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Thursday, June 11, 2009

Unemployment Claims: Record 6.8 Million Continued Claims

by Calculated Risk on 6/11/2009 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending June 6, the advance figure for seasonally adjusted initial claims was 601,000, a decrease of 24,000 from the previous week's revised figure of 625,000. The 4-week moving average was 621,750, a decrease of 10,500 from the previous week's revised average of 632,250.
The advance number for seasonally adjusted insured unemployment during the week ending May 30 was 6,816,000, an increase of 59,000 from the preceding week's revised level of 6,757,000.
Weekly Unemployment Claims Click on graph for larger image in new window.

This graph shows weekly claims and continued claims since 1971.

Continued claims increased to 6.82 million. This is 5.1% of covered employment.

Note: continued claims peaked at 5.4% of covered employment in 1982 and 7.0% in 1975. So this isn't a record as a percent of covered employment.

The four-week average of weekly unemployment claims decreased this week by 10,500, and is now 37,000 below the peak of 8 weeks ago. There is a reasonable chance that claims have peaked for this cycle, but continued claims are still increasing - so it is still too early to call.

The level of initial claims (over 601 thousand) is still high, indicating significant weakness in the job market.

RealtyTrac: Foreclosure Activity May Hit 1.8 Million by Mid-Year

by Calculated Risk on 6/11/2009 02:49:00 AM

Note: Foreclosure "activity" is defined as Notice of Default (NODs), scheduled auctions and bank repossessions. A large number of NODs are cured, so this isn't the number of properties that the banks' repossess.

From RealtyTrac: U.S. Foreclosure Activity Decreases 6 Percent in May U.S.

RealtyTrac® ... today released its May 2009 U.S. Foreclosure Market Report™, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 321,480 U.S. properties during the month, a decrease of 6 percent from the previous month but an increase of nearly 18 percent from May 2008. The report also shows that one in every 398 U.S. housing units received a foreclosure filing in May.

“May foreclosure activity was the third highest month on record, and marked the third straight month where the total number of properties with foreclosure filings exceeded 300,000 — a first in the history of our report,” said James J. Saccacio, chief executive officer of RealtyTrac. “While defaults and scheduled foreclosure auctions were both down from the previous month, bank repossessions, or REOs, were up 2 percent thanks largely to substantial increases in several states, including Michigan, Arizona, Washington, Nevada, Oregon and New York. We expect REO activity to spike in the coming months as foreclosure delays and moratoria implemented by various state laws come to an end.”
emphasis added
The NODs are already spiking (most of the moratoriums have ended), but it takes awhile for this to lead to repossessions and REOs.

From Bloomberg: U.S. Foreclosure Filings Top 300,000 as Bank Seizures Loom
U.S. foreclosure filings surpassed 300,000 for the third straight month in May and may hit a record 1.8 million by the first half of the year, RealtyTrac Inc. said.
Additional U.S. home foreclosures will probably total 6.4 million by mid-2011, and inventories of foreclosed homes awaiting sale will probably peak in mid-2010 at about 2 million properties, JPMorgan Chase & Co. analysts led by John Sim wrote in a June 5 report.
The May total was the third-highest in RealtyTrac records dating to January 2005.

Wednesday, June 10, 2009

Changes, Comments, Summary, Calendar for Thursday

by Calculated Risk on 6/10/2009 10:46:00 PM

Note: the graphic format has been changed. The in post graphics will be larger, and not use blogspot (blogspot graphics were blocked by many companies and government agencies).


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    Daily Summary:

  • Long rates are rising.

