by Calculated Risk on 5/13/2010 08:45:00 PM

Last night I linked to an article from Catherine Rampell at the NY Times that highlighted the skills mismatch problem related to long term unemployment.

And from Haya El Nasser at the USA Today: More move, but not long distance

More Americans moved last year than in the previous year, but most didn't go far, a sign that foreclosures and housing costs are still keeping people close to home.
...
"The main reason migration has ticked up (in 2009) is local movement," [William Frey, demographer at the Brookings Institution said]. "Foreclosures have a lot to do with that. A lot of people have moved to renter status."
...
"This is the absolute worst time to lose our residential mobility," says Richard Florida, a professor of U.S. urban theory at the University of Toronto. "It's important for people to move to where the new opportunities are, because that is the cornerstone of our idea-driven economy."

The loss of mobility is a huge concern. Usually people can move freely in the U.S. to pursue employment - but it is more difficult now, especially for borrowers who are underwater on their homes.

In March, Atlanta Fed President Dennis Lockhart discussed both of these mismatches: Prospects for Sustained Recovery and Employment Gains. These mismatches are part of the reason I expect the unemployment rate to stay elevated for some time.

by Calculated Risk on 5/13/2010 05:12:00 PM

"Ob Griechenland über die Zeit wirklich in der Lage ist, diese Leistungskraft aufzubringen, das wage ich zu bezweifeln"
Deutsche Bank CEO Josef Ackermann, May 13, 2010

Translation: "Whether Greece - over time – is really in a position to raise its [economic] performance [to repay its debt], I doubt it" (ht U)

by Calculated Risk on 5/13/2010 02:44:00 PM

Here is a graph from the Atlanta Fed weekly Financial Highlights released today (graph as of May 12th):

Click on graph for larger image in new window.

From the Atlanta Fed:

European bond spreads (over German bonds) narrowed considerably this week following the unveiling of the European Union’s €750 billion policy response on May 9, jointly with the International Monetary Fund.

In addition to the €750 billion package, the European Central Bank announced its Securities Market Program, aimed at purchasing public and private European debt.

During the past few weeks, the 10-year Greece-to-German bond spread had risen to nearly 10% (or 1000 bps), but following the €750 billion EU/IMF package, the spread fell sharply to around 450 bps, as of May 11. Other European peripherals’ spreads also narrowed, with Portugal currently at 152 bps, Ireland at 165 bps, and Spain at 100 bps.

This is the series to follow to see the short term impact of the policy response. The spread for Greece has fallen sharply, but is still very high. The spreads for Portugal, Ireland and Spain have all fallen back to earlier levels.

by Calculated Risk on 5/13/2010 12:07:00 PM

Notes: this data is not seasonally adjusted. There is a very distinct seasonal pattern for imports, but not for exports. LA area ports handle about 40% of the nation's container port traffic.

Sometimes port traffic gives us an early hint of changes in the trade deficit. The following graph shows the loaded inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported.

Click on graph for larger image in new window.

Loaded inbound traffic was up 13.6% compared to April 2009. (up 15% compared to last year using three month average). Inbound traffic was still down 11% vs. two years ago (Apr 08).

Loaded outbound traffic was up 13.7% from April 2009. (+19% using three months average) Just as with imports, exports are still off from 2 years ago (off 7%).

Exports were off slightly in April after the increase in March.

For imports there is usually a significant dip in either February or March, depending on the timing of the Chinese New Year, and that didn't happen this year. Then usually imports increase until late summer or early fall as retailers build inventory for the holiday season. So this increase in April imports is part of the normal seasonal pattern.

Still, based on this data, it appears the trade deficit with Asia increased in April. The old global imbalances continue ...

by Calculated Risk on 5/13/2010 09:51:00 AM

The phrase "foreclosure activity" can be confusing.

There are three key stages in the process: 1) Notice of Default (or Lis Pendens depending on state), 2) Notice of Trustee Sale or Notice of Foreclosure Sale, and 3) actual foreclosure (Real Estate Owned). Usually we abbreviate these stages as NOD, NTS and REO.

To calculate "foreclosure activity", RealtyTrac adds the notices together. If a property goes all the way to REO, it will be counted at least 3 times (sometimes more if multiple NODs or NTS are filed).

What this report shows is that REO is at record levels (actual foreclosures), but the initial stage (NODs) has declined substantially. The decline in NODs is good news, but the servicers are still working through a huge backlog of previously filed NODs - and REO activity (or short sales) will be high for a long time.

From RealtyTrac: Foreclosure Activity Decreases 9 Percent in April

RealtyTrac® ... today released its U.S. Foreclosure Market Report™ for April 2010, which shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 333,837 properties in April, a 9 percent decrease from the previous month and a 2 percent decrease from April 2009. One in every 387 U.S. housing units received a foreclosure filing during the month.

“There were two important milestones in the April numbers that show foreclosure activity has begun to plateau — but at a very high level that will not drop off in the near future,” said James J. Saccacio, chief executive officer of RealtyTrac. “April was the first month in the history of our report with an annual decrease in U.S. foreclosure activity. Secondly, bank repossessions, or REOs, hit a record monthly high for the report even while default notices dropped substantially on a monthly and annual basis. We expect a similar pattern to continue for most of this year, with the overall numbers staying at a high level and ripples of activity hitting the various stages of the foreclosure process as lenders systematically work through the backlog of distressed properties.”