by Calculated Risk on 8/08/2009 11:38:00 AM

From the Independent: Banks take the blame as 33,000 are declared insolvent

More than 33,000 people were declared insolvent during the second quarter of the year, official statistics revealed yesterday, the highest number ever recorded. ...

Almost 19,000 people were declared bankrupt during the second quarter of the year ... while a further 12,000 people entered into individual voluntary arrangements, agreements with creditors that fall short of full-scale bankruptcy. ... In addition, 2,000 people signed up to debt relief orders, a new type of insolvency agreement introduced in April for those with relatively small amounts of borrowing.

Insolvency experts warned that the combination of rising unemployment and the lack of stigma attached to options such as IVAs and debt relief orders meant the number of people affected would go on rising.

Mark Sands, director of personal insolvency at Tenon Recovery, predicted 140,000 people would be declared insolvent during 2009, 30 per cent more than in 2006 – the worst year on record so far – when the figure was 107,000.

"The overall record level of personal insolvencies, whilst at first shocking, hides the detail which suggests the worst is yet to come," Mr Sands warned.

In the U.S., bankruptcy filings are rising sharply too, but are not are record levels because of the change to the bankruptcy law in 2005.

For the U.S., see: Personal Bankruptcy Filings up 34.3 Percent compared to July 2008

When it comes to bankruptcy (or insolvency) apparently misery does love company.

by Calculated Risk on 8/08/2009 08:10:00 AM

This is a common story in many areas ... the following information is from San Diego.

San Diego real estate broker Edgewood121 attended a presentation this week by San Diego County Assessor / Recorder / County Clerk David Butler on NODs and foreclosures in the county. The following is a handout from the presentation:

Click on document for larger image in new window.

Acording to Edgewood121, Butler said that San Diego county is "expecting a wave of foreclosures in the near future and they are gearing up for it". (quoting Edgewood121 paraphrasing Butler). Butler thinks the banks are holding back, probably because of the various government programs.

Edgewood121 was left with the impression that "it is [only] a matter of time before more properties become available." And that the only reason prices appear to have stabilized "is because of the artificial choking-off of inventory, thereby creating urgency and multiple-offer scenarios."

Clearly the banks are hoping that the modification programs will reduce the number of foreclosures. However most mods just capitalize missed payments and fees (so the banks can pretend they are still whole), and reduce interest rates for a few years (so the homeowner can pretend they still own something of value). Extend and pretend.

Really these underwater "homeowners" are more renters than owners, and many will still have negative equity when the interest rate increases again. Perhaps we should call the modification programs Single Family Public Housing.

by Calculated Risk on 8/07/2009 09:31:00 PM

This is an unofficial list of Problem Banks.

The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay - the most recent data is from June 30th. The Fed and OTC data is more timely, and the OCC a little lagged. Credit: surferdude808.

DISCLAIMER: This is an unofficial list, the information is from public sources and while deemed to be reliable is not guaranteed. No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein and same is subject to errors and omissions. This is not intended as investment advice. Please contact CR with any errors.

See description below table for Class and Cert (and a link to FDIC ID system).

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)





Class: from FDIC

The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state or federal government), its Federal Reserve membership status (member or nonmember), and its primary federal regulator (state-chartered institutions are subject to both federal and state supervision). These codes are:

N National chartered commercial bank supervised by the Office of the Comptroller of the Currency

SM State charter Fed member commercial bank supervised by the Federal Reserve

NM State charter Fed nonmember commercial bank supervised by the FDIC

SA State or federal charter savings association supervised by the Office of Thrift Supervision

SB State charter savings bank supervised by the FDIC

Cert: This is the certificate number assigned by the FDIC used to identify institutions and for the issuance of insurance certificates. You can enter the certificate number in the Institution Directory (ID) system "which will provide the last demographic and financial data filed by the selected institution".

by Calculated Risk on 8/07/2009 09:30:00 PM

Ashes to Ashes
Banks cash burn rate a firestorm
Smokey Bair on scene
by Soylent Green is People
From the FDIC: Home Federal Bank, Nampa, Idaho, Assumes All of the Deposits of Community First Bank, Prineville, Oregon

Community First Bank, Prineville, Oregon, was closed today ... As of July 5, 2009, Community First Bank had total assets of $209 million and total deposits of approximately $182 million.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $45 million. ... Community First Bank is the 72nd FDIC-insured institution to fail in the nation this year, and the third in Oregon. The last FDIC-insured institution to be closed in the state was Silver Falls Bank, Silverton, Oregon, on February 20, 2009.

