by Calculated Risk on 4/22/2009 05:55:00 PM

From the Census Bureau: Residential Mover Rate in U.S. is Lowest Since Census Bureau Began Tracking in 1948

The U.S. Census Bureau announced today that the national mover rate declined from 13.2 percent in 2007 to 11.9 percent in 2008 — the lowest rate since the bureau began tracking these data in 1948.

In 2008, 35.2 million people 1 year and older changed residences in the U.S. within the past year, representing a decrease from 38.7 million in 2007 and the smallest number of residents to move since 1962.

Click on graph for larger image in new window.

This graph shows the percent of people that moved to a different county - in the same states or to another state.

Note: data is missing for a few years in the mid-70s.

The recent collapse is probably related to the housing bust. It is very difficult for homeowners with negative equity to move.

From the NY Times today: As Housing Market Dips, More in U.S. Are Staying Put

The declines appeared to be directly related to the housing slump and the recession.

“It represents a perfect storm halting migration at all levels, since it involves deterrents in local housing-related moves and longer distance employment-related moves,” said William H. Frey, a demographer with the Brookings Institution.

For a few earlier posts on the housing bust and mobility:

More on the Housing Bust and Labor Mobility June 2008

Research: Housing Busts and Household Mobility October 2008

by Calculated Risk on 4/22/2009 03:56:00 PM

From Paul Kasriel and Asha Bangalore at Northern Trust: Are We There Yet?

Is the economic recovery at hand? No, we still are mired in a recession that is going to be of the longest duration in the post-WWII era (the previous record was 16 months) and is likely to involve the largest annual average contraction in real GDP for a single year (the record to beat is a decline of 1.9%, which occurred in 1982). But there is a good chance that the worst for the U.S. economy in terms of quarterly contractions in real GDP is behind us, occurring in the fourth quarter of 2008. We currently are forecasting an annualized rate of contraction in real GDP of 3.8% in the first quarter of this year vs. the annualized rate of contraction of 6.3% in the fourth quarter of 2008. So, economic activity still is descending, but our forecast has the rate of descent moderating. We do not expect any growth in real GDP until the fourth quarter of this year.

See the research note for much more.

I'm surprised Kasriel has revised up his Q1 GDP forecast all the way to minus 3.8% (from -4.9%). It appears PCE will probably be flat or even slightly positive in Q1, the investment slump in Q1 will be stunning (See Q1 GDP will be Ugly). Also, it appears the inventory correction in Q1 was significant, however trade might be a little more positive than I expected earlier.

Note: Kasriel has revised down his GDP estimate for Q2 (now -3.3% and -1.0% respectively).

by Calculated Risk on 4/22/2009 01:38:00 PM

From DataQuick: Golden State Mortgage Defaults Jump to Record High

Lenders filed a record number of mortgage default notices against California homeowners during the first three months of this year, the result of the recession and of lenders playing catch-up after a temporary lull in foreclosure activity ...

A total of 135,431 default notices were sent out during the January- to-March period. That was up 80.0 percent from 75,230 for the prior quarter and up 19.0 percent from 113,809 in first quarter 2008, according to MDA DataQuick.

Last quarter's total was an all-time high for any quarter in DataQuick's statistics, which for defaults go back to 1992. There were 121,673 default notices filed in second quarter 2008 and 94,240 in third quarter 2008, during which a new state law took effect requiring lenders to take added steps aimed at keeping troubled borrowers in their homes.

"The nastiest batch of California home loans appears to have been made in mid to late 2006 and the foreclosure process is working its way through those. Back then different risk factors were getting piled on top of each other. Adjustable-rate mortgages can be good loans. So can low- down-payment loans, interest-only loans, stated-income loans, etcetera. But if you combine these elements into one loan, it's toxic," said John Walsh, DataQuick president.

The median origination month for last quarter's defaulted loans was July 2006. That's only four months later than the median origination month for defaulted loans a year ago, in first quarter 2008. That suggests a period where underwriting criteria were particularly lax.

Of the 3.7 million home loans made in 2004, less than 1 percent have since resulted in a lender filing a default notice. Of the 3.7 million loans originated in 2005, 4.9 percent have triggered a default notice so far. Of the 3 million in 2006, 8.5 percent have so far resulted in default. A particularly toxic period appears to have been August through November 2006 which had more than a 9 percent default rate. Of the 2.1 million loans made in 2007, it's 4.6 percent - a percentage that's likely to rise significantly during the rest of this year.