    From CNBC: Treasury Holds 'Awful' Auction: 10-Year Yield Hits 3.95%

    From the WSJ: Rate Rise Clouds Recovery
    On Wednesday, rates on 30-year fixed-rate mortgages climbed to 5.79%, up from 5% two weeks ago, according to HSH Associates. That jump will cut roughly in half the number of borrowers with an incentive to refinance, according to FTN Financial.
    From the MBA: Mortgage Rates Increase, Refinance Applications Decline

    Here is a cool tool from Political Calculations: Predicting Mortgage Rates and Treasury Yields

  • Trade Deficit Increases Slightly in April

  • From the Fed: Beige Book: Economic conditions remained weak or deteriorated further

    Economic Calender for Thursday

  • Retail Sales 8:30 AM ET

  • Weekly Jobless Claims 8:30 AM ET

  • Business Inventories 10 AM ET

  • Fed: Flow of Funds Report 12 PM ET

  • Hotel Occupancy Report (morning)

  • Atlanta Federal Reserve Bank President Dennis Lockhart 1:05 PM ET

    Futures are up slightly:

    Bloomberg Futures.

    And the Asian markets are mixed.

  • Update: What is a Depression?

    by Calculated Risk on 6/10/2009 08:50:00 PM

    In early March it seemed like the "D" word was everywhere. That raised a question: What is a depression?

    This is an update to that earlier post. Although there is no formal definition, most economists agree a depression is a prolonged slump with a 10% or more decline in real GDP.

    In March I heard an analyst say that a 10% unemployment rate is a depression. But the unemployment rate peaked at 10.8% in 1982, and that period is not considered a depression.

    Some people argue the duration of the economic slump defines a depression - and the current recession is already 18 months old (through May). That is longer than the recessions of '90/'91 and '01. The '73-'75 recession lasted 16 months peak to trough, and the early '80s recession (a double dip) was classified as a 6 month recession followed by a 16 month recession (22 months total). Those earlier periods weren't "depressions", so if duration is the key measure, the current recession probably still has a ways to go.

    Here is a graph comparing the decline in real GDP for the current recession with other recessions since 1947. Depression is marked on the graph as -10%.

    Click on graph for larger image in new window.
    Real GDP Declines
    Q2 2009 is estimated at a -4.0% decline in real GDP (seasonally adjusted annual rate). This will push the cumulative decline (peak to trough) to about 4.2% from the peak of real GDP.

    Note: Northern Trust is forecasting -3.6% real GDP (SAAR) in Q2, and Goldman Sachs is forecasting -3.0%. For the stress tests, the baseline scenario assumed -1.2% in Q2, and the "more adverse" scenarios assumed -4.3%.

    Even though the current recession is already one of the worst since 1947, it is only about 42% of the way to a depression (assuming a weak Q2).

    To reach a depression - assuming -4.0% in Q2 - the economy would have to decline at about a 5.8% annual rate each quarter for the next year.

    California State Controller: Out of Cash in 50 Days

    by Calculated Risk on 6/10/2009 05:43:00 PM

    California State Controller John Chiang wrote to Governor Schwarzenegger today. The following graph shows California's Cash Outlook starting in July 2009.

    Click on graph for larger image in new window.
    California Cash Deficit

    And here is the letter to Governor Schwarzenegger (note that May was worse than projections just a few weeks ago):
    On May 29, 2009, I informed you of the precarious nature of the State’s cash condition and alerted you to impending risks which threaten the State’s ability to meet its payment obligations.

    The situation has not improved. Based on actual revenues received during the month of May, and finalized May Revision data provided by the Department of Finance on June 1, I have the following updates to the State’s 2009-10 cash outlook:

    • In the absence of legislative action, the State will not have sufficient cash to meet all of its payment obligations on July 28. By July 31, the cash deficit will increase to a negative $2.78 billion.

    • In April, the State’s cash balance will fall to a negative $25.3 billion – the lowest point projected for Fiscal Year 2009-10. To put this shortfall into proper perspective, it is five times the $5.1 billion cash deficit we faced this past spring.

    In the letter I sent you on May 29, I indicated we would have a negative cash balance of $1.02 billion at the end of July, and a low point for 2009-10 of $22 billion. The additional deterioration is a result of two factors: (a) May revenues coming in $827 million less than projected by the Governor’s May Revision, and (b) adjustments made by the Department of Finance to its revenue and expenditure projections. Attached is a chart detailing the projected cash low point for each month for the fiscal year starting July 1.