by Calculated Risk on 8/07/2009 06:15:00 PM

Wise men said before
"A rising tide lifts all boats"
Not these submarines
by Soylent Green is People
From the FDIC: Stearns Bank, National Association, St. Cloud, Minnesota, Assumes All of the Deposits of First State Bank, Sarasota, Florida

First State Bank, Sarasota, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of May 31, 2009, First State Bank had total assets of $463 million and total deposits of approximately $387 million. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $116 million. ... First State Bank is the 70th FDIC-insured institution to fail in the nation this year, and the fifth in Florida. The last FDIC-insured institution to be closed in the state was Integrity Bank, Jupiter, on July 31, 2009.

From the FDIC: Stearns Bank, National Association, St. Cloud, Minnesota, Assumes All of the Deposits of Community National Bank of Sarasota County, Venice, Florida

Community National Bank of Sarasota County, Venice, Florida, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of June 30, 2009, Community National Bank of Sarasota County had total assets of $97 million and total deposits of approximately $93 million. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $24 million. ... Community National Bank of Sarasota County is the 71st FDIC-insured institution to fail in the nation this year, and the sixth in Florida. The last FDIC-insured institution to be closed in the state was First State Bank, Sarasota, earlier today.

by Calculated Risk on 8/07/2009 04:22:00 PM

Freddie Mac Press Release:

Freddie Mac had a positive net worth of $8.2 billion at June 30, 2009. As a result, no additional funding was required from Treasury under the terms of the Senior Preferred Stock Purchase Agreement (Purchase Agreement) for the second quarter.
...
Provision for credit losses was $5.2 billion for the second quarter of 2009, compared to $8.8 billion for the first quarter of 2009. The decrease was driven by a reduced rate of growth in the company's loan loss reserve due to the recent modest national home price improvements, which the company believes to be largely seasonal.
emphasis added

No mention of the amount of nonperforming loans.

by Calculated Risk on 8/07/2009 03:30:00 PM

From MarketWatch: June consumer credit down for 5th straight month

U.S. consumers reduced their debt in June for the fifth consecutive month, the Federal Reserve reported Friday. Total seasonally adjusted consumer debt fell $10.29 billion, or at a 4.9% annual rate, in June to $2.502 trillion. Consumer credit fell in eight of the past nine months.

Click on graph for larger image in new window.

This graph shows the year-over-year (YoY) change in consumer credit. Consumer credit is off 2.8% over the last 12 months. The record YoY decline was 1.9% in 1991 - and that record has been shattered.

Note: Consumer credit does not include real estate debt.

by Calculated Risk on 8/07/2009 01:26:00 PM

From a SEC 8-K filed this morning:

On August 6, 2009, The Colonial BancGroup, Inc. (the Company or BancGroup) was informed by the U.S. Department of Justice that it is the target of a federal criminal investigation relating to the Company’s mortgage warehouse lending division and related alleged accounting irregularities. The Company has been informed that the alleged accounting irregularities relate to more than one year’s audited financial statements and regulatory financial reporting, and the Company’s Board of Directors and Audit Committee are making every effort to determine the impact of these alleged accounting irregularities on the Company’s financial statements and regulatory financial reporting. The Company intends to cooperate with the investigation.

Earlier in 2009, BancGroup provided documents to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) in response to a subpoena issued by SIGTARP.

Also, the SEC has issued subpoenas to BancGroup seeking documents related to, among other things, BancGroup’s disclosures related to its participation in the U.S. Treasury Department’s Troubled Asset Relief Program and BancGroup’s disclosures respecting accounting for loan loss reserves. BancGroup has provided, and continues to provide, documents in response to these subpoenas.

On August 5, 2009, the Alabama State Banking Department provided notice to Colonial Bank that the Alabama State Banking Board will meet on August 12, 2009, at which time Colonial Bank will be asked to consent to the Superintendent’s exercise of his statutory authority to appoint the FDIC as receiver or conservator for the Bank if and when the Superintendent deems such appointment to be necessary. In the meantime, the Company continues to explore all possible capital-raising alternatives that would position it and Colonial Bank to comply with the requirements of the Orders to Cease and Desist to which they are subject.
emphasis added

Here is the press release.

by Calculated Risk on 8/07/2009 11:20:00 AM

Note: Several analysts follow the average workweek series to look for the end of a recession. The idea is that companies will increase the work week before they start hiring, so the average weekly hours might increase as a recession ends. The small increase in July will be viewed as a possible indicator. Other employment measures that are used to judge the end of a recession are the four-week moving average of initial unemployment claims (has fallen significantly) and the diffusion index (previous post).

