David Kirkpatrick

May 29, 2009

Reading these economic indicators …

… might have less worth than reading tea leaves or engaging in navel gazing. Like most numbers they can be spun up, down or sideways, but anyone seeing blue skies and smelling roses from these reports has given up and started taking antidepressants.

From the link:

The economy is sending a message of hope laced with caution: That the recession is steadily easing, but new threats could delay any recovery.One piece of heartening news was that the number of people seeking first-time jobless aid fell last week, a sign companies are cutting fewer workers.

And even though sales of newly built homes were flat last month, the figures suggested that the battered U.S. real estate market is nearing a gradual comeback.

But pessimists could point to bleaker news Thursday: The number of people continuing to receive unemployment benefits rose to 6.78 million _ the largest total on records dating to 1967 and the 17th straight record-high week.

The figure signaled that the jobless rate, which reached 8.9 percent in April, will rise in May, economists said. And many economists expect the rate to approach 10 percent by year’s end.

Another worrisome sign is that a record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit, the Mortgage Bankers Association said. And the wave of foreclosures isn’t expected to crest until the end of next year.

March 6, 2009

Mortgage default rates stunning

This figure is not so stunning — almost 50 percent of sub-prime adjustable rate mortgages (ARMs) are in arrears or foreclosure. Everyone knows these are the most toxic of the toxic assets being bandied about by economic “pundits.” Well, technically these mortgages make up the components of the toxic assets.

The stunning figure is 12 percent of all mortgages are either behind in payment or in foreclosure. That is not good news for any hope of an economic recovery from this financial crisis. The floor hasn’t been found, and probably is really too far below us to even be fathomed right now.

On that cheery note, hope everyone has a great weekend!

From the link:

The reckless lending practices in states like Florida, California and Nevada that were the epicenter of the housing crisis are no longer driving up the nation’s delinquency rate. Instead, the foreclosure crisis now is being fueled by a spike in defaults in states like Louisiana, New York, Georgia and Texas, where the economies are rapidly deteriorating and thousands are losing their jobs.

A record 5.4 million American homeowners with a mortgage of any kind, or nearly 12 percent, were at least one month late or in foreclosure at the end of last year, the Mortgage Bankers Association reported. That’s up from 10 percent at the end of the third quarter, and up from 8 percent at the end of 2007.

Prime and subprime fixed-rate loans saw sharp increases in the fourth quarter, a sign that the problem is now the economy.

“We’re seeing increases in fixed-rate categories and that’s where the problems are coming from,” said Jay Brinkmann, the group’s chief economist. “The foreclosure picture is more clearly driven by the jobs market.”

That trend highlights one of the biggest challenges confronting the Obama administration’s mortgage relief plan launched this week. While the $75 billion plan could help change the loan terms or refinance up to 9 million homeowners, unemployed borrowers will have a hard time qualifying.

On Thursday, the Labor Department said new unemployment claims last week totaled 639,000, lower than expected, but still at elevated levels. Factory orders also slipped for the sixth month in a row in January, the Commerce Department reported.

“There can be no doubt that employers continue to shed labor at a frightening pace, with no end in sight,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a client note Wednesday.

The key is what kind of workers are losing their jobs, Brinkmann said. Unemployment for people with college degrees, some college education or technical training _ those most likely to own homes and have prime fixed-rate loans _ has nearly doubled over the past six months.