    While the severity of the shortfall has worsened since my last letter, the time available to correct our budget and cash deficits has not materially changed. The State will run out of cash in less than 50 days without corrective action by the Legislature and Governor. ...

    AIG New York Building Sell for Under $100 per Square Foot

    by Calculated Risk on 6/10/2009 04:02:00 PM

    From the NY Post: AIG BLDG. FETCHES UNDER $140M (ht bill)

    LOCAL owner/developer Youngwoo & Associates has teamed up with South Korea's Kumho Investment Bank to win the bidding for AIG's downtown headquarters complex that consists of the Art Deco 70 Pine St. and the more modern 72 Wall St.

    Sources said the pricing for the buildings, which have a combined 1.4 million square feet of space, will be just under $100 a foot, bringing the total to less than $140 million.
    Put that in your CMBS rating formulas ...

    Fed's Beige Book: "Economic conditions remained weak or deteriorated further"

    by Calculated Risk on 6/10/2009 02:00:00 PM

    From the Fed: Beige Book

    Reports from the twelve Federal Reserve District Banks indicate that economic conditions remained weak or deteriorated further during the period from mid-April through May. However, five of the Districts noted that the downward trend is showing signs of moderating. Further, contacts from several Districts said that their expectations have improved, though they do not see a substantial increase in economic activity through the end of the year.
    On Real Estate and construction:
    Although the residential real estate market remains weak, agents in the New York, Philadelphia, Cleveland, Richmond, Chicago, Kansas City, Dallas, and San Francisco Districts reported an uptick in home sales. The reasons cited include seasonal factors, low interest rates, declining house prices, and tax credits for first-time buyers. Much of the sales increase was found in the lower-priced end of the market. New home construction appeared to have stabilized at very low levels in Philadelphia, Cleveland, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco, although Kansas City reported an uptick in construction. Home inventories were trending down in Philadelphia, Richmond, Atlanta, Kansas City, and Dallas. However, Chicago reported that inventories remain elevated.

    Commercial real estate markets continued to weaken across all Districts. Vacancy rates for commercial properties were rising in many regions of the Boston, New York, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis, Kansas City, and San Francisco Districts putting downward pressure on rents. Atlanta, Chicago, and St. Louis reported new construction projects being postponed or cancelled, and new construction in the New York, Philadelphia, and Minneapolis Districts dropped substantially. Eight Districts cited difficulty in obtaining financing as one of the primary reasons for delaying or stopping construction of new developments and for limiting sales of existing properties.
    emphasis added
    Commercial real estate (CRE) is following residential off the cliff (this is the typical pattern - CRE follows residential). CRE will be crushed this year and into 2010.

    Beige Shoots (ht kilroy was here)

    Mortgage Rates and the Ten Year Yield

    by Calculated Risk on 6/10/2009 01:08:00 PM

    Here is a new tool from Political Calculations: Predicting Mortgage Rates and Treasury Yields

    This is based off the chart I posted last Friday and is very timely with the Ten Year Yield pushing 4%.

    Using their tool, with the Ten Year yield at 3.99%, this suggests that 30 year mortgage rates will rise to 5.8% based on the historical relationship between the Ten Year yield and mortgage rates.

    According to the MBA the "average contract interest rate for 30-year fixed-rate mortgages increased to 5.57 percent" last week. So rates will probably be higher this week.

    BTW, I first used the term "Bernanke's conundrum" in 2005 to describe what I thought would happen when the Fed rate was low following the housing bust - and the long rate started to rise.

