February 2011 U.S. Economic Fundamentals
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U.S. consumer spending sees big gains in December
WASHINGTON ` Americans spent at the fastest pace in three years in 2010, boosted by a strong finish in December.
Consumer spending rose 0.7 percent in December, the sixth straight monthly increase, the Commerce Department reported Monday. Households saw their incomes rise 0.4 percent, the same as November.
For all of 2010, consumers boosted spending 3.5 percent. That was the best performance since a 5.2 percent rise in 2007, before the recession began.
The government reported Friday that consumer spending rose at a 4.4 percent rate in the final three months of 2010 ` the most since 2006 and helping retailers to the best holiday shopping season in that time.
Economists expect a cut in Social Security taxes will lift January`s spending and incomes even further that last month.
Read the full article here.
WASHINGTON ` Americans spent at the fastest pace in three years in 2010, boosted by a strong finish in December.
Consumer spending rose 0.7 percent in December, the sixth straight monthly increase, the Commerce Department reported Monday. Households saw their incomes rise 0.4 percent, the same as November.
For all of 2010, consumers boosted spending 3.5 percent. That was the best performance since a 5.2 percent rise in 2007, before the recession began.
The government reported Friday that consumer spending rose at a 4.4 percent rate in the final three months of 2010 ` the most since 2006 and helping retailers to the best holiday shopping season in that time.
Economists expect a cut in Social Security taxes will lift January`s spending and incomes even further that last month.
Read the full article here.
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Top 5 Places to Invest in the U.S.
I absolutely know you are hoping the five include some combination of California, Florida, Arizona, Texas, Hawaii, Nevada and, if you are a ski buff, Montana, Colorado or maybe Idaho. Sorry, no can do.
The top contenders for recovery from the still brutal real estate carnage south of 49 may seem an unlikely lot to Canadians who view the United States as a holiday and retirement destination.
But, according to a recent analysis by the Portland Cement Association -- which has a powerful interest in knowing where real estate will crawl out of its hole first -- recovery is all about loan delinquency rates, unemployment and not having been invited to the housing bubble party.
Read the full article here.
I absolutely know you are hoping the five include some combination of California, Florida, Arizona, Texas, Hawaii, Nevada and, if you are a ski buff, Montana, Colorado or maybe Idaho. Sorry, no can do.
The top contenders for recovery from the still brutal real estate carnage south of 49 may seem an unlikely lot to Canadians who view the United States as a holiday and retirement destination.
But, according to a recent analysis by the Portland Cement Association -- which has a powerful interest in knowing where real estate will crawl out of its hole first -- recovery is all about loan delinquency rates, unemployment and not having been invited to the housing bubble party.
Read the full article here.
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U.S. construction spending drops to 10-year low
WASHINGTON ` U.S. construction spending unexpectedly fell in December to touch its lowest level in nearly 10-1/2 years as investment in both public and private projects declined, suggesting the sector would continue to struggle this year as federal stimulus spending tapers off.
The Commerce Department said on Tuesday construction spending dropped 2.5% to an annual rate of $787.9 billion, the lowest level since July 2000. The government revised November`s data to show a 0.2% fall, which was previously reported as a 0.4% increase.
Economists polled by Reuters had forecast construction spending flat in December. For the whole of 2010, construction spending declined 10.3% to $814.2 billion, also the lowest since 2000.
Read the full article here.
WASHINGTON ` U.S. construction spending unexpectedly fell in December to touch its lowest level in nearly 10-1/2 years as investment in both public and private projects declined, suggesting the sector would continue to struggle this year as federal stimulus spending tapers off.
The Commerce Department said on Tuesday construction spending dropped 2.5% to an annual rate of $787.9 billion, the lowest level since July 2000. The government revised November`s data to show a 0.2% fall, which was previously reported as a 0.4% increase.
Economists polled by Reuters had forecast construction spending flat in December. For the whole of 2010, construction spending declined 10.3% to $814.2 billion, also the lowest since 2000.
Read the full article here.