A few more graphs based on the (un)employment report ...

Employment-Population Ratio

Click on graph for larger image in new window.

This graph show the employment-population ratio; this is the ratio of employed Americans to the adult population.

Note: the graph doesn't start at zero to better show the change.

The general upward trend from the early '60s was mostly due to women entering the workforce. As an example, in 1964 women were about 32% of the workforce, today the percentage is close to 50%.

This measure fell slightly in July to 59.4%, the lowest level since the early '80s. This also shows the weak recovery following the 2001 recession - and the current cliff diving!

Part Time for Economic Reasons

From the BLS report:

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in July at 8.8 million. The number of such workers rose sharply in the fall and winter but has been little changed for 4 consecutive months.

Note: "This category includes persons who would like to work full time but were working part time because their hours had been cut back or because they were unable to find full-time jobs."

The number of workers only able to find part time jobs (or have had their hours cut for economic reasons) is at 8.8 million. This is slightly below the peak of 9.1 million in May.

Note: the U.S. population is significantly larger today (about 305 million) than in the early '80s (about 228 million) when the number of part time workers almost reached 7 million. That is the equivalent of about 9.3 million today, so population adjusted this wasn't quite a record.

Average Weekly Hours

From the BLS report:

In July, the average workweek of production and nonsupervisory workers on private nonfarm payrolls edged up by 0.1 hour to 33.1 hours. The manufacturing workweek increased by 0.3 hour to 39.8 hours. Factory overtime was unchanged at 2.9 hours.

The average weekly hours has been declining since the early '60s, but usually falls faster during a recession. Average weekly hours in June was at the lowest level since the series began in 1964, and the uptick in July was very small.

Note: the graph doesn't start at zero to better show the change.

Earlier employment posts today:

Employment Report: 247K Jobs Lost, 9.4% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.

Unemployment: Stress Tests, Unemployed over 26 Weeks, Diffusion Index

by Calculated Risk on 8/07/2009 09:06:00 AM

Note: earlier Employment post: Employment Report: 247K Jobs Lost, 9.4% Unemployment Rate . The earlier post includes a comparison to previous recessions.

Stress Test Scenarios

Click on graph for larger image in new window.

This graph shows the unemployment rate compared to the stress test economic scenarios on a quarterly basis as provided by the regulators to the banks (no link).

This is a quarterly forecast: the Unemployment Rate for Q3 just includes July, and will probably move higher. Once again, the unemployment rate is already higher than the "more adverse" scenario.

Note also that the unemployment rate has already exceeded the peak of the "baseline scenario".

Unemployed over 26 Weeks

The DOL report yesterday showed seasonally adjusted insured unemployment at 6.3 million, down from a peak of about 6.9 million. This raises the question of how many unemployed workers have exhausted their regular unemployment benefits (Note: most are still receiving extended benefits, although this is about to change).

The monthly BLS report provides data on workers unemployed for 27 or more weeks, and here is a graph ...

The blue line is the number of workers unemployed for 27 weeks or more. The red line is the same data as a percent of the civilian workforce.

According to the BLS, there are almost 5.0 million workers who have been unemployed for more than 26 weeks (and still want a job). This is 3.2% of the civilian workforce.

Notice the peak happens after a recession ends, and the of long term unemployed peaked about 18 months after the end of the last two recessions (because of the jobless recovery). This suggests that even if the current recession officially ended this month, the number of long term unemployed would probably continue to rise through the end of 2010.

Diffusion Index

Here is a look at how "widespread" the job losses are using the employment diffusion index from the BLS.

In July, job losses continued in many of the major industry sectors.
BLS, July Employment Report

The BLS diffusion index is a measure of how widespread changes in employment are. Some people think it measures the percent of industries increasing employment, but that isn't quite correct.

From the BLS handbook:

The diffusion indexes for private nonfarm payroll employment are based on estimates for 278 industries, while the manufacturing indexes are based on estimates for 84 industries. Each component series is assigned a value of 0, 50, or 100 percent, depending on whether its employment showed a decrease, no change, or an increase over a given period. The average (mean) value is then calculated, and this percent is the diffusion index number.

