While we are still in a recession so this isn’t really a potential ‘double dip’ are going to see the second downward push in the economy soon?
For years I have watched employment and consumer confidence for clues as to where we were heading in the economy–I quit watching these closely during the last 6 months as the Fed and the treasury overwhelmed fundamentals with never ending money drops–but maybe it is time to watch again.
The Conference Board released their take on Consumer Confidence today and it wasn’t good. The Consumer Confidence Index fell to 84.8 from 91.7 last month–this is a damned big drop. ‘Analysts’ (who ever that is) were expecting an increase in the reading–so much for the smart folks. Seems to me with the $600/week extra cash from the federal government going away confidence both by the employed and the unemployed would head south–we are talking maybe $6 billion a week going away–real money (or is it just fake paper fresh off the printing press?).
Last week we had a 1.1 million first time unemployment claims number–up from 910,000 the week before–are small businesses simply running out of cash and having to lay off folks? I didn’t dig into this one, but anecdotally I had 2 nephews get laid off last week–1 in Colorado and 1 in Kansas. Both worked in hospitality related businesses–the businesses simply continue to suffer and eventually lay offs have to happen. In this case both nephews are around 50 and this will be a tough time for them.
Black Knight released the latest mortgage data report last Thursday and there was a bit of improvement overall–but with the $600 weekly going away is this going to worsen again? Their report is here.
While overall mortgage delinquencies improved a bit FHA borrowers are not paying their mortgages–a full 16% of all of them are delinquent!! Yikes!! This is up from 9.7% the month before. While I am for everyone that wants a house to have one–the facts are, time and time again, that when you have little ‘skin in the game’ and you lose your job defaulting is always an option. The feds have a forbearance program and payments can be deferred for up to a year–any wagers on how many of these folks will walk away from their property at some point in the future? A short article on the recent number can be read here.
So the time is here to again watch numbers closely. The wild card being how much money congress will throw at the problem in the weeks ahead–not that money will help in the long term–we are creating zombie businesses, zombie homeowners, zombie employees–when will the ‘piper be paid’?