The lending institutions with the highest default rates for loans originated in August to November 2006 include ResMAE Mortgage (69.9 percent of loans resulting in a default notice), Master Financial (64.6 percent) and Ownit Mortgage Solutions (63.6 percent). Of the major lenders, IndyMac has a default rate on those loans of 18.9 percent, World Savings 8.0 percent, Countrywide 7.7 percent, Washington Mutual 6.3 percent and Wells Fargo 3.4 percent. Less than 1 percent of the home loans originated in late 2006 by Citibank and Bank of America have since gone into default.
...
While most first quarter 2009 foreclosure activity was still concentrated in affordable inland communities, there are signs that the problem is slowly migrating into other areas. The affordable sub-markets, which represent 25 percent of the state's housing stock, accounted for more than 52.0 percent of all default activity in 2008. Last quarter it fell to 47.5 percent.
emphasis added

There is a lot of interesting data in this report. A few key points:

2009 will probably be another record year for NODs (although the lenders were playing catch-up in Q1)

2006 was a toxic year (probably because that was when house prices peaked or were starting to fall).

Defaults are movin' on up into the mid and high priced areas.

About two-thirds of the loans that ResMAE and Ownit made in 2006 are in default.

Click on graph for larger image in new window.

This graph shows the Notices of Default (NOD) by year through 2008 in California from DataQuick.

With 135,431 default notices filed in Q1 2009 (even with the lenders playing catch-up), 2009 is clearly on pace to break the 2008 record of 424 thousand NODs.

by Calculated Risk on 4/22/2009 12:37:00 PM

From the IMF report: Global Prospects and Policies

The global economy is in a severe recession inflicted by a massive financial crisis and an acute loss of confidence. Wide-ranging and often unorthodox policy responses have made some progress in stabilizing financial markets but have not yet restored confidence nor arrested negative feedback between weakening activity and intense financial strains. While the rate of contraction is expected to moderate from the second quarter onward, global activity is projected to decline by 1.3 percent in 2009 as a whole before rising modestly during the course of 2010.

These graphs from the IMF report show the synchronized global cliff diving.

Click on graph for larger image in new window.

On page 11 is a note about Global Business Cycles:

In 2009, almost all the advanced economies are expected to be in recession. The degree of synchronicity of the current recession is the highest to date over the past 50 years. Although it
is clearly driven by declines in activity in the advanced economies, recessions in
a number of emerging and developing economies are contributing to its depth and synchronicity.

To summarize, the 2009 forecasts of economic activity, if realized, would qualify this year as the most severe global recession during the postwar period. Most indicators are expected to register sharper declines than in previous episodes of global recession. In addition to its severity, this global recession also qualifies as the most synchronized, as virtually all the advanced economies and many emerging and developing economies are in recession.
emphasis added

On page 10 are the IMF economic forecasts. For the U.S., the IMF is forecasting -2.8% real change for GDP in 2009, and 0.0% (no change) in 2010.

That is basically the same as the "more adverse" stress test scenario:


Click on table for larger image in new window.

by Calculated Risk on 4/22/2009 10:24:00 AM

The Dept of Transportation reports on U.S. Traffic Volume Trends:

[T]ravel during February 2009 on all roads and streets in the nation changed by -0.9 percent (-1.9 billion vehicle miles) resulting in estimated travel for the month at 215.8 billion vehicle-miles.
...
NOTE: The Average Daily Travel changed by +2.7% for February 2009 as compared to February 2008

Update: added the leap year adjustment.

Click on graph for larger image in new window.

The first graph shows the annual change in the rolling 12 month average of U.S. vehicles miles driven. Note: the rolling 12 month average is used to remove noise and seasonality.

By this measure, vehicle miles driven are off 3.6% Year-over-year (YoY); the decline in miles driven is worse than during the early '70s and 1979-1980 oil crisis.

The second graph shows the comparison of month to the same month in the previous year as reported by the DOT.

This comparison has been improving. As the DOT noted, miles driven in February 2009 were 0.9% less than in February 2008.

Year-over-year miles driven started to decline in December 2007, and really fell off a cliff in March 2008. So the March 2009 report, to be released next month, will be very interesting.