    WSJ: Relief for CRE Debt?

    by Calculated Risk on 6/10/2009 11:27:00 AM

    From Lingling Wei and Kris Hudson: Relief for Commercial Real-Estate Debt? It Seems Possible

    ... developers and investors complain that only those who are delinquent can talk to servicers of ... CMBS. But now the Treasury is considering issuing guidance that would allow servicers to start talking about ways to avoid defaults and foreclosures sooner, possibly at least two years ahead of the maturity date of a loan ... The Treasury guidance, which could be released within weeks, would essentially enable loan-modification talks to take place without triggering tax consequences ... when CMBS offerings are created, the underlying mortgages are legally held by tax-free trusts. The trusts can be forced to pay taxes if the underlying loans are modified before they become delinquent, according to current CMBS rules.
    Of particular concern is $154.5 billion of CMBS loans coming due between now and 2012. About two-thirds of that likely won't qualify for refinancing, according to a recent report by Deutsche Bank. The bank projected that the default rates on the $700 billion of outstanding CMBS eventually could hit at least 30%, and loss rates, which take into account the amounts recovered by lenders, could reach as much as 13%, more than the peak seen during the commercial-real-estate collapse of the early 1990s.
    This is a follow up to:

  • S&P on CMBS: Potential Downgrades from AAA to A

  • CRE Mortgage Servicers Seek up to 5 Year Extensions (with Fitch comments)

  • From Bloomberg: U.S. Commercial Mortgage Defaults May Rise to 17-Year High

  • Trade Deficit Increases Slightly in April

    by Calculated Risk on 6/10/2009 08:43:00 AM

    The Census Bureau reports:

    The ... total April exports of $121.1 billion and imports of $150.3 billion resulted in a goods and services deficit of $29.2 billion, up from $28.5 billion in March, revised. April exports were $2.8 billon less than March exports of $123.9 billion. April imports were $2.2 billion less than March imports of $152.5 billion.
    U.S. Trade Deficit Click on graph for larger image.

    The first graph shows the monthly U.S. exports and imports in dollars through April 2009.

    Both imports and exports declined again in April. On a year-over-year basis, exports are off 21% and imports are off 31%!

    The second graph shows the U.S. trade deficit, with and without petroleum, through April.

    U.S. Trade Deficit The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

    Import oil prices increased slightly to $46.60 in April - the second monthly increase in a row - and following eight consecutive monthly declines. Spot prices have increased sharply since April, so the decline in the trade deficit due to lower oil prices is over for now.

    MBA: Mortgage Rates Increase, Refinance Applications Decline

    by Calculated Risk on 6/10/2009 08:37:00 AM

    The MBA reports:

    The Market Composite Index, a measure of mortgage loan application volume, was 611.0, a decrease of 7.2 percent on a seasonally adjusted basis from 658.7 one week earlier.
    The Refinance Index decreased 11.8 percent to 2605.7 from 2953.6 the previous week and the seasonally adjusted Purchase Index increased 1.1 percent to 270.7 from 267.7 one week earlier.
    The average contract interest rate for 30-year fixed-rate mortgages increased to 5.57 percent from 5.25 percent ...
    emphasis added
    The Purchase Index is now at the level of the late '90s.

    30-year fixed mortgage rates were at 4.81% two weeks ago, and are now at 5.57%. With the 10 year yielding 3.9%, mortgage rates will probably rise again this week.

    MBA Purchase Index Click on graph for larger image in new window.

    This graph shows the MBA Purchase Index and four week moving average since 2002.

    Although we can't compare directly to earlier periods because of the changes in the index, this shows no pick up in overall sales activity.

    Inland SoCal: House Prices at 20 Year Low

    by Calculated Risk on 6/10/2009 01:47:00 AM

    When I saw the title of the following article, I was wary that the median price was being distorted by the mix of homes being sold (a mix of more low end homes lowers the median). But Peter Hong at the LA Times gives some specific examples of prices going back 20 years or more.

    From the LA Times: Median home prices drop below 1989 levels in some parts of Southland

    To return to the past, take a stroll down Mulberry Avenue in Lancaster. John A. Beatrice, 55, bought his spacious two-story Spanish-style house there brand-new for $120,000 in 1989. It was a price he could comfortably afford, and he planned on staying through retirement, so he wasn't worried about price swings.
    But he never imagined his neighborhood would drop off the charts. In April, a slightly larger home two doors away sold for $66,500. That's just over half the $130,000 it went for new in 1992. In 2005, that house sold for $330,000.
    And another example ...
    [Patricia] Hynes bought her three-bedroom home in Lancaster brand-new for $119,000 in 1989 ... Her home is an island in a sea of repos. Houses on both sides have fallen into foreclosure; one is priced $10,000 less than the amount she paid 20 years ago.