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Las Vegas: Still the foreclosure king
NEW YORK (CNNMoney) -- Las Vegas is once again the foreclosure king.
One out of every 9 homes in Sin City received some kind of default notice in 2010, according a report released Thursday by RealtyTrac. That's five times higher than the national average.
But there is a silver lining: The foreclosure rate is actually dropping in Vegas, down 7% compared to the end of 2009.
In fact, rates fell in all top-10 foreclosure markets of 2010. In No. 2 Cape Coral, Fla., for example, filings dropped 28%. In third place Modesto, Calif., they fell 13%; and forth place Phoenix dipped 7%.
Read the full article here.
NEW YORK (CNNMoney) -- Las Vegas is once again the foreclosure king.
One out of every 9 homes in Sin City received some kind of default notice in 2010, according a report released Thursday by RealtyTrac. That's five times higher than the national average.
But there is a silver lining: The foreclosure rate is actually dropping in Vegas, down 7% compared to the end of 2009.
In fact, rates fell in all top-10 foreclosure markets of 2010. In No. 2 Cape Coral, Fla., for example, filings dropped 28%. In third place Modesto, Calif., they fell 13%; and forth place Phoenix dipped 7%.
Read the full article here.
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Repeat sales index report
The preliminary data for December shows that housing prices declined for another month with the annual rate accelerating slightly to -8 percent on a year-to-year basis. Given the pattern that is emerging, it is likely that declines will continue for at least the next several months. The recent improvement in Phoenix employment is an important step in getting the housing market back to normal but the process will continue through 2011 and beyond. To put things in perspective, in December 2008 prices had declined by 33 percent from the prior year and by December 2009 they had declined another 13 percent. Those declines reflected the depressed condition of the Phoenix housing market and the Great Recession. With the economy gradually recovering and the foreclosure problem apparently past its peak, the odds are good that 2011 will be a transition year in the housing market.
Read the full report here.
The preliminary data for December shows that housing prices declined for another month with the annual rate accelerating slightly to -8 percent on a year-to-year basis. Given the pattern that is emerging, it is likely that declines will continue for at least the next several months. The recent improvement in Phoenix employment is an important step in getting the housing market back to normal but the process will continue through 2011 and beyond. To put things in perspective, in December 2008 prices had declined by 33 percent from the prior year and by December 2009 they had declined another 13 percent. Those declines reflected the depressed condition of the Phoenix housing market and the Great Recession. With the economy gradually recovering and the foreclosure problem apparently past its peak, the odds are good that 2011 will be a transition year in the housing market.
Read the full report here.
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U.S. private sector job gains beat expectations
U.S. private employers added more jobs than expected in January, underscoring views the employment picture is slowly improving.
The private sector added 187,000 jobs in January compared with a downwardly revised gain of 247,000 jobs in December, a report by payrolls processor ADP Employer Services showed today. The December figure was originally reported as a gain of 297,000 jobs.
"Bottom line, even with the Dec downward revision, the two month average is a solid 217,000 and certainly a positive for economic activity," said Peter Boockvar, equity strategist at Miller Tabak + Co in New York.
Read the full article here.
U.S. private employers added more jobs than expected in January, underscoring views the employment picture is slowly improving.
The private sector added 187,000 jobs in January compared with a downwardly revised gain of 247,000 jobs in December, a report by payrolls processor ADP Employer Services showed today. The December figure was originally reported as a gain of 297,000 jobs.
"Bottom line, even with the Dec downward revision, the two month average is a solid 217,000 and certainly a positive for economic activity," said Peter Boockvar, equity strategist at Miller Tabak + Co in New York.
Read the full article here.
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Bernanke optimism tempered by sluggish job creation
U.S. Federal Reserve chairman Ben Bernanke is feeling better about the economy, but not enough to alter the central bank`s extraordinary stimulus program.
Making a rare appearance in front of an audience consisting primarily of reporters, Mr. Bernanke referred to recent indicators as `good news,` singling out evidence that fewer Americans are filing for unemployment benefits.
Read the full article here.
U.S. Federal Reserve chairman Ben Bernanke is feeling better about the economy, but not enough to alter the central bank`s extraordinary stimulus program.
