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Paper Economy

Cashier Liliana Romero checks out a customer who is using a SNAP card at Tesoro Supermarket in Framingham, Mass. in 2010. Food stamps recipients can use their Supplemental Nutrition Assistance Program cards at grocery stores to help purchase their meals. (Melanie Stetson Freeman/The Christian Science Monitor/File)

More Americans collecting SNAP food stamps

By Guest blogger / 07.15.13

As a logical consequence of the prolonged economic downturn, participation in the federal food stamp program is continuing to rise.

In fact, household participation has been climbing so steadily that it has dwarfed the last peak (which looks like a minor blip by comparison) set as a result of the immediate fallout following hurricane Katrina.

The latest data released by the Department of Agriculture indicated that in April, a notable 175,902 individual recipients were removed from the food stamps program with the current total still increasing 2.75% on a year-over-year basis.

Individuals receiving food stamp benefits declined to 47.54 million which, as a ratio of the overall civilian non-institutional population now stands at a whopping 19.39% of the population.

Households receiving food stamps benefits declined by 76,082 to 23.03 million households with the current total rising 3.72% above the level seen a year earlier.

As participation continues to swell, so too has the total nominal benefit cost climbing 2.80% on a year-over-year basis to $6.29 billion for the month.

Compared to peaks in 1990, 2001, and 2008, the probability of a recession occurring in January 2014 looks slim, according to this chart. (SoldAtTheTop)

Is the recession returning?

By Guest blogger / 07.12.13

With the weak economic recovery lagging through its fourth continuous year, it's sensible to start looking for clues, however so slight, of the possibility of oncoming recession.

First, let’s remember that while the NBER makes the official call of both the “peak” of a business cycle expansion and the “trough” of the subsequent recession, their officiating is delayed to say the least.

For a more “real time” assessment of the prospects of recession, various methods of number crunching have been formulated to distill out a basic probability assessment from several underlying macro series data sets.

One popular statistical method is the yield-curve based “Term Spread” probability method.

Spearheaded by economist Professor Arturo Estrella of the Rensselaer Polytechnic Institute, this method derives a probability of recession from the spread between long and short yields (10-year and 3-month) and is by all accounts the standard for recession probability forecasting.

The latest data indicates that the probability for recession is remains elevated with a January 2014 probability (the probability that there will be a recession by that date) of 4.4%.

Keep in mind that a positive indication using this method would require this probability to reach 30% so while the probability is clearly rising, the current probability is still quite low.

The average rate for a 30 year fixed-rate mortgage has increased 106 basis points in the last 9 weeks, perhaps as a result of the Fed suggesting it will taper off its b (SoldAtTheTop)

Mortgage rates 'explode,' moving to 2-year high

By Guest blogger / 07.11.13

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications. 

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases. 

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) rose again climbing 10 basis points to 4.52% since last week while the purchase application volume decreased 3% and the refinance application volume decreased 4% over the same period. 

Rates have literally exploded rising a whopping 106 basis points over the past nine weeks seemingly directly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year. 

Clearly, steadily increasing rates is working to tamp down mortgage application activity but thus far, the spillover to home sales and price indicators appears minimal.

Seasonally adjusted national pending home sales rose significantly from April, jumping 6.7 percent up. (SoldAtTheTop)

Home sales jump up in May

By Guest blogger / 06.27.13

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for May showing that pending home sales improved notably with the seasonally adjusted national index climbing 6.7% from April and increasing 12.1% above the level seen in May 2012. 

Meanwhile, the NARs chief economist Lawrence Yun is suggests the spike in contract activity is likely the result of sidelined buyers now jumping to buy before interest rates, increasing for several weeks now, rise further:

"Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher, ... This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand."

The number of seasonally adjusted "initial" unemployment claims went down from 355,000 to 346,000 claims over the last week. Overall, total continued unemployment claims has declined since 2010. (SoldAtTheTop)

Unemployment benefits claims drop to 346,000

By Guest blogger / 06.27.13

Yesterday’s jobless claims report showed a decrease to both initial and continued unemployment claims as initial claims trended well below the closely watched 400K level. 

Seasonally adjusted “initial” unemployment claims declined by 9,000 to 346,000 claims from 355,000 claims for the prior week while seasonally adjusted “continued” claims declined by 1,000 claims to 2.965 million resulting in an “insured” unemployment rate of 2.3%. 

