by Calculated Risk on 6/29/2012 04:41:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate declined in May to 3.57% from 3.63% April. The serious delinquency rate is down from 4.14% in May last year, and this is the lowest level since April 2009.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Freddie Mac reported that the Single-Family serious delinquency rate declined slightly in May to 3.50%, from 3.51% in April. Freddie's rate is only down from 3.53% in May 2011. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

These are loans that are "three monthly payments or more past due or in foreclosure".

Click on graph for larger image

I don't know why Fannie's delinquency rate is falling faster than for Freddie.

The "normal" serious delinquency rate is under 1%, so there is a long way to go.

by Calculated Risk on 6/29/2012 02:00:00 PM

Away from Europe ...

From the National Restaurant Association: Restaurant Performance Index Remains Above 100 for Seventh Consecutive Month, Reflecting Continued Positive Sales

The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.4 in May, down 0.2 percent from April’s level of 101.6. Despite the decline, May represented the seventh consecutive month that the RPI stood above 100, which signifies expansion in the index of key industry indicators.

“Despite a soft patch in the overall economy, restaurant operators reported positive same-store sales for the 12th consecutive month,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Looking forward, restaurant operators remain generally optimistic about sales growth in the months ahead, though they are somewhat less bullish about the direction of the economy.”

Restaurant operators reported positive same-store sales for the 12th consecutive month in May ... While sales results remained positive, restaurant operators reported softer customer traffic results in May.

Click on graph for larger image.

The index decreased to 101.4 in May, down from 101.6 in April (above 100 indicates expansion).

Restaurant spending is discretionary, so even though this is "D-list" data, I like to check it every month - and the index has been positive all year.

by Calculated Risk on 6/29/2012 11:29:00 AM

From CoreLogic: CoreLogic® Reports 63,000 completed foreclosures in May

CoreLogic ... today released its National Foreclosure Report for May, which provides monthly data on completed foreclosures and the overall foreclosure inventory. According to the report, there were 63,000 completed foreclosures in the U.S. in May 2012 compared to 77,000 in May 2011 and 62,000 in April 2012. Since the financial crisis began in September 2008, there have been approximately 3.6 million completed foreclosures across the country. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure.

Approximately 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the national foreclosure inventory as of May 2012 compared to 1.5 million, or 3.5 percent, in May 2011 and 1.4 million, or 3.4 percent, in April 2012.

“There were more than 819,000 completed foreclosures over the past year, or an average of 2,440 completed foreclosures every day over the last 12 months,” said Mark Fleming, chief economist for CoreLogic. “Although the level of completed foreclosures remains high, it is down 27 percent from a peak of 1.1 million in all of 2010.”
...
“Though the national foreclosure inventory levels remain steady, around 1.4 million homes, there have been dramatic shifts at the state level,” said Anand Nallathambi, president and CEO of CoreLogic. “Nevada, Arizona and Michigan, for example, each experienced at least a 20-percent decline in the foreclosure inventory from a year ago. While foreclosure inventories in most states are declining, the foreclosure inventory is still rising in many judicial states, such as Hawaii, New York and Connecticut.”

So far we haven't seen a surge in completed foreclosures - or a large increase in REO (lender Real Estate Owned) coming on the market. Note: The foreclosure inventory reported by CoreLogic is lower than the number reported by LPS of 4.12% of mortgages or 2 million in foreclosure, and the Mortgage Bankers Association’s (MBA) Q1 report showing 4.39% of loans in the foreclosure process.

My guess is the "surge" in foreclosures this year will be less than many people expect, although there has been an increase in some judicial states.

by Calculated Risk on 6/29/2012 09:55:00 AM

Chicago PMI: The overall index increased to 52.9 in June, up from 52.7 in May. This was slightly below consensus expectations of 53.1 and indicates slow growth in June. Note: any number above 50 shows expansion. From the Chicago ISM:

The Chicago Purchasing Managers reported the June Chicago Business Barometer stabilized just above May's 33 month low. The short-term trend of the Chicago Business Barometer fell for the third month. The three-month moving average of each Business Activity index, except Employment, fell in June.
...
• PRODUCTION rebounded; • NEW ORDERS and ORDER BACKLOGS lowest since September 2009; • PRICES PAID were at a 30 month low.

New orders declined to 51.9 from 52.9, and employment increased to 60.4 from 57.0.


Click on graph for larger image.

The final Reuters / University of Michigan consumer sentiment index for June declined to 73.2, down from the May reading of 79.3, and the preliminary June reading of 74.1.

This was below the consensus forecast of 74.1 and the lowest level this year. Overall sentiment is still weak - and apparently the weak job market and sluggish economy are outweighing any positive impact from falling gasoline prices.

by Calculated Risk on 6/29/2012 08:30:00 AM

The BEA released the Personal Income and Outlays report for May:

Personal income increased $25.4 billion, or 0.2 percent ... in May, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $4.7 billion, or less than 0.1 percent.
...
Real PCE -- PCE adjusted to remove price changes -- increased 0.1 percent in May, the same increase as in April. ... PCE price index -- The price index for PCE decreased 0.2 percent in May, compared with an increase of less than 0.1 percent in April. The PCE price index, excluding food and energy, increased 0.1 percent in May, the same increase as in April.

The following graph shows real Personal Consumption Expenditures (PCE) through May (2005 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

This graph shows real PCE by month for the last few years. The dashed red lines are the quarterly levels for real PCE. You can really see the slow down in Q2 of last year.

Using the two-month method, it appears real PCE will increase around 1.4% in Q2 (PCE is the largest component of GDP); the mid-month method suggests an increase of less than 1% in Q2. Also - so far - it appears spending is soft in June, so Q2 PCE growth will probably be fairly weak.

Another key point is the PCE price index has only increased 1.5% over the last year, and core PCE is up 1.8%. And it looks like the year-over-year increases will decline further in June.