Making a rare appearance in front of an audience consisting primarily of reporters, Mr. Bernanke referred to recent indicators as `good news,` singling out evidence that fewer Americans are filing for unemployment benefits.
Read the full article here.
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10 Foreclosure Hotspots
Spartanburg is found in the upstate portion of South Carolina, the fastest-growing region in the state. But in the last year, it also had the country's fastest-growing foreclosure rate.
The 228% spike in foreclosure filings is the result of two converging trends, according to city manager Ed Memmott: Questionable mortgages used to buy homes -- especially investment homes -- during the boom; and job losses.
The unemployment rate hit 12.7% in 2009 before dropping to 10.9% in 2010 -- well above the national average. And, as many of those workers were laid off, they fell behind on their mortgage payments.
Read the full article here.
Spartanburg is found in the upstate portion of South Carolina, the fastest-growing region in the state. But in the last year, it also had the country's fastest-growing foreclosure rate.
The 228% spike in foreclosure filings is the result of two converging trends, according to city manager Ed Memmott: Questionable mortgages used to buy homes -- especially investment homes -- during the boom; and job losses.
The unemployment rate hit 12.7% in 2009 before dropping to 10.9% in 2010 -- well above the national average. And, as many of those workers were laid off, they fell behind on their mortgage payments.
Read the full article here.
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How many folks have 'lost their homes' to foreclosure/short sales/DILs?
CR: This is an interesting question and hard to answer ... the following is from economist Tom Lawler ...
How Many Folks Have `Lost Their Homes` to Foreclosure/Short Sales/DILs Over the Past Few Years?
According to Hope Now estimates, completed foreclosure sales (rounded) were about as follows over the past few years.
Read the full article here.
CR: This is an interesting question and hard to answer ... the following is from economist Tom Lawler ...
How Many Folks Have `Lost Their Homes` to Foreclosure/Short Sales/DILs Over the Past Few Years?
According to Hope Now estimates, completed foreclosure sales (rounded) were about as follows over the past few years.
Read the full article here.
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Managing a potential flood of foreclosure
You can talk all you want of renewed interest in housing, slowly increasing sales and supposed stabilization in prices, but the elephant in the room is slowly growing, and banks, Fannie, Freddie and the government know it. I'm talking about foreclosures.
Economist Mark Zandi, often quoted by lawmakers on both sides of the aisle, told the Senate Budget Committee this morning that while he's "optimistic" with regard to the economy's prospects, "At the top of my list of concerns, at least in the near term (6 to 12 months), is the ongoing problem in the housing market and the foreclosure crisis."
REO inventory is rising, he proved through some slides. Four million seriously delinquent loans, out of 50 million first mortgage loans, "so that's a lot." And while he noted that the problems appear to have peaked, there are still over 600,000 properties in REO, which will only put more pressure on prices when they come to market.
Read the full article here.
You can talk all you want of renewed interest in housing, slowly increasing sales and supposed stabilization in prices, but the elephant in the room is slowly growing, and banks, Fannie, Freddie and the government know it. I'm talking about foreclosures.
Economist Mark Zandi, often quoted by lawmakers on both sides of the aisle, told the Senate Budget Committee this morning that while he's "optimistic" with regard to the economy's prospects, "At the top of my list of concerns, at least in the near term (6 to 12 months), is the ongoing problem in the housing market and the foreclosure crisis."
REO inventory is rising, he proved through some slides. Four million seriously delinquent loans, out of 50 million first mortgage loans, "so that's a lot." And while he noted that the problems appear to have peaked, there are still over 600,000 properties in REO, which will only put more pressure on prices when they come to market.
Read the full article here.
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Fannie and Freddie's big foreclosure backlog
Fannie Mae (FNMA) and Freddie Mac (FMCC) are trying to sell their huge backlog of foreclosed homes in an orderly way to avoid flooding the market and depressing prices. As foreclosures mount, though, analysts say the companies may be forced to reconsider that approach.