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls. 

Currently there are some 1.70 million people receiving federal “extended” unemployment benefits. 

Taken together with the latest 2.77 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.48 million people on state and federal unemployment rolls.

The national economy picked up slowly in May, with its index improving from -0.52 in April to -0.30. An index of zero shows that the national economy is expanding at its historical trend rate. (SoldAtTheTop)

Remaining in slump, economy grows slowly

By Guest blogger / 06.25.13

The latest release of the Chicago Federal Reserve National Activity Index (CFNAI) indicated that the national economy remained near contraction in May with the index improving to -0.30 from a level of -0.52 in April while the three month moving average declined to a level of -0.43. 

The CFNAI is a weighted average of 85 indicators of national economic activity collected into four overall categories of “production and income”, “employment, unemployment and income”, “personal consumption and housing” and “sales, orders and inventories”. 

The Chicago Fed regards a value of zero for the total index as indicating that the national economy is expanding at its historical trend rate while a negative value indicates below average growth. 

A value at or below -0.70 for the three month moving average of the national activity index (CFNAI-MA3) indicates that the national economy has either just entered or continues in recession. 

This chart shows the monthly and annual change in existing single family home sales. Single family homes jumped 5 percent in May 2013. (SoldAtTheTop)

Existing home sales jump 4.3 percent in May

By Guest blogger / 06.23.13

Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for May showing an increase in sales with total home sales rising a notable 4.2% since April and climbing 12.9% above the level seen in May 2012. 

Single family home sales also improved climbing a whopping 5.0% from April and rising 12.7% above the level seen in May 2012 while the median selling price increased a notable 15.8% above the level seen a year earlier. 

Inventory of single family homes increased from April to 1.98 million units but still remained 9.2% below the level seen in May 2012 which, along with the sales pace, resulted in a monthly supply of 5.2 months. 

The following charts (click for full-screen dynamic version) shows national existing single family home sales, median home prices, inventory and months of supply since 2005. 

1.68 million Americans are receiving extended unemployment benefits from the government, which has picked up people who have fallen off of traditional unemployment benefit rolls since mid-2008. Overall, as the chart shows, total continued unemployment claims has continued to decrease, albeit slowly. (SoldAtTheTop)

More Americans claim extended unemployment benefits

By Guest blogger / 06.21.13

Yesterday’s jobless claims report showed an increase to initial unemployment claims and a decrease to continued unemployment claims as initial claims trended well below the closely watched 400K level. 

Seasonally adjusted “initial” unemployment claims increased by 18,000 to 354,000 claims from 336,000 claims for the prior week while seasonally adjusted “continued” claims declined by 40,000 claims to 2.951 million resulting in an “insured” unemployment rate of 2.3%.  

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls. 

Currently there are some 1.68 million people receiving federal “extended” unemployment benefits. 

Taken together with the latest 2.77 million people that are currently counted as receiving traditional continued unemployment benefits, there are 4.46 million people on state and federal unemployment rolls. 

The average interest rate for 30 year and 15 year fixed rate mortgages has, on the whole, declined since 2006. Rates for 30-year fixed rate mortgages climbed back up 3 basis points to 4.01 percent since last week. (SoldAtTheTop)

Home mortgage rates rise slightly

By Guest blogger / 06.20.13

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications. 

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.  

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) rose again climbing 3 basis points to 4.01% since last week while the purchase application volume decreased 3% and the refinance application volume decreased 3% over the same period. 

Rates have risen steadily for the past few weeks seemingly correlated with the Feds recent suggestion that they may start to wind down GSE purchases later this year.  Only time will tell if this is a trend or simply an aberration.

More constructors sought permits for single family houses in May, but housing activity remained well below levels seen at the market's peak in early 2006. (SoldAtTheTop)

Single family homes crawl back up

By Guest blogger / 06.19.13

Yesterday's New Residential Construction Report showed mixed results in May with an 6.8% increase to total housing starts and a 3.1% decline to total housing permits while single family housing permits improved on the month.

Single family housing permits, the most leading of indicators, increased 1.3% from April to 622K single family units (SAAR), and  increased 24.6% above the level seen in May 2012 but still remained well below levels seen at the peak in September 2005.  

Single family housing starts increased 0.3% from April to 599K units (SAAR), and rose 16.3% above the level seen in May 2012 but still remained well below the peak set in early 2006. 

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