by Calculated Risk on 9/21/2012 10:49:00 AM

From the BLS: Regional and State Employment and Unemployment Summary

Regional and state unemployment rates were generally little changed in August. Twenty-six states recorded unemployment rate increases, 12 states and the District of Columbia posted rate decreases, and 12 states had no change, the U.S. Bureau of Labor Statistics reported today.
...
Nevada continued to record the highest unemployment rate among the states, 12.1 percent in August. Rhode Island and California posted the next highest rates, 10.7 and 10.6 percent, respectively. North Dakota again registered the lowest jobless rate, 3.0 percent.

Click on graph for larger image in graph gallery.

This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). Two states - New Jersey and New York - are at the maximum unemployment rate for the recession, and New Jersey set a new cycle high in August at 9.9%.

The states are ranked by the highest current unemployment rate. Only three states still have double digit unemployment rates: Nevada, Rhode Island, and California. This is the fewest since January 2009, although New Jersey is close. In early 2010, 18 states and D.C. had double digit unemployment rates.

All current employment graphs

by Calculated Risk on 9/21/2012 08:46:00 AM

A plan for Spain will probably be announced next Thursday, and Greece will need additional aid by November.

From the Financial Times: EU in talks over Spanish rescue plan

EU authorities are working behind the scenes to pave the way for a new Spanish rescue programme and unlimited bond buying by the European Central Bank, by helping Madrid craft an economic reform programme ...
...
The plan, due to be unveiled next Thursday, will focus on structural reforms to the Spanish economy long requested by Brussels, rather than new taxes and spending cuts.
Excerpt with permission.

From the WSJ: Fight Looms on Greek Bailout

A report by international inspectors, due in October, will state how big the funding shortfall is in Greece's bailout program, but European officials say the deficit is far too big for Greece to close on its own.

That means the International Monetary Fund, the European Central Bank, and euro-zone governments such as Germany will have to negotiate over which of them will make painful concessions to ease Greece's debt-service burden.
...
The trio must agree to a plan by November at the latest, when the government in Athens—already in financial arrears—could run out of money altogether.
...
The €173 billion ($226 billion) bailout plan agreed with Athens in March this year—Greece's second bailout since 2010—is already badly off track, euro-zone officials admit.

by Calculated Risk on 9/20/2012 09:01:00 PM

First, from Freddie Mac: Mortgage Rates Back To Record Lows

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates at or near their all-time record lows helping to keep homebuyer affordability high. The average 30-year fixed rate mortgage matched its all-time record low at 3.49 percent, and the average 15-year fixed fell to a new all-time record low at 2.77 percent.

And from David Wessel at the WSJ: Depression Lessons: Should Fed Stand Down to Compel Congressional Action?

As [economist James] Tobin put it in the American Economic Review in June 1965: “The monetary authorities should have tried harder to promote expansion in 1933-36 and 1937-40 — nothing would have been lost and something might have been gained. Throughout the period the authorities were too little concerned with deflationary risks immediately at hand and too much concerned to forestall the hypothetical future dangers of excess liquidity.”

... Friedman and co-author Anna Schwartz quote at length from a December 1935 technical memo from Fed files that made the case for tightening the credit spigot. ... The subsequent tightening by the Fed was, Friedman and Schwartz concluded, a mistake followed by “a failure to recognize that the action had misfired.”

Friday:
• At 10:00 AM ET, the BLS will release the Regional and State Employment and Unemployment (Monthly) report for August 2012.

Earlier: The Trillion Dollar Bear

by Calculated Risk on 9/20/2012 05:49:00 PM

CR Note: This is a fairly long technical piece. These are just excerpts. The complete article is here.

From housing economist Tom Lawler: ACS 2011: Big Shift to Rental Market; Gross Vacancy Rate Virtually Unchanged Despite Drop in Vacant Homes for Rent and For Sale; Household “Estimate” Shockingly Low

The Census Bureau released it ACS 2011 one-year estimates, and for housing folks the data were in some cases interesting and in other cases quite puzzling. ...

A few things jump out: first, the ACS estimate for occupied housing units increased by just 424,306 in 2011, and at 114.992 million was 1.724 million lower than the “official” Census household count on April 1, 2010. Second, the ACS’ estimate of the gross vacancy rate in 2011 was virtually unchanged from 2010, despite a decline in the number of homes for rent or for sale. The reason was an increase in both housing units for seasonal/recreational/occasional use (up 181,000) and an increase in “other” – homes vacant and held of the market for unknown reasons (in the above I included “usual residence elsewhere” and migrant workers” in “other” to be consistent with the other measures.)

Third, the ACS homeownership rate fell from 65.4% in 2010 to 64.6% in 2011, which is a full 1.5 percentage points lower than the HVS.

In terms of the jump in the ACS’ estimate of the number of renters in 2011 vs. 2010, almost half of the 1.033 million increase reflected a jump in the number of householders renting SF detached homes. The ACS estimate of the percent of the occupied SF detached home market that was occupied by renters for 2011 was 15.7%, up from 15.1% in 2010 and 13.1% in 2006. The renter-share of the occupied SF detached housing market increased by over three percentage points from 2006 to 2011 in eleven states plus DC, with the biggest increases coming in Nevada, Arizona, Oregon, and California. (The full list is Arizona, California, Colorado, DC, Florida, Georgia, Michigan, Nevada, Ohio, Oregon, Utah, and Washington.)
...
what is a reasonable assumption to make about the increase in US households in 2011, much less so far in 2012? HVS and ACS data suggest very slow growth in 2011, but neither has been consistent with decennial Census results, and HVS data suggest only a modest pickup in 2012. CPS/ASEC data, in contrast, suggest much faster growth in households since early 2010, but CPS/ASEC data are not consistent with decennial Census data either!

Gosh, it’s no wonder there’s so much confusion on the US housing outlook!

CR Note: This was an excerpt from an article by Tom Lawler.

by Calculated Risk on 9/20/2012 03:10:00 PM

Memories ... some new readers might not realize that once upon a time I was one of the most bearish analysts around.

The Flow of Funds report today showed that household mortgage debt has declined by more than $1 trillion following the housing bust (see previous post). Most of that decline is due to defaults (as opposed to homeowners paying down debt). And that reminds me of a post I wrote almost 5 years ago.

From the WSJ in December 2007: How High Will Subprime Losses Go?

The global race is on to find the best phrase to describe the housing and credit mess. The U.K.’s Telegraph quotes an economist who says it “could make 1929 look like a walk in the park” if central banks don’t solve the crisis in a matter of weeks.

The report cites the recent prediction from Barclays Capital that losses from the subprime-mortgage meltdown could hit $700 billion. That would top Merrill Lynch’s recent estimate of $500 billion. The Australian newspaper notes that a $700 billion “bloodbath” — potentially leading the U.S. economy into “the blackest year since the Great Depression” — would top the GDPs of all but 15 nations.

Back in the U.S., the Calculated Risk blog sidestepped the colorful language and went straight for the big number: “The losses for the lenders and investors might well be over $1 trillion.”

Many people thought I was crazy.

And if you look at the post the WSJ referenced, the first paragraph starts: "Within the next couple of years, probably somewhere between 10 million and 20 million U.S. homeowners will owe more on their homes, than their homes are worth."

I was a grizzly bear!