    Nearby, a four-bedroom, 2,100-square-foot home sold in May for $89,000.
    Most of these areas are suffering negative absorption (families are moving out) and are the least desirable areas in SoCal. And there are more foreclosures coming ...
    Another tsunami of foreclosures is threatening to swamp an already saturated market. In Palmdale and Lancaster, 903 homes were sold in April, but according to ForeclosureRadar, more than 7,500 are in some stage of foreclosure.

    Some buyers who thought they were getting bargains didn't. In Lancaster, Beatrice's eldest son, Daniel, bought a house near his father's for $175,000 in April 2008; comparable properties are now selling for about $95,000.
    Get ready for 1979 prices!

    Late Night Futures

    by Calculated Risk on 6/10/2009 12:29:00 AM

    By request, here is an open thread for discussion.

    Futures are up slightly ...

    Futures from

    Bloomberg Futures.

    CBOT mini-sized Dow

    CME Globex Flash Quotes

    And the Asian markets are mostly up.

    Best to all.

    Tuesday, June 09, 2009

    CRE Mortgage Servicers Seek up to 5 Year Extensions

    by Calculated Risk on 6/09/2009 10:36:00 PM

    From Reuters: US commercial loan servicers seek longer extensions

    U.S. commercial real estate mortgage servicers are seeking to extend maturing loans for up to five years in a bid to prevent borrowers from defaulting and giving up office, retail and apartment buildings at distressed levels, an industry executive said on Tuesday.
    Modifying loans has consumed the $700 billion market for commercial mortgage securities this year.
    The urgency has also risen since the fourth quarter of 2008 as special servicers have taken on hundreds of new loans due to default or a reduction in cash flow that may presage a default.
    Also on CMBS from Fitch: U.S. Super Senior CMBS Expected To Hold Onto 'AAA' Ratings
    While rating actions across the capital structure of many recent vintage U.S. CMBS transactions will be substantial, mezzanine and super-senior 'AAA'-rated classes are expected to stay 'AAA' for the foreseeable future, according to Fitch Ratings as it continues its review of 2006-2008 fixed-rate conduit and fusion transactions.

    While rating actions on the most senior tranches are not anticipated, Fitch expects to downgrade approximately 75%-85% of subordinate 'AAA' (A-J) classes from these recent vintages as a result of its revised loss forecasts. Downgrades across all classes are expected to average two rating categories.

    Fitch assumes the following factors in forecasting losses:

    --Peak-to-trough value declines of 35%;

    --Immediate and sustained income declines of 15%;
    Unlike S&P, Fitch believes the "AAA" rated classes will not be downgraded - but a large percentage of the other classes will be cut. Note that S&P assumed current or market rents, and then decreased rents a further 6 to 30% depending upon property type. Fitch is only assuming an "Immediate and sustained income declines of 15%". We know from recent reports that incomes for hotels are already off more than 15%.

    Supreme Court Lifts Stay on Chrysler Deal

    by Calculated Risk on 6/09/2009 07:36:00 PM

    From SCOTUS Blog: Court clears Chrysler sale

    Ending four days of intense, round-the-clock and high-stakes legal maneuvering in the Supreme Court, the Justices on Tuesday evening removed a legal obstacle to sale of the troubled auto industry giant, Chrysler.

    Insisting that it was denying a postponement “in this case alone,” the two-page order said the challengers had not met their burden of showing that a delay was justified. The order allows a closing of the deal as of next Monday, because it lifts a temporary stay that Justice Ruth Bader Ginsburg had issued on Monday, apparently to give the Court time to ponder the issue.

    The Court said nothing about the biggest issue lurking in the case: the legality of using federal “bailout” money to pay for the rescue of an auto manufacturer. In fact, the order stressed that “a denial of a stay is not a ddecision on the merits of the underlying legal issues.”
    More at link ...