The government-controlled mortgage companies' inventory of foreclosed residential property has quadrupled in three years and now stands at a record $24 billion. The number of properties they own has increased fivefold to nearly 242,000, representing roughly a third of all repossessed homes in the U.S. And the total keeps growing as they take possession of homes faster than they can sell them. In the first nine months of 2010 Fannie and Freddie took in 319,243 foreclosed properties and disposed of 210,105. At the same time, U.S. housing prices have been falling. In the most recent reading, the S&P/Case-Shiller index of home values in 20 cities fell 1.6 percent in November from the previous year, the biggest 12-month decrease since December 2009.
Read the full article here.
Fannie Mae (FNMA) and Freddie Mac (FMCC) are trying to sell their huge backlog of foreclosed homes in an orderly way to avoid flooding the market and depressing prices. As foreclosures mount, though, analysts say the companies may be forced to reconsider that approach.
The government-controlled mortgage companies' inventory of foreclosed residential property has quadrupled in three years and now stands at a record $24 billion. The number of properties they own has increased fivefold to nearly 242,000, representing roughly a third of all repossessed homes in the U.S. And the total keeps growing as they take possession of homes faster than they can sell them. In the first nine months of 2010 Fannie and Freddie took in 319,243 foreclosed properties and disposed of 210,105. At the same time, U.S. housing prices have been falling. In the most recent reading, the S&P/Case-Shiller index of home values in 20 cities fell 1.6 percent in November from the previous year, the biggest 12-month decrease since December 2009.
Read the full article here.
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Feasting on Foreclosures: Foreclosure sales can wreck lives, neighbourhoods
When friends came to visit Shirley Hernandez in her new house in Penn Hills in 2007, they raved about it.
"Oh my God, Shirl, this is so nice," she recalls them saying.
Then she discovered mold growing throughout the basement. The downstairs bathroom stopped working, windows froze over and the furnace broke.
Worried her two kids would get sick from the mold, she left the home. "They said, 'Why, mommy, are we moving out of our house?' " she said.
Read the full article here.
When friends came to visit Shirley Hernandez in her new house in Penn Hills in 2007, they raved about it.
"Oh my God, Shirl, this is so nice," she recalls them saying.
Then she discovered mold growing throughout the basement. The downstairs bathroom stopped working, windows froze over and the furnace broke.
Worried her two kids would get sick from the mold, she left the home. "They said, 'Why, mommy, are we moving out of our house?' " she said.
Read the full article here.
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California has eight of Forbe's 20 Most Miserable Cities in U.S.
Arnold Schwarzenegger was sworn in as the governor of California at the end of 2003 amid a wave of optimism that his independent thinking and fresh ideas would revive a state stumbling after the recall of Gov. Gray Davis.
The good vibes are a distant memory: The Governator exited office last month with the state facing a crippling checklist of problems, including massive budget deficits, high unemployment, plunging home prices, rampant crime and sky-high taxes. Schwarzenegger`s approval ratings hit 22% last year, a record low for any sitting California governor.
Read the full article here.
Arnold Schwarzenegger was sworn in as the governor of California at the end of 2003 amid a wave of optimism that his independent thinking and fresh ideas would revive a state stumbling after the recall of Gov. Gray Davis.
The good vibes are a distant memory: The Governator exited office last month with the state facing a crippling checklist of problems, including massive budget deficits, high unemployment, plunging home prices, rampant crime and sky-high taxes. Schwarzenegger`s approval ratings hit 22% last year, a record low for any sitting California governor.
Read the full article here.
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Detroit mayor promises to pressure absentee property owners
Detroit mayor Dave Bing announced through a spokesman on Friday that the mayor plans to get `tough with speculators and owners of nuisance properties who are investing in the city`[1]. Low property values and bargain basement prices have attracted real estate investors of all ilks, including tax deed investors who purchase properties for the cost of their delinquent property taxes, which can be a great deal[2]. However, many members of the Detroit population believe that these types of investors ` who often buy in large volumes ` are actually creating a nuisance by purchasing properties and then failing to care for them appropriately. The Bing administration has dubbed this type of investing `predatory speculation,` and plans to crack down on the problem in the near future.