Think of this as a measure of how widespread the job losses are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS.

Before last Summer, the all industries employment diffusion index was in the 40s, suggesting that job losses were limited to a few industries. However starting in September the diffusion index plummeted. In March, the index hit 19.6, suggesting job losses were very widespread. The index has recovered since then to 30.1 in July, suggesting job losses are not as widespread across industries as in March - but losses continue in many industries.

The manufacturing diffusion index fell even further, from 40 in May 2008 to just 6 in January 2009. The manufacturing index has rebounded to 22.3 in July, indicating some improvement, but still widespread job losses across manufacturing industries.

by Calculated Risk on 8/07/2009 08:30:00 AM

From the BLS:

Nonfarm payroll employment continued to decline in July (-247,000), and the unemployment rate was little changed at 9.4 percent, the U.S. Bureau of Labor Statistics reported today. The average monthly job loss for May through July (-331,000) was about half the average decline for November through April (-645,000). In July, job losses continued in many of the major industry sectors.

Click on graph for larger image.

This graph shows the unemployment rate and the year over year change in employment vs. recessions.

Nonfarm payrolls decreased by 247,000 in July. The economy has lost almost 5.7 million jobs over the last year, and 6.66 million jobs during the 19 consecutive months of job losses.

The unemployment rate declined slightly to 9.4 percent.

Year over year employment is strongly negative.

The second graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).

For the current recession, employment peaked in December 2007, and this recession was a slow starter (in terms of job losses and declines in GDP).

However job losses have really picked up over the last year, and the current recession is now the 2nd worst recession since WWII in percentage terms (and the 1948 recession recovered very quickly) - and also in terms of the unemployment rate (only early '80s recession was worse).

With fewer job losses ("only" a rate of 3 million job losses per year), and the dip in unemployment rate, this will be consider an improvement. It is still a weak employment report. Much more to come ...

by Calculated Risk on 8/06/2009 08:58:00 PM

Note: some of the data appears out of date - but if the data was updated regularly this would be a useful tool.

Healdsburg Housing Bubble directs me to a Google maps feature that shows houses in various states of distress.

The distress ranges from delinquent payments, to homes that will be auctioned off, to REOs. It appears that Google uses several vendors for the data, and some of the vendors charge for more information.

Here is a look at a section of New York and New Jersey. Click on the red dots for more info (some data is free depending on the vendor). Use the map here, or click on View larger map and enter your own zip code.


View Larger Map

by Calculated Risk on 8/06/2009 06:03:00 PM

Fannie Mae Press Release: Loss of $14.8 Billion Driven by Credit-Related Expenses

Fannie Mae (FNM/NYSE) reported a loss of $14.8 billion, ... in the second quarter of 2009, compared with a loss of $23.2 billion, ... in the first quarter of 2009. Second-quarter results were driven primarily by $18.8 billion of credit-related expenses, reflecting the ongoing impact of adverse conditions in the housing market, as well as the economic recession and rising unemployment. Credit-related expenses were partially offset by fair value gains. The company also reported a substantial decrease in impairment losses on investment securities, which was due in part to the adoption of new accounting guidance.

Taking into account unrealized gains on available-for-sale securities during the second quarter and an adjustment to our deferred tax assets due to the new accounting guidance, the loss resulted in a net worth deficit of $10.6 billion as of June 30, 2009. As a result, on August 6, 2009, the Director of the Federal Housing Finance Agency (FHFA), which has been acting as our conservator since September 6, 2008, submitted a request for $10.7 billion from the U.S. Department of the Treasury on our behalf under the terms of the senior preferred stock purchase agreement between Fannie Mae and the Treasury in order to eliminate our net worth deficit. FHFA has requested that Treasury provide the funds on or prior to September 30, 2009.
...
Credit-related expenses, which are the total provision for credit losses plus foreclosed property expense, were $18.8 billion, compared with $20.9 billion in the first quarter of 2009. Our provision for credit losses was $18.2 billion, compared with $20.3 billion in the first quarter of 2009. The reduction in the provision for credit losses in the second quarter was attributable to a slower rate of increase in both our estimated default rate and average loss severity, or average initial charge-off per default, as compared with the first quarter. Our provision exceeded net charge-offs of $4.8 billion by $13.4 billion, as we continued to build our combined loss reserves, which represent our current estimate of probable losses inherent in our guaranty book of business as of June 30, 2009.