    Chrysler Updates

    by Calculated Risk on 6/09/2009 05:15:00 PM

    From the AP: Judge OKs Chrysler plan to terminate franchises. The AP is reporting that U.S. Judge Arthur Gonzalez said Chrysler can terminate 789 dealers effective immediately.

    From the SCOTUS Blog: Chrysler and the meaning of June 15

    [I]t seemed clear that Ginsburg — and perhaps the full Court — were awaiting the new round of briefing on what a widely disputed June 15 “deadline” means.

    It is not clear how central this dispute is to the Justices’ ultimate view of the legal and financial situation, but there was no doubt of the vigor with which all sides were debating that question.

    The Indiana funds, in a somewhat triumphant though brief filing, contended Tuesday that they had undermined the claims that Fiat would back out and the deal would collapse if it is not closed by next Monday. Its evidence was a brief wire story on Bloomberg News quoting a Fiat executive as saying it “would never walk away” from the pact.

    By early afternoon, the three main defenders of the rescue plan joined the new battle, with Fiat saying that the benefit funds’ new thrust was “unwarranted.” The deal, by its own express terms, “will terminate automatically” if not closed “on or before June 15.” (emphasis in the original).
    And from Steve Jakubowski at the Bankruptcy Litigation Blog: What's Bothering Ruthie? Chrysler Bankruptcy Sale Opinion Analysis - Part II
    I'm guessing, though, that what bothers her most -- and frankly what's really been bothering me most (hence Part II) -- is the sale's treatment of tort claimants, both present and future, and Judge Gonzalez's cursory justification for such treatment.
    And other auto news from CNBC: US House Passes 'Cash for Clunkers' Plan
    [T]he House approved a plan Tuesday to provide vouchers of up to $4,500 for consumers who turn in their gas-guzzling cars and trucks for more fuel-efficient vehicles.

    Aggregate Hours and Market

    by Calculated Risk on 6/09/2009 04:02:00 PM

    Click on graph for larger image in new window.

    The first graph is from Doug Short of (financial planner): "Four Bad Bears".

    Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.
    Stock Market Crashes

    Weekly Aggregate Hours IndexHere are aggregate hours index for the last six recessions, with the index normalized to 100 for the last month of the recession. (ht Bob_in_MA)

    Notes: Recessions are labeled based on the starting year. The 1980 line (green) ended early because of the 1981 recession. The 2007 recession is not included since we don't when it will end!

    This shows the weak labor market following the 1990 recession - the red line hovers around 100 for about a year following the official end of the recession.

    This also shows the aggregate hours index was flat for a few months following the 2001 recession (blue line) and then declined until mid-2003.

    Weak Hiring and the Jobless Recovery

    by Calculated Risk on 6/09/2009 01:51:00 PM

    First a report from Bloomberg: U.S. Third-Quarter Hiring Plans at Record Low, Manpower Says

    U.S. employers’ hiring plans for the third quarter held at a record low, signaling fired workers will have to wait many more months to find a job, a survey showed.
    Companies are “treading slowly and watching with guarded optimism, hoping a few quarters of stability will be the precursor to the recovery,” Jonas Prising, president of the Americas for Milwaukee-based Manpower, said in a statement.
    That fits with the Fed Economic Paper I posted yesterday: Jobless Recovery Redux? that argued a jobless recovery is likely.
    Our analysis generally supports projections that labor market weakness will persist, but our findings offer a basis for even greater pessimism about the outlook for the labor market.
    This projection indicates that the level of labor market slack would be higher by the end of 2009 than experienced at any other time in the post-World War II period, implying a longer and slower recovery path for the unemployment rate. This suggests that, more than in previous recessions, when the economy rebounds, employers will tap into their existing workforces rather than hire new workers. This could substantially slow the recovery of the outflow rate and put upward pressure on future unemployment rates.
    emphasis added
    And Frankels (on the NBER recession Business Cycle Dating Committee) notes: The labor market has NOT yet signaled a turning point (ht Mark Thoma, Paul Krugman)
    The members of the NBER Business Cycle Dating Committee (of which I am one) will be responsible for calling the trough when the time is right.
    Speaking entirely for myself, I like to look at the rate of change of total hours worked in the economy. Total hours worked is equal to the total number of workers employed multiplied by the average length of the workweek for the average worker. The length of the workweek tends to respond at turning points faster than does the number of jobs. When demand is slowing, firms tend to cut back on overtime, and then switch to part-time workers or in some cases cut workers back to partial workweeks, before they lay them off. Conversely, when demand is rising, firms tend to end furloughs, and if necessary ask workers to work overtime, before they hire new workers. (The hours worked measure improved in April 1991 and November 2001 which on other grounds were eventually declared to mark the ends of their respective recessions.) The phenomenon is called “labor hoarding” and it is attributable to the costs of finding, hiring and training new workers and the costs in terms of severance pay and morale when firing workers.
    Note that Frankels is making similar arguments as the San Francisco Fed paper - except he is discussing the end of the recession as opposed to a jobless recovery.