Much of the recent furor about Detroit`s blighted state ` and the subsequent blame being laid at the door of real estate investors ` is a result of a Detroit News investigative series in which investigators determined that more than 5,000 city parcels are owned by 10 private landowners, 8 of whom live outside of Detroit. The largest of the landowners has amassed his portfolio using tax auctions, and much of the portfolio remains vacant. The landowner owes nearly $100,000 in blight fines at this time but is disputing the fines and asserts that as a high-volume landowner he has just as much of a vested interest in the city`s comeback as residents of the area
Read the full article here.
Detroit mayor Dave Bing announced through a spokesman on Friday that the mayor plans to get `tough with speculators and owners of nuisance properties who are investing in the city`[1]. Low property values and bargain basement prices have attracted real estate investors of all ilks, including tax deed investors who purchase properties for the cost of their delinquent property taxes, which can be a great deal[2]. However, many members of the Detroit population believe that these types of investors ` who often buy in large volumes ` are actually creating a nuisance by purchasing properties and then failing to care for them appropriately. The Bing administration has dubbed this type of investing `predatory speculation,` and plans to crack down on the problem in the near future.
Much of the recent furor about Detroit`s blighted state ` and the subsequent blame being laid at the door of real estate investors ` is a result of a Detroit News investigative series in which investigators determined that more than 5,000 city parcels are owned by 10 private landowners, 8 of whom live outside of Detroit. The largest of the landowners has amassed his portfolio using tax auctions, and much of the portfolio remains vacant. The landowner owes nearly $100,000 in blight fines at this time but is disputing the fines and asserts that as a high-volume landowner he has just as much of a vested interest in the city`s comeback as residents of the area
Read the full article here.
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Top-Line growth is here
More U.S. companies are exceeding sales forecasts than any time in four years, helping extend the biggest stock-market rally since 1936.
Caterpillar Inc. and United Parcel Service Inc., barometers for the economy because of their building and delivery businesses, are among the 72 percent of Standard & Poor`s 500 Index companies that reported more revenue last quarter than analysts estimated, the largest proportion since at least 2006, according to data compiled by Bloomberg. Sales beat projections by an average 2.3 percent, the most in two years, the data show.
While U.S. earnings have surpassed Wall Street estimates for seven straight quarters, sales have trailed forecasts on average since 2008, as the U.S. ended its worst recession in seven decades and employers cut as many as 8.75 million workers. Bank of America Corp. and Penn Capital Management say unexpected revenue growth shows the economy is expanding enough that companies can stop firing people and closing plants.
`You really did need top-line growth because the cost-cutting got to where you couldn`t cut any more,` said Eric Green, a money manager at Penn Capital Management in Philadelphia, which oversees $5.6 billion. `But you`re seeing it now. Many companies are having that nice top-line growth, and as that goes up, it should have a magnified effect on earnings. It`s very positive for the equity markets.`
Read the full article here.
More U.S. companies are exceeding sales forecasts than any time in four years, helping extend the biggest stock-market rally since 1936.
Caterpillar Inc. and United Parcel Service Inc., barometers for the economy because of their building and delivery businesses, are among the 72 percent of Standard & Poor`s 500 Index companies that reported more revenue last quarter than analysts estimated, the largest proportion since at least 2006, according to data compiled by Bloomberg. Sales beat projections by an average 2.3 percent, the most in two years, the data show.
While U.S. earnings have surpassed Wall Street estimates for seven straight quarters, sales have trailed forecasts on average since 2008, as the U.S. ended its worst recession in seven decades and employers cut as many as 8.75 million workers. Bank of America Corp. and Penn Capital Management say unexpected revenue growth shows the economy is expanding enough that companies can stop firing people and closing plants.
`You really did need top-line growth because the cost-cutting got to where you couldn`t cut any more,` said Eric Green, a money manager at Penn Capital Management in Philadelphia, which oversees $5.6 billion. `But you`re seeing it now. Many companies are having that nice top-line growth, and as that goes up, it should have a magnified effect on earnings. It`s very positive for the equity markets.`
Read the full article here.
