by Calculated Risk on 1/12/2012 01:39:00 PM

The FOMC transcripts for 2006 are now online.

Binyamin Appelbaum at the NY Times is reading through them. A few comments from his twitter feed (most recent first):

Bies, cont. " However... let me just say that the bottom line is that overall mortgage credit quality is still very, very strong. "

Bies, Oct. '06: "We are also seeing in a small way increased predatory activity with loans..."

Yellen, Oct. '06: "Of course, housing is a relatively small sector of the economy, and its decline should be self-correcting."

Stern, Oct. '06: "The housing situation notwithstanding, I remain somewhat more optimistic about our prospects for real growth..."

Mishkin, Sept. '06: "The excesses in the housing sector seem to be unwinding in an acceptable way... I'm actually quite positive."

Warsh, Sept. '06: "Capital markets are probably more profitable and more robust at this moment... than they have perhaps ever been."

Geithner, cont. "If we see a more-pronounced actual decline in housing prices, will that have greater damage on confidence and spending?"

Geithner, Sept. '06: "We just don’t see troubling signs yet of collateral damage, and we are not expecting much."

Guynn, stepping down from the FOMC: "I’m counting on all of you to protect the buying power of my hard-earned retirement savings."

Lacker, Sept. '06: "I’m still fairly skeptical of large indirect spillover effects on employment or consumption.”

Minehan, cont. "So it is hard actually for me to see that residential investment will be that hard hit that long."

Minehan, Sept. 06: "Buyers should recognize housing [is] more affordable & resume purchases, perhaps w/out further major price declines."

Yellen, cont. "Houses [in Boise]... are now being dressed up to look occupied... so as not to discourage potential buyers."

Yellen, Sept. '06: "The speed of the falloff in housing activity and the deceleration in house prices continue to surprise us..."

Fed staff, Sept. '06: "We are not projecting large declines nationwide in house prices."

Fed staff, Aug. '06: "We forecast single-family starts will bottom out at annual rate of 1.43m units." //Actual low (so far): 445k in '09

Bies, cont. "...rather than being a drain going forward and that will also get the growth rate more positive."

Bies, June '06: "So I really believe that the drop in housing is actually on net going to make liquidity available for other sectors..."

Geithner, June '06: "We see a pretty healthy adjustment process under way... The world economy still looks pretty robust to us."

Guynn, June '06: "...Of greater concern to me, however, is the inflation outlook."

Guynn, June '06: "We are geting reports that builders are now making concessions... even throwing in a free Mini Cooper -- [LAUGHTER]."

Fed staff report, June '06: "We have not seen—and don’t expect—a broad deterioration in mortgage credit quality."

Bernanke, March 2006: "Again, I think we are unlikely to see growth being derailed by the housing market."

by Calculated Risk on 1/12/2012 11:34:00 AM

This is another indication of an improving labor market.

From Ricardo Lopez at the LA Times: Remittances to Mexico are rebounding

Head to 4th Street and Broadway in downtown Los Angeles and you'll see signs of a labor market on the mend.

At a Continental Currency Services Inc. branch, a check-cashing and money-transfer business, housekeeper Maria Guadalupe Gutierrez waited patiently in line on a recent afternoon to wire $200 to her mother in Chiapas, Mexico.
...
Ending a three-year slump, remittances to Mexico are finally on the upswing, thanks to an improving U.S. job market. Analysts expect that money sent home last year by Mexicans living abroad, most of them residing in the United States, will top $23 billion when Mexico's central bank releases annual figures this month. Although still below the peak of $26 billion in 2007, that would be a solid 8% increase over 2010.

Click on graph for larger image.

Here is a graph of the annual remittances to Mexico. This is money sent home by Mexicans worldwide, although this is mostly from the US. The data is from Banco de México.

Remittances increased sharply during the housing bubble, and declined by about 15% in 2009. Remittances will probably increase about 8% this year.

by Calculated Risk on 1/12/2012 09:00:00 AM

On a monthly basis, retail sales were up 0.1% from November to December (seasonally adjusted, after revisions), and sales were up 6.5% from December 2010. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $400.6 billion, an increase of 0.1 percent (±0.5%)* from the previous month and 6.5 percent (±0.7%) above December 2010.

Sales for November were revised up from a 0.2% increase to 0.4%. Retail sales excluding autos decreased 0.2% in December.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales are up 20.4% from the bottom, and now 5.9% above the pre-recession peak (not inflation adjusted)

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 6.1% on a YoY basis (6.5% for all retail sales). Retail sales ex-gasoline increase 0.3% in December.

This was well below the consensus forecast for retail sales of a 0.4% increase in December, and a 0.4% increase ex-auto.


All current retail sales graphs

by Calculated Risk on 1/12/2012 08:39:00 AM

The DOL reports:

In the week ending January 7, the advance figure for seasonally adjusted initial claims was 399,000, an increase of 24,000 from the previous week's revised figure of 375,000. The 4-week moving average was 381,750, an increase of 7,750 from the previous week's revised average of 374,000.

The previous week was revised up to 375,000 from 372,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased this week to 381,750.

The 4-week moving average is still well below 400,000.

And here is a long term graph of weekly claims:





All current Employment Graphs

by Calculated Risk on 1/12/2012 01:13:00 AM

From RealtyTrac: 2011 Year-End Foreclosure Market Report: Foreclosures on the Retreat

RealtyTrac® ... today released its Year-End 2011 U.S. Foreclosure Market Report™, which shows a total of 2,698,967 foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 1,887,777 U.S. properties in 2011, a decrease of 34 percent in total properties from 2010. Foreclosure activity in 2011 was 33 percent below the 2009 total and 19 percent below the 2008 total.

“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” said Brandon Moore, chief executive officer of RealtyTrac. “The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages — particularly in states with a judicial foreclosure process."

From Reuters: Foreclosure filings hit four-year low in 2011

Bank seizures of homes fell to 804,423 from 1,050,500 in 2010, also marking the lowest level in four years.

"A big part that is inflating the size of the decrease is a continuing extended foreclosure process," said Daren Blomquist, director of marketing communications at RealtyTrac.

This is close to Tom Lawler's estimate of the number of completed foreclosure sales using data from Hope Now.

Earlier this week I argued foreclosure activity would increase in 2012:

There are 4 million seriously delinquent loans (90 day and in-foreclosure). This is about 3 million more properties than normal. Probably when the mortgage settlement is announced, some of these loans will cure as part of the settlement with loan modifications that include principal reduction, but many of these properties will become REOs fairly quickly.

So even though REO inventory is declining, there are still many more [foreclosures] to come ...

My guess is the policy changes will all be announced in the next few months, and that foreclosure activity will increase significantly. Some portion of these REO will be sold in bulk to investors and rented, so it is difficult to tell how many REOs will come on the market.