Combined loss reserves were $55.1 billion on June 30, 2009, up from $41.7 billion on March 31, 2009, and $24.8 billion on December 31, 2008. ...

We are experiencing increases in delinquency and default rates for our entire guaranty book of business, including on loans with fewer risk layers. Risk layering is the combination of risk characteristics that could increase the likelihood of default, such as higher loan-to-value ratios, lower FICO credit scores, higher debt-to-income ratios and adjustable-rate mortgages. This general deterioration in our guaranty book of business is a result of the stress on a broader segment of borrowers due to the rise in unemployment and the decline in home prices. Certain states, higher risk loan categories and our 2006 and 2007 loan vintages continue to account for a disproportionate share of our foreclosures and chargeoffs.

Total nonperforming loans in our guaranty book of business were $171.0 billion on June 30, 2009, compared with $144.9 billion on March 31, 2009, and $119.2 billion on December 31, 2008. The carrying value of our foreclosed properties was $6.2 billion, compared with $6.4 billion on March 31, 2009, and $6.6 billion on December 31, 2008.
emphasis added

Fannie Mae has reserved seating at the confessional. NPLs of $171.0 billion. Wow.

by Calculated Risk on 8/06/2009 03:50:00 PM

More from the supplemental GDP tables released yesterday ...

Residential investment (RI), according to the Bureau of Economic Analysis (BEA), includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories.

Back in Q4 2008 - for the first time ever - investment in home improvements exceeded investment in new single family structures. This has continued through Q2 2009.

Click on graph for larger image in new window.

This graph shows the various components of RI as a percent of GDP for the last 50 years. The most important components are investment in single family structures followed by home improvement.

Investment in home improvement was at a $153.3 billion Seasonally Adjusted Annual Rate (SAAR) in Q2, significantly above investment in single family structures of $92.8 billion (SAAR).

Let's take a closer look at these two key components of RI:

As everyone knows, investment in single family structures has fallen off a cliff. This is the component of RI that gets all the media attention - although usually from stories about single family starts and new home sales.

Currently investment in single family structures is at 0.66% of GDP, significantly below the average of the last 50 years of 2.35% - and almost half of the previous record low in 1982 of 1.20%.

And on home improvement:

The third graph shows home improvement investment as a percent of GDP.

Home improvement is at 1.08% of GDP, well off the high of 1.31% in Q4 2005 - but just back to the average of the last 50 years of 1.07%.

This would seem to suggest there remains downside risk to home improvement spending. Home Depot and Lowes announce results in the middle of August, and this might be something to watch.

NOTE: Home improvement is a rough estimate by the BEA - and could be lower. Also, there could be changes in spending patterns leading to a higher percentage of GDP on home improvement.

by Calculated Risk on 8/06/2009 12:59:00 PM

Note: Graph is for Orange County only.

From Matt Padilla at the O.C. Register: Foreclosure wave gathers momentum

“To say there is a second wave implies the (current) wave has receded,” [Sam Khater, senior economist, First American CoreLogic] “I don’t see that the wave has receded.”

Click on graph for larger image in new window.

This graph is from Matt based on data from American CoreLogic.

Khater said ... federal and state efforts have mostly delayed foreclosures, preventing few. ... So to tune out the noise, just look at the 90-day rate. In Khater’s view it shows “one giant wave.”

UPDATE: Matt provided me with the definitions:

90 day delinquency rate: "everything 3 months late or more. Likely includes most all Foreclosures in Process. The categories are not separate."

Foreclosure Rate is actual foreclosures in process: "Everything with NOD and Trustee's Sale filing."

REO Rate: "Everything foreclosed but still held by bank or servicer. This category is separate from other two."

by Calculated Risk on 8/06/2009 11:48:00 AM

From HotelNewsNow.com: STR reports US performance for week ending 1 August 2009

In year-over-year measurements, the industry’s occupancy fell 6.4 percent to end the week at 66.5 percent. Average daily rate dropped 9.6 percent to finish the week at US$97.48. Revenue per available room for the week decreased 15.5 percent to finish at US$64.86.

Click on graph for larger image in new window.

This graph shows the YoY change in the occupancy rate (3 week trailing average).

The three week average is off 7.6% from the same period in 2008.

The average daily rate is down 9.6%, and RevPAR is off 15.5% from the same week last year.

Comments: This is a multi-year slump. Although the occupancy rate was off 6.6 percent compared to last year, the occupancy rate is off about 10 percent compared to the same week in 2007.

