by Calculated Risk on 6/07/2011 08:12:00 PM

As I mentioned this morning, CoreLogic released the Q1 2011 negative equity report today.

CoreLogic ... today released negative equity data showing that 10.9 million, or 22.7 percent, of all residential properties with a mortgage were in negative equity at the end of the first quarter of 2011, down slightly from 11.1 million, or 23.1 percent, in the fourth quarter. An additional 2.4 million borrowers had less than five percent equity, referred to as near-negative equity, in the first quarter.

Here are a couple of graphs from the report:

Click on graph for larger image in graph gallery.

This graph shows the distribution of negative equity (and near negative equity). The more negative equity, the more at risk the homeowner is to losing their home.

Close to 10% of homeowners with mortgages have more than 25% negative equity. This is trending down slowly - the decline is apparently mostly due to homes lost in foreclosure.

The second graph from CoreLogic shows the default rate by percent negative equity.

The default rate increases the more 'underwater' the property, and the default rate really increases with Loan-to-values (LTV) of 125% or more.

Note that most homes with LTVs of 125% are still current. Many of these people will be stuck in their homes for years - or eventually default.

The third graph shows the break down of negative equity by state. Note: Data not available for Louisiana, Maine, Mississippi, South Dakota, Vermont, West Virginia and Wyoming.

"Nevada had the highest negative equity percentage with 63 percent of all mortgaged properties underwater, followed by Arizona (50 percent), Florida (46 percent), Michigan (36 percent) and California (31 percent). ... Las Vegas led the nation with a 66 percent negative equity share, followed by Stockton (56 percent), Phoenix (55 percent), Modesto (55 percent) and Reno (54 percent)."

by Calculated Risk on 6/07/2011 03:45:00 PM

From Fed Chairman Ben Bernanke: The U.S. Economic Outlook

U.S. economic growth so far this year looks to have been somewhat slower than expected. Aggregate output increased at only 1.8 percent at an annual rate in the first quarter, and supply chain disruptions associated with the earthquake and tsunami in Japan are hampering economic activity this quarter. A number of indicators also suggest some loss of momentum in the labor market in recent weeks. We are, of course, monitoring these developments. That said, with the effects of the Japanese disaster on manufacturing output likely to dissipate in coming months, and with some moderation in gasoline prices in prospect, growth seems likely to pick up somewhat in the second half of the year. Overall, the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers.
..
Although the recent increase in inflation is a concern, the appropriate diagnosis and policy response depend on whether the rise in inflation is likely to persist. So far at least, there is not much evidence that inflation is becoming broad-based or ingrained in our economy; indeed, increases in the price of a single product--gasoline--account for the bulk of the recent increase in consumer price inflation.
...
Although it is moving in the right direction, the economy is still producing at levels well below its potential; consequently, accommodative monetary policies are still needed. Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.

by Calculated Risk on 6/07/2011 11:52:00 AM

The Association of American Railroads (AAR) reports carload traffic in May 2011 increased 0.5 percent compared with the same month last year (essentially flat), and intermodal traffic (using intermodal or shipping containers) increased 7.5 percent compared with May 2010.

On the carload side, May 2011 was not especially impressive, following a not especially impressive April. U.S. freight railroads originated 1,159,328 carloads in May, an average of 289,832 per week. That’s up 0.5% (5,960 carloads for the month) on a seasonally unadjusted basis over May 2010, though it was up 16.4% (163,308 carloads) over May 2009.

Click on graph for larger image in graph gallery.

This graph shows U.S. average weekly rail carloads (NSA).

As the first graph shows, rail carload traffic collapsed in November 2008, and now, 2 years into the recovery, carload traffic has only recovered about half way. From AAR:

For the year to date through May, total U.S. rail carloadings in 2011 were 6,110,554, up 3.2% (186,751 carloads) over the first five months of 2010. Neither 2011 nor 2010 include the Memorial Day holiday.

For the last two months, traffic has been tracking 2010 (no growth from last year). Of course auto traffic was down in May.

The second graph is for intermodal traffic (using intermodal or shipping containers):

In contrast to carload traffic, U.S. rail intermodal traffic continues to be impressive. U.S. railroads originated 932,956 intermodal trailers and containers in May 2011, an average of 233,239 per week and up 7.5% (65,440 units) over May 2010 on a non-seasonally adjusted basis.

Seasonally adjusted U.S. rail intermodal traffic was up 0.8% in May 2011 over April 2011, the sixth straight monthly increase.

Intermodal’s weekly average in May 2011 of 233,239 units was the second highest May ever. The highest May ever was in 2006 at 233,516 units per week.
excerpts with permission

So intermodal traffic is essentially at record highs, but carload traffic (commodities and autos) is only about half way back to pre-recession levels.

by Calculated Risk on 6/07/2011 10:00:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings in April was 3.0 million, little changed from 3.1 million in March. After increasing in February, job openings have been flat. Job openings have been around 3.0 million for three consecutive months; the last three-month period with levels this high was September—November 2008. The number of job openings was 549,000 higher than at the end of the recession in June 2009 (as designated by the National Bureau of Economic Research) but remains well below the 4.4 million openings when the recession began in December 2007.

The following graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Unfortunately this is a new series and only started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for April, the most recent (and dismal) employment report was for May.

Click on graph for larger image in graph gallery.

Notice that hires (purple) and total separations (red and blue columns stacked) are pretty close each month. When the purple line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

In general job openings (yellow) has been trending up - however job openings declined slightly in April - and are actually down year-over-year compared to April 2010. However April 2010 included decennial Census hiring, so that isn't a good comparison.

Overall turnover remains low.

Note: I've had some questions about "quits", and quits have been trending up (although they were down slightly in April). For this graph I add quits to other discharges to compare to total hires, but I'll look at just tracking quits too.

by Calculated Risk on 6/07/2011 08:38:00 AM

From Robbie Whelan at the WSJ: Second-Mortgage Misery

[A] report to be released Tuesday by real-estate data firm CoreLogic Inc. ... says 38% of borrowers who took cash out of their residences using home-equity loans are underwater ... By contrast, 18% of borrowers who don't have these loans were underwater.
...
Overall ... 10.9 million Americans who borrowed to buy their homes, or 22.7% of all homeowners with a mortgage nationwide, were underwater in the first quarter ...

This is a slight decrease from the 11.1 million, or 23.1 percent of homeowners with a mortgage who were underwater at the end of Q4 2010. The WSJ article notes the decline was probably due to completed foreclosures.

I'll have more when the CoreLogic report is available online.