11/2020 01:53:00 PM

This graph shows the unemployment rate by four levels of education (all groups are 25 years and older) through Feb 2020.

Unfortunately this data only goes back to 1992 and includes only two previous recessions (the stock / tech bust in 2001, and the 2007-2009 housing bust/financial crisis). Clearly education matters with regards to the unemployment rate.

Note: There was a data error in the original post in the Bachelors Degree series. This has been fixed.

Click on graph for larger image.

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

The 'Less than a High School Diploma, 25 yrs. & over' unemployment rate increased from 5.7% in February to 6.8% in March to 21.2% in April.

The 'High School Graduates, No College, 25 yrs. & over' unemployment rate increased from 3.6% in February to 4.4% in March to 17.3% in April.

The 'Some College or Associate Degree, 25 yrs. & over' unemployment rate increased from 3.0% in February to 3.7% in March to 15.0% in April.

The 'Bachelors degree and higher, 25 yrs. & over' unemployment rate increased from 1.9% in February to 2.5% in March to 8.4% in April.

by Calculated Risk on 5/11/2020 11:05:00 AM

Note: This was released last week.

From the NY Fed: Pre-COVID-19 Data Shows Total Household Debt Increased in Q1 2020, Though Growth in Non-Housing Debt Slows

The Federal Reserve Bank of New York's Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit, which shows that total household debt increased by $155 billion (1.1%) to $14.30 trillion in the first quarter of 2020. The total balance is now $1.6 trillion higher, in nominal terms, than the previous peak of $12.68 trillion in the third quarter of 2008. The Report is based on data from the New York Fed's Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.

The latest report captures consumer credit data as of March 31, 2020. However, given that individual credit accounts are typically updated monthly, the data do not fully reflect the potential effects of COVID-19 that materialized in the second half of March 2020.
…
"It is critical to note that the latest report reflects a time when many of the economic effects of the COVID-19 pandemic were only starting to be felt," said Andrew Haughwout, senior vice president at the New York Fed. "We do see a larger-than-expected decline in credit card balances based on past seasonal patterns, but it is too soon to confidently assess its connection to the pandemic. We will continue to monitor these developments and the broader state of household balance sheets closely as key data are updated and the economic situation evolves."
emphasis added

Click on graph for larger image.

Here are two graphs from the report:

The first graph shows aggregate consumer debt increased in Q1.  Household debt previously peaked in 2008, and bottomed in Q2 2013.

From the NY Fed:

Aggregate household debt balances increased by $155 billion in the first quarter of 2020, a 1.1% increase, and now stand at $14.30 trillion. Balances are $1.6 trillion higher, in nominal terms, than the previous peak (2008Q3) peak of $12.68 trillion and 28.2% above the 2013Q2 trough.

Mortgage balances shown on consumer credit reports on March 31 stood at $9.71 trillion, a $156 billion increase from 2019Q4.

The second graph shows the percent of debt in delinquency.

The overall delinquency rate decreased slightly in Q1.  From the NY Fed:

Aggregate delinquency rates were mostly unchanged in the first quarter of 2020. As of March 31, 4.6% of outstanding debt was in some stage of delinquency, a 0.1 percentage point decrease from the fourth quarter of 2019. Of the $652 billion of debt that is delinquent, $449 billion is seriously delinquent (at least 90 days late or “severely derogatory”, which includes some debts that have been removed from lenders books but upon which they continue to attempt collection).

About 189,000 consumers had a bankruptcy notation added to their credit reports in 2020Q1, a small decrease from the 192,000 seen in 2019Q1.

There is much more in the report.   This is mostly prior to the impact of COVID-19.

by Calculated Risk on 5/11/2020 08:21:00 AM

These indicators are for travel and entertainment - some of the sectors that will probably recover very slowly.

The TSA is providing daily travel numbers.

Click on graph for larger image.

This data shows the daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red).

On May 10th there were 200,815 travelers compared to 2,419,114 a year ago.

That is a decline of over 91.7%. There has been some increase off the bottom, but it is pretty small compared to the normal level of travel.

The second graph shows the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

Thanks to OpenTable for providing this restaurant data:

This data is updated through May 10, 2020.

The US was off 100% YoY as of March 21st.

California and New York are still off 100%.

Some states - like Texas and Georgia - have started to open up. In Texas, diner traffic was only down 83% YoY.

This data shows domestic box office for each week (red) and the maximum and minimum for the previous four years.  Data is from BoxOfficeMojo.

Note that the data is noisy and depends on when blockbusters are released.

Movie ticket sales have been essentially at zero for seven weeks.

Basically movie theaters are closed all across the country, and will probably reopen slowly (probably with limited seating at first).

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

2020 was off to a solid start, however, COVID-19 has crushed hotel occupancy.

Note: Y-axis doesn't start at zero to better show the seasonal change.

STR reported hotel occupancy was off 58.5% year-over-year last week.  Occupancy has increased slightly over the last few of weeks.

by Calculated Risk on 5/10/2020 07:20:00 PM

Weekend:
• Schedule for Week of May 10, 2020

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 5 and DOW futures are up 50 (fair value).

Oil prices were up over the last week with WTI futures at $24.52 per barrel and Brent at $30.67 barrel.  A year ago, WTI was at $62, and Brent was at $72 - so WTI oil prices are down about 60% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $1.84 per gallon. A year ago prices were at $2.86 per gallon, so gasoline prices are down $1.02 per gallon year-over-year.