    And the following graph shows the aggregate hours index from the BLS over several recessions.

    Weekly Aggregate Hours Index Click on graph for larger image in new window.

    Frankel notes that the "hours worked measure improved in April 1991 and November 2001" and that was a factor in declaring the end of those recessions. In 1991 the index flattened out - and in 2001, after improving slightly at the end of the year, the index actually declined further in 2002 and 2003 (the employment recession lasted until July 2003 by this measure).

    This will be an important series to follow in trying to predict when the NBER calls the end of the recession.

    As the recession ends, we should see hours worked increase (or at least stop falling), and the number of part time for economic reasons workers decline. New hiring will probably remain sluggish for some time.

    Commercial Mortgage Defaults Seen Rising to 17 Year High

    by Calculated Risk on 6/09/2009 12:15:00 PM

    From Bloomberg: U.S. Commercial Mortgage Defaults May Rise to 17-Year High (ht Brian)

    The default rate on commercial mortgages held by U.S. banks may rise to the highest in 17 years in the fourth quarter as debt for refinancing remains scarce and the recession drags down rents.

    The rate is likely to reach 4.1 percent by year-end, Real Estate Econometrics LLC ... said in a report today. ...

    Commercial defaults already are at a 15-year high after climbing to 2.3 percent in the first quarter ... from 1.6 percent at the end of 2008 ...

    The projection for this year would match the 4.1 percent rate seen in 1993 and be the highest since defaults reached 4.6 percent in 1992 during the savings and loan crisis ...

    The company projects the default rate on commercial mortgages will reach 5.2 percent by the end of 2010 and peak at 5.3 percent in 2011 before starting to decline.
    Earlier this morning, TARP panel chair Elizabeth Warren recommended running the stress tests again on US banks, but using a higher unemployment rate and for more years (including 2011 through 2013). This would include these higher commercial real estate defaults that everyone now sees coming.

    Treasury: Ten Large Banks can Repay $68 Billion in TARP Funds

    by Calculated Risk on 6/09/2009 09:52:00 AM

    From MarketWatch: Ten large banks can return $68 billion in TARP


    It is a little confusing because Northern Trust (NTRS) wasn't one of the 19 stress test banks.

    NameTARP AmountRepay
    Bank of America$52.5 billionNo way!
    Citigroup$50 billionNo way!
    JPMorgan Chase$25 billionXXX
    Wells Fargo$25 billion -
    GMAC$12.5 billionNo way!
    Goldman Sachs$10 billionXXX
    Morgan Stanley$10 billionXXX
    PNC Financial Services$7.6 billion -
    U.S. Bancorp$6.6 billionXXX
    SunTrust$4.9 billion -
    Capital One Financial Corp.$3.6 billionXXX
    Regions Financial Corp.$3.5 billion -
    Fifth Third Bancorp $3.4 billion -
    American Express$3.4 billionXXX
    BB&T$3.1 billionXXX
    Bank of New York Mellon $3 billionXXX
    KeyCorp$2.5 billion -
    State Street $2 billionXXX
    MetLifeNone -
    Bailout amounts from Pro Publica : Eye on the Bailout