by Calculated Risk on 5/20/2010 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending May 15, the advance figure for seasonally adjusted initial claims was 471,000, an increase of 25,000 from the previous week's revised figure of 446,000. The 4-week moving average was 453,500, an increase of 3,000 from the previous week's unrevised average of 450,500.
...
The advance number for seasonally adjusted insured unemployment during the week ending May 8 was 4,625,000, a decrease of 40,000 from the preceding week's revised level of 4,665,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims increased this week by 3,000 to 453,500.

The dashed line on the graph is the current 4-week average. The 4-week average first declined to this level at the end of December 2009, and has been at this level for almost five months. The current level of 471,000 (and 4-week average of 453,500) is still high, and suggests ongoing weakness in the labor market.

by Calculated Risk on 5/19/2010 09:44:00 PM

The MBA released the Q1 National Delinquency Survey showing record delinquencies:
1) Press Release from the MBA: Delinquencies, Foreclosure Starts Fall in Latest MBA National Delinquency Survey
2) Comments from MBA conference call.
3) Two key graphs: Mortgage Delinquencies by Period and by State

First American CoreLogic reported house price declined 0.3% in March

The MBA also reported purchase mortgage applications 'Plummeted' to a 13 Year Low

Moody's reported that Commercial Real Estate prices declined 0.5% in March

The Euro is back up a little to 1.23 dollars.

And CNBC Pre-Market Data shows the S&P 500 futures off slightly. Morning update: Off significantly!

by Calculated Risk on 5/19/2010 06:49:00 PM

Moody's reported today that the Moody’s/REAL All Property Type Aggregate Index declined 0.5% in March. This is a repeat sales measure of commercial real estate prices.

Below is a comparison of the Moodys/REAL Commercial Property Price Index (CPPI) and the Case-Shiller composite 20 index.

Notes: Beware of the "Real" in the title - this index is not inflation adjusted. Moody's CRE price index is a repeat sales index like Case-Shiller - but there are far fewer commercial sales - and that can impact prices.

Click on graph for larger image in new window.

CRE prices only go back to December 2000.

The Case-Shiller Composite 20 residential index is in blue (with Dec 2000 set to 1.0 to line up the indexes).

Commercial real estate values are now down 25% over the last year, and down 42% from the peak in August 2007.

by Calculated Risk on 5/19/2010 04:01:00 PM

Much was made last quarter about the decline in the 30 day delinquency "bucket" (percent of loans between 30 and 60 days delinquent). Unfortunately the seasonally adjusted 30 day delinquency rate increased in Q1 2010.

Note: there are some questions about the seasonal adjustment, especially for the 90 day bucket since we've never seen numbers this high before, but the adjustment for the 30 and 60 day periods are probably reasonable.

Click on graph for larger image in new window.

Loans 30 days delinquent increased to 3.45%, about the same level as in Q4 2008.

Delinquent loans in the 60 day bucket increased too, and are also close to the Q4 2008 level. This suggests that the pipeline is still filling up at a high rate, but slightly below the rates of early 2009.

The 90+ day and 'in foreclosure' rates are at record levels. Obviously the lenders have been slow to start foreclosure proceedings - and the 90+ day delinquent bucket is very full. Also lenders have been slow to actually foreclose - and the 'in foreclosure' bucket is at record levels.

These seriously delinquent loans are the 4.3 million loans MBA Chief Economist Jay Brinkmann referred to as the "shadow inventory" on the conference call this morning. Not all are really "shadow inventory" since some of these loans will be modified, some will be cured (probably very few), and some are probably already listed as short sales. But it does suggest a significant number of distressed sales coming.

The second graph shows the delinquency rate by state (red is seriously delinquent: 90+ days or in foreclosure, blue is delinquent less than 90 days).

This highlights a couple more points that Brinkmann made this morning: 1) the largest category of delinquent loans are fixed rate prime loans, and 2) this is not just a "sand state" problem. Brinkmann argued the foreclosure crisis is now being driven by economic problems as opposed to the bursting of the housing price bubble - and this is showing up in prime loans and all states. Although Florida and Nevada are very high, notice that the blue bar (new delinquencies) are higher in many other states.

Thirty four states and the District of Columbia have total delinquency rates over 10%. This is a widespread problem.

by Calculated Risk on 5/19/2010 02:00:00 PM

From the April 27-28, 2010 FOMC meeting.

On Greece:

[P]articipants saw the escalation of fiscal strains in Greece and spreading concerns about other peripheral European countries as weighing on financial conditions and confidence in the euro area. If other European countries responded by intensifying their fiscal consolidation efforts, the result would likely be slower growth in Europe and potentially a weaker global economic recovery. Some participants expressed concern that a crisis in Greece or in some other peripheral European countries could have an adverse effect on U.S. financial markets, which could also slow the recovery in this country.

On Housing:

[T]he recovery in the housing market appeared to have stalled in recent months despite various forms of government support. Although residential real estate values seemed to be stabilizing and in some areas had reportedly moved higher, housing sales and starts had leveled off in recent months at depressed levels. Some participants saw the possibility of elevated foreclosures adding to the already very large inventory of vacant homes as posing a downside risk to home prices, thereby limiting the extent of the pickup in residential investment for a while.

The FOMC is forecasting moderate growth however they expect the unemployment rate to remain elevated for some time:

In their discussion of the economic situation and outlook, meeting participants agreed that the incoming data and information received from business contacts indicated that economic activity continued to strengthen and the labor market was beginning to improve. Although some of the recent data on economic activity had been better than anticipated, most participants saw the incoming information as broadly in line with their earlier projections for moderate growth; accordingly, their views on the economic outlook had not changed appreciably. Participants expected the economic recovery to continue, but, consistent with experience following previous financial crises, most anticipated that the pickup in output would be rather slow relative to past recoveries from deep recessions. A moderate pace of expansion, in turn, would imply only a modest improvement in the labor market this year, with the unemployment rate declining gradually.