by Calculated Risk on 10/06/2014 08:42:00 PM

An international economic overview from Bonddad: International Week in Review: The Sky Is Not Falling, But the Calculus Has Changed. Excerpt:

At times like this, gloom and doom commentary begins to take center stage as “sky is falling” headlines become click bait for various websites. Unfortunately for the bearish crowd a careful analysis indicates we are not near a major, cataclysmic market or economic event. However, it is clear that the underlying calculus regarding macro-economic analysis has changed, caused by a combination of increased geopolitical conflict, potentially higher interest rates in the US and UK and the ripple effects from this development, and growing economic concern regarding the EU, Japan and, to a lesser extent Australia.

Tuesday:
• At 10:00 AM ET, the Job Openings and Labor Turnover Survey for August from the BLS. Jobs openings decreased slightly in July to 4.673 million from 4.675 million in June.

• At 3:00 PM, Consumer Credit for August from the Federal Reserve. The consensus is for credit to increase $20.5 billion.

by Calculated Risk on 10/06/2014 04:45:00 PM

My view is most people are busy with other aspects of their lives, but these results are still pretty disappointing ...

From Jim Puzzanghera at the LA Times: Less than 1 in 4 Americans in survey know Janet Yellen is Fed chair

Janet L. Yellen made history this year when she became the first woman to lead the Federal Reserve, but most Americans apparently didn't notice.

Just 24% correctly identified her as the central bank's chair in results of a nationwide poll released Monday.

Nearly half of the respondents -- 48% -- in the Pew Research Center's News IQ survey said they didn't know who was the Fed's current chair after being read a list that included Yellen and three other names.

You can take the quiz here. All of the questions are pretty easy for those who follow the news. 

But I wonder how many people could find the countries mentioned on a map?

by Calculated Risk on 10/06/2014 01:41:00 PM

This is an update to a previous post through September.

Earlier this year, I posted some demographic data for the U.S., see: Census Bureau: Largest 5-year Population Cohort is now the "20 to 24" Age Group and The Future is still Bright!

I pointed out that "even without the financial crisis we would have expected some slowdown in growth this decade (just based on demographics). The good news is that will change soon."

Changes in demographics are an important determinant of economic growth, and although most people focus on the aging of the "baby boomer" generation, the movement of younger cohorts into the prime working age is another key story in coming years. Here is a graph of the prime working age population (this is population, not the labor force) from 1948 through August 2014.

Click on graph for larger image.

There was a huge surge in the prime working age population in the '70s, '80s and '90s - and the prime age population has been mostly flat recently (even declined a little).

The prime working age labor force grew even quicker than the population in the '70s and '80s due to the increase in participation of women. In fact, the prime working age labor force was increasing 3%+ per year in the '80s!

So when we compare economic growth to the '70s, '80, or 90's we have to remember this difference in demographics (the '60s saw solid economic growth as near-prime age groups increased sharply).

The prime working age population peaked in 2007, and appears to have bottomed at the end of 2012.  The good news is the prime working age group has started to grow again, and should be growing solidly by 2020 - and this should boost economic activity in the years ahead.

by Calculated Risk on 10/06/2014 10:37:00 AM

The Fed staff has developed a labor market indicator that they call the Labor Market Conditions Index (LMCI). From the Fed: Assessing the Change in Labor Market Conditions

This Note describes a dynamic factor model of labor market indicators that we have developed recently, which we call the labor market conditions index (LMCI). ...

A factor model is a statistical tool intended to extract a small number of unobserved factors that summarize the comovement among a larger set of correlated time series.2 In our model, these factors are assumed to summarize overall labor market conditions.3 What we call the LMCI is the primary source of common variation among 19 labor market indicators. One essential feature of our factor model is that its inference about labor market conditions places greater weight on indicators whose movements are highly correlated with each other. And, when indicators provide disparate signals, the model's assessment of overall labor market conditions reflects primarily those indicators that are in broad agreement.
...
In terms of the average monthly changes, then, the labor market improvement seen in the current expansion has been roughly in line with its typical pace. That said, the cumulative increase in the index since July 2009 ... is still smaller in magnitude than the extraordinarily large decline during the Great Recession (... from January 2008 to June 2009).

The Fed staff released the updated LMCI through September this morning.  This includes 19 indicators (see link above).

Click on graph for larger image.

This graph shows the cumulative change in the index. The Fed staff didn't release any commentary this morning, but the cumulative increase is still smaller than the decline during the Great Recession (suggesting slack in the labor market).

by Calculated Risk on 10/06/2014 07:15:00 AM

Black Knight Financial Services (BKFS) released their Mortgage Monitor report for August today. According to BKFS, 5.90% of mortgages were delinquent in August, up from 5.64% in July. BKFS reports that 1.80% of mortgages were in the foreclosure process, down from 2.66% in August 2013.

This gives a total of 7.70% delinquent or in foreclosure. It breaks down as:

• 1,852,000 properties that are 30 or more days, and less than 90 days past due, but not in foreclosure.
• 1,143,000 properties that are 90 or more days delinquent, but not in foreclosure.
• 913,000 loans in foreclosure process.

For a total of ​​3,908,000 loans delinquent or in foreclosure in August. This is down from 4,465,000 in August 2013.

Click on graph for larger image.

This graph from BKFS shows percent of loans delinquent and in the foreclosure process over time.

Delinquencies and foreclosures are generally moving down - and might be back to normal levels in a couple of years. 

The second graph from BKFS shows the mortgage performance by vintage.

From Black Knight:

Looking at the weighted average loan age among the active mortgage population, Black Knight found that while loan age varies among different credit score groups, in general the average loan age has been rising steadily. According to Kostya Gradushy, Black Knight’s manager of Research and Analytics, the weighted average loan age has reached its highest point ever.

“In terms of the entire active mortgage population, average loan age has been rising steadily for at least the last nine years,” said Gradushy. “The high volume of originations in 2013 resulted in a temporary slowdown. However, the average loan age since then has hit its highest level ever at 54 months. Reviewing the data at a more granular level, we see that the age of loans with credit scores of 750 and above has remained relatively constant for the last five years. However, lower credit score loans – particularly those with scores below 700 – have seen dramatic increases in average age.”

“We also looked again at mortgage performance and found delinquencies in 2012-2014 vintage loans lower than any of the prior seven years. In fact, even among borrowers with lower credit scores, these vintages are outperforming all previous vintages. This holds true for FHA mortgages as well, where we found that early-stage delinquencies were lower than in all pre-2012 vintages.”
emphasis added

There is much more in the mortgage monitor.