Also, the end of July and beginning of August is the peak leisure travel period. The peak occupancy rate for the year was probably two weeks ago at 67%.

Note: Graph doesn't start at zero to better show the change.

Business travel is off much more than leisure travel, so the summer months are not as weak as other times of the year. September will be the real test for business travel.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 8/06/2009 09:31:00 AM

Here is a graph of office, mall and lodging investment through Q2 2009 based on the underlying detail data released yesterday by the BEA ...

Click on graph for larger image in new window.

This graph shows investment in offices, lodging and malls as a percent of GDP.

The recent boom in lodging investment has been stunning. Lodging investment peaked at 0.32% of GDP in Q2 2008 and has started to decline (0.27% in Q2 2009). There was a small increase in Q2 2009 that is probably related to projects being completed. I expect lodging investment to continue to decline through at least 2010, to perhaps one-third of the peak.

Investment in multimerchandise shopping structures (malls) peaked in 2007 and has fallen sharply. As projects are completed, mall investment will probably continue to decline through next year. As David Simon, Chief Executive Officer or Simon Property Group, the largest U.S. shopping mall owner said earlier this year:

"The new development business is dead for a decade. Maybe it’s eight years. Maybe it’s not completely dead. Maybe I’m over-dramatizing it for effect."

Office investment as a percent of GDP peaked at 0.46% in Q3 2008 and has started to decline sharply. With the office vacancy rate rising sharply, office investment will also probably decline through at least 2010.

Notice that investment in all three categories typically falls for a year or two after the end of a recession, and then usually slowly recovers. Also - usually office investment is the most overbuilt in a boom, but this time the office market struggled for a few years after the stock market bubble burst and there was comparatively more investment in malls and hotels.

As projects are completed there will be little new investment in these categories probably at least through 2010. This will be a steady drag on GDP (nothing like the decline in residential investment though), and a steady drag on construction employment.

by Calculated Risk on 8/06/2009 08:31:00 AM

The DOL reports weekly unemployment insurance claims fell to 550,000 from 588,000 the week before.

In the week ending Aug. 1, the advance figure for seasonally adjusted initial claims was 550,000, a decrease of 38,000 from the previous week's revised figure of 588,000. The 4-week moving average was 555,250, a decrease of 4,750 from the previous week's revised average of 560,000.
...
The advance number for seasonally adjusted insured unemployment during the week ending July 25 was 6,310,000, an increase of 69,000 from the preceding week's revised level of 6,241,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims decreased this week by 4,750 to 555,250, and is now 103,500 below the peak of 17 weeks ago. It appears that initial weekly claims have peaked for this cycle.

The level of initial claims has fallen fairly quickly - but the number is still very high (at 550,000), indicating significant weakness in the job market. The four-week average of initial weekly claims will probably have to fall below 400,000 before the total employment stops falling.

After earlier recessions (like '81), weekly claims fell quickly, but in the two most recent recessions, weekly claims declined a little and then stayed elevated for some time. A jobless recovery, with elevated weekly claims, seems likely this time too.

When the BLS reports tomorrow, I will graph the number of workers unemployed for 27 or more weeks. These workers have exhausted their regular benefits, although most are still on extended benefits.

by Calculated Risk on 8/05/2009 11:26:00 PM

From CNBC: Senate Reaches Deal on $2 Billion 'Clunkers' Refill

The Senate reached a deal on saving the dwindling "cash for clunkers" program ... that would add $2 billion to the popular rebate program ...

... The Toyota Corolla is the top-selling vehicle on the list, followed by the Ford Focus, Honda Civic, Toyota Prius and the Toyota Camry. There is one SUV on the list, the Ford Escape, which also comes in a hybrid model. Six of the top-10 selling vehicles are built by foreign manufacturers, but most are built in North America.

The deal is to allow some amendments to be offered that will be voted down, and then the bill will be passed exactly as it is.

by Calculated Risk on 8/05/2009 08:09:00 PM

From Zachary A. Goldfarb and David Cho at the WaPo: Administration Considers Splitting Fannie Mae, Freddie Mac

The Obama administration launched a broad government effort this week to overhaul mortgage giants Fannie Mae and Freddie Mac and is considering splitting the companies and putting their troubled assets in a new federally backed corporation, administration officials said.
...
The companies' regulator ... confirmed that the administration is discussing the "good bank bad bank" model.

There are no details on a proposed structure.