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Detroit offers cops abandoned city homes for $1,000
DETROIT - Mayor Dave Bing is offering renovated homes in Detroit for as little as $1,000 to city police officers who live in the suburbs under a plan aimed at improving neighborhoods and safety.
The city will tap federal stimulus funds to repair up to 200 abandoned houses in the Boston-Edison and Indian Village neighborhoods, Bing said during a news conference Monday.
At least 53 percent of the city's 3,000 officers live outside the city, Bing said. Residency requirements for city employees were wiped away by state lawmakers in 1999.
Bing said the police presence will hinder crime and create better relationships with residents. Detroit's population has dropped by half after peaking at near 2 million in the early 1950s.
"Detroiters want to live in safe, stable neighborhoods and they deserve no less," Bing said. "This is just step one of many things that we think we're going to have to involve ourselves in as we bring our city back. We hope it's a model for the nation."
Read the full article here.
DETROIT - Mayor Dave Bing is offering renovated homes in Detroit for as little as $1,000 to city police officers who live in the suburbs under a plan aimed at improving neighborhoods and safety.
The city will tap federal stimulus funds to repair up to 200 abandoned houses in the Boston-Edison and Indian Village neighborhoods, Bing said during a news conference Monday.
At least 53 percent of the city's 3,000 officers live outside the city, Bing said. Residency requirements for city employees were wiped away by state lawmakers in 1999.
Bing said the police presence will hinder crime and create better relationships with residents. Detroit's population has dropped by half after peaking at near 2 million in the early 1950s.
"Detroiters want to live in safe, stable neighborhoods and they deserve no less," Bing said. "This is just step one of many things that we think we're going to have to involve ourselves in as we bring our city back. We hope it's a model for the nation."
Read the full article here.
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Robo-signing still taming foreclosures
Fallout from the robo-signing scandal kept a lid on foreclosure filings in January, data aggregator RealtyTrac said, particularly in judicial foreclosure states where courts oversee the process.
But there are warning signs that the lid is set to blow, with filings already picking up in non-judicial foreclosure states.
Before procedural issues that surfaced last fall slowed new foreclosure filings and processing of existing cases, RealtyTrac's inspections of public records had logged 20 consecutive months when at least 300,000 properties were hit with foreclosure-related filings.
Read the full article here.
Fallout from the robo-signing scandal kept a lid on foreclosure filings in January, data aggregator RealtyTrac said, particularly in judicial foreclosure states where courts oversee the process.
But there are warning signs that the lid is set to blow, with filings already picking up in non-judicial foreclosure states.
Before procedural issues that surfaced last fall slowed new foreclosure filings and processing of existing cases, RealtyTrac's inspections of public records had logged 20 consecutive months when at least 300,000 properties were hit with foreclosure-related filings.
Read the full article here.
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34% of Metro Seattle's homes now worth less than mortgages owed
The owners of one-third of the houses with mortgages in the Seattle metro area now owe more than their homes are worth, Zillow.com estimates.
That's up from less than 23 per cent a year ago, the online real-estate database and marketplace said in an analysis released Wednesday.
At the end of 2010, 34.3 per cent of all single-family homeowners with mortgages in King, Snohomish and Pierce counties were "underwater" on their homes, Seattle-based Zillow said. That was higher than the national figure, 27 per cent.
This region's rate of increase over the past year ` and especially over the last quarter ` also topped the national increase.
Read the full article here.
The owners of one-third of the houses with mortgages in the Seattle metro area now owe more than their homes are worth, Zillow.com estimates.
That's up from less than 23 per cent a year ago, the online real-estate database and marketplace said in an analysis released Wednesday.
At the end of 2010, 34.3 per cent of all single-family homeowners with mortgages in King, Snohomish and Pierce counties were "underwater" on their homes, Seattle-based Zillow said. That was higher than the national figure, 27 per cent.
This region's rate of increase over the past year ` and especially over the last quarter ` also topped the national increase.
Read the full article here.