Economic data USA don't point to boom times just yet

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

In de afgelopen 2 jaar 5 miljoen én dit jaar méér dan 3 miljoen
hypotheken 'foreclosed'.
Dus dit jaar HOGER AANTAL dan vorige jaren.

Het bemoedigende cijfer is dan dat het aantal hypotheken met 30 dagen
achterstand in betaling men EEN HALF PROCENT is afgenomen.

De eerste afname sinds 2006, dus nog niet eens aan halve zwaluw.
Misschien een paar veertjes!!

Maar de werkloosheidcijfers zijn nog steeds zwaar negatief: 'The number
of people filing new claims for jobless benefits each week has remained
stubbornly around 450,000'

Groet / Cees

More homeowners keep up with their mortgage
http://www.usatoday.com/money/economy/housing/2010-04-14-1Amortgages14_ST_N.htm

By Stephanie Armour, USA TODAY
The share of homeowners behind on their mortgages fell in the first
quarter, the first drop in four years and a possible sign that the
foreclosure crisis has peaked.

The portion of mortgages that were delinquent 30 days or more fell to
6.57% in the first quarter from 6.60% in the last three months of 2009,
according to Equifax and Moody's Economy.com.

That's a drop of about 16,630 delinquent loans and, though modest, it is
the first decline in the delinquency rate since early 2006.

"It will take years to work through all the troubled mortgage loans in
the foreclosure pipeline, but this is the first indication that the
number of loans entering the pipeline is declining," says Mark Zandi,
chief economist for Moody's Economy.com. "It portends a peaking of the
foreclosure crisis."

Delinquencies in almost all categories — 30-, 90- and 120-day
delinquencies on single-family properties — declined.

Reasons for the improvement in the foreclosure rate:

•Tougher lending standards since the housing bubble burst have kept
riskier borrowers from getting mortgages.

•Mortgage modifications have helped tens of thousands of troubled
homeowners stave off delinquencies.

•A more stable job market is preventing new mortgage delinquencies. The
unemployment rate held steady at 9.7% in March, and non-farm jobs
increased by 162,000.

"I wouldn't be surprised if we're at the peak," says Joel Naroff of
Naroff Economic Advisors.

But the foreclosure problem won't disappear quickly.

In the past two years, more than 5 million homes have received
foreclosure notices, and more than 3 million are expected to get them
this year, according to RealtyTrac.

One issue is strategic defaults by borrowers who walk away from their
mortgages — even though they can afford to pay — because they owe more
than their homes are worth.

Millions of homes have negative equity and perhaps 20% to 25% of recent
defaults have been strategic, according to a new Moody's Economy.com
analysis.

More strategic defaults could increase the pace of home foreclosures and
hamper new borrowers' attempts to get mortgages, it says.

"There is still a foreclosure problem that is going to cause people to
lose their homes, but in terms of new delinquencies starting, those are
probably at their peak," Zandi says. "This summer will be the peak of
foreclosures started."



Economic data don't point to boom times just yet
http://www.washingtonpost.com/
By Neil Irwin
Washington Post Staff Writer
Tuesday, April 13, 2010; A11

Some of the talk about the state of the economy lately has grown
downright giddy.

Hiring has resumed! (After all, last month the nation had its strongest
job growth in three years.) The stock market is booming! (Up 77 percent
from its low 13 months ago.) America's Back! (So says the new cover of
Newsweek.)

The economy is certainly growing, as it has been since last summer. And
that growth appears more durable than it did just a few months ago,
making a dip back into recession appear highly unlikely.

But the buoyant talk has gotten far ahead of the reality on the ground
of the American economy.

That great March job number, for example, received a short-term boost
from temporary Census Bureau hiring and the rebound from February
snowstorms, so the underlying employment growth was somewhere around
50,000 jobs -- not the 162,000 that made headlines, and far below the
130,000 or so jobs needed to keep up with population growth. The number
of people filing new claims for jobless benefits each week has remained
stubbornly around 450,000, well above the levels expected in a hiring boom.

And while the stock market is up a lot, it has rebounded from
generational lows. Much of the gains of the past year reflected the
investors' conclusion that the economy wasn't going to collapse, not a
harbinger of boom times ahead.

The U.S. economy will grow 3.1 percent this year, according to the
consensus of forecasters surveyed by the Blue Chip Economic Indicators.
That is far better than the steep declines of a year ago, but basically
close to the long-term growth trend for the U.S. economy.

But that rate of expansion won't be enough to pull the economy out of
the deep hole it is in, given a 9.7 percent unemployment rate, and is
merely enough to keep the hole from getting any deeper. By contrast,
after the last recession of similar depth, in 1981-1982, the economy
experienced five straight quarters of growth in the 7 to 9 percent range
from the spring of 1983 through summer of 1984.

On Monday, the semiofficial arbiter of economic cycles said it would be
"premature" to conclude that the recession that began in December 2007
had ended, as economists widely believe, in the summer of 2009. Members
of the National Bureau of Economic Research Business Cycle Dating
Committee say they want more final data before making such a
pronouncement, according to a memo the committee published.

This week, three pieces of economic data will be released that are
expected to confirm that the economy expanded at a brisk pace in March:
retail sales Wednesday, industrial production Thursday, and housing
starts Friday are all expected to show strong gains.

But the springtime bloom is not the same as the kind of sustained strong
growth that would drive joblessness back to normal levels and get
factories humming at their potential again.

"There have always been Wall Street economists wanting to cheerlead the
recovery, and quick to jump on any piece of news showing a great boom is
around the corner," said Kenneth Rogoff, a Harvard economist. "The data
so far are more consistent with a very moderate recovery."

There are a number of reasons that would be the case. American
households are trying to reduce debt to stabilize finances. But they are
doing so slowly, with total household debt at 94 percent of gross
domestic product in the fourth quarter down just slightly from 96
percent when the recession began in late 2007.

By contrast, that ratio of household debt to economic output was 70
percent in 2000. To get back to that level, Americans would need to pay
down $3.4 trillion in debt -- and if they do, that money wouldn't be
available to spend on goods and services. No one knows where household
debt levels will settle, but assuming that they are lower than the
ultra-leveraged 2005-2008 period, getting Americans' balance sheets in
line will be a drag on economic activity.

Moreover, as the recovery progresses, major government supports for
growth will eventually be pulled away. The boost from stimulus spending
will start waning in the second half of this year, while the Federal
Reserve, which has already ended its unconventional programs to prop up
the economy, will eventually raise interest rates.

"When you have a recession that's amplified by a deep financial crisis,
the recovery is slower and more painful, much akin to recovering from a
heart attack," said Rogoff, who authored a history of financial crises,
"This Time Is Different," with Carmen Reinhart. "It just takes time. If
you look at a typical recovery, we would be growing at 7 or 8 percent by
now given the depth of our fall."

Other economists say that a stronger burst of growth could be near.
Corporate America, having slashed inventories during the downturn, now
appears to be on the verge of rebuilding them. That should lead to
stronger economic activity, some economists say, as workers are needed
not merely to supply the goods people are buying, but also to restock
store shelves.

"There is a momentum building up which is really just beginning and it's
got a way to go," former Federal Reserve chairman Alan Greenspan said
recently on "This Week," the ABC news show. The nation, he said, is "on
the edge of a significant build-up" in inventories, which creates "a
self-reinforcing cycle."

But even if Greenspan is right, skeptics argue that the impact is likely
to be short-lived.

"I buy the idea that inventories can be a big positive to growth, but
the inventory cycle is well advanced already," said Jan Hatzius, chief
economist at Goldman Sachs.

"Most of the deeper recessions in postwar U.S. history have been
followed by strong recoveries, but this is a housing-bust experience,"
said Hatzius, who expects growth to taper off to only a 1.5 percent rate
in the second half of the year. "And if you look at international
evidence, those have generally been much more moderate."

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