#2 of ten things to not Tweet about

I especially enjoyed this one:



Translation: I don't have any actual knowledge about any actual industries. I just like to communicate about communications.

From The Oatmeal

More economic pain ahead

From my post at Libertarianstandard.com:

In the chart below, provided by chartoftheday.com, one can see how grim the job situation has become. The long term-trend experienced since 1961 has been abandoned for what can only be described as stagnation in job creation. As jobs remain flat, of course, the size of the job force will continue to grow as more young people graduate from college and secondary school. This is partly why unemployment among teens and twentysomethings is now about 25 percent.



According to chartoftheday.com:

Today, the Labor Department reported that nonfarm payrolls increased by 431,000 in May. It is worth noting that a large majority of last month's gain in payrolls was due to the hiring of temporary workers for the 2010 census. Today's chart provides some perspective on the US job market. Note how the number of jobs steadily increased from 1961 to 2001 (top chart). During the last economic recovery, however, job growth was unable to get back up to its long-term trend (first time since 1961). More recently, nonfarm payrolls have pulled away from its 40-year trend (1961-2001) by a record percentage (bottom chart). In fact, the number of US jobs is currently at level first reached in early 2000.

So far, the current "recovery" has produced a net loss of 133,000 jobs. During the same point in the last recovery (2003), the economy was adding 200,000 to 300,000 jobs per month. Calling the current situation a recovery is risible to anyone who is out looking for a job right now, especially since workers are now experiencing the longest periods of joblessness experienced in decades.

We can add to this the fact that the debt crisis in Europe has now spread to Hungary. So now, Greece, Portugal, Ireland, Italy, Spain and Hungary are all now facing serious debt crises and even risk of default. The European economy is in disarray, and investors were not pleased as the Dow plunged more than 300 points to below 10,000.

The homebuyer tax credits are gone, the stimulus is beginning to wear off, and there is nothing left that the feds can do to stave off another crisis since interest rates are already effectively zero and the federal government is more more broke than ever. State and local governments are in even worse shape.

Needless to say, this does not bode well for the "recovery."

New economics haikus

Here are a couple of haikus by economists I know. I didn't credit them because I'm too lazy to ask them, and it's easier to just cut and paste. Note: If you want me to credit you, just shoot me an email.

Helicopters fueled
Bernanke begins his flight
Paper-rain cuts me

also

Too much bank credit
Plans cannot be completed
Recession follows

I'll post any good new ones...

Good analysis on GDP growth.

All those big growth numbers above 5 percent come from manufacturing to replace burned off inventory. There's little actual growth. Oh, and there's zero employment growth.

This piece is helpful except for this statement: "As this remains a jobless recovery, it must therefore become a consumer spending recovery." That doesn't follow at all. This attitude only results in consumers going more deeply into debt. Just because the American economy is currently driven by consumer spending doesn't mean that has to be true. The economy could just as easily be based on saving and investment rather than on purchasing shiny trinkets.

But, as long as the Fed continues to ram down interest rates, consumers will prefer spending to saving.

My talk in Aspen

I was recently on an economics panel at the Aspen Board of Realtors' Economic Summit. The Aspen Daily news did a write-up.

Foreclosure filings up dramatically
by Catherine Lutz, Aspen Daily News Staff Writer
Monday, March 15, 2010

Expert: Locals in resort areas getting hit hard

Foreclosure filings in Pitkin County are more than triple what they were in early March last year, mirroring a disturbing trend in which experts are seeing rural resort regions getting hit harder later in the economic downturn.

There have been 22 foreclosure filings so far in Pitkin County in 2010, compared to six at the same time last year, according to treasurer’s office records.

Delinquent amounts range from under $100,000 to $1.5 million, and there doesn’t seem to be any rhyme or reason to the types of foreclosures being filed, said Tiffany Wancura, chief deputy public trustee for Pitkin County.

“They’re all over the place,” said Wancura. “They just keep coming in.”

A scan of the foreclosures list shows that mostly individuals and couples are affected, as opposed to LLCs, which tend to own commercial properties and oftentimes more expensive, second homes.

Pitkin County saw a total of 105 foreclosure filings in 2009, out of which 20 properties went all the way through to the foreclosure sale. It was the third highest number of foreclosures since 1973. (Records are unavailable before that.) By comparison, 2008 saw 35 foreclosure filings and five completed foreclosures in Pitkin County.

An economist who works for the state government addressed the issue of rising foreclosures recently at the Aspen Board of Realtors’ real estate summit.

Some resort regions saw 40-60 percent foreclosure rates two years ago, said Ryan McMaken, director of community relations for the Colorado Division of Housing. That’s when vacation home owners, initially hit by the economist crisis, were choosing to jettison their timeshares or other investment properties as values plummeted by simply not paying the mortgage. Owner occupants, meanwhile, qualified for a federal foreclosure deferment program, which saved many people from foreclosure sales.

But now, “local owners are losing their jobs or otherwise seeing a decline in income, so over time locals are impacted more and more,” said McMaken, an economist.

In the rural resort regions of Colorado, McMaken said, both new foreclosure filings and completed foreclosures are going up, and in some places are doubling and tripling since last year.

“It’s because places like this got hit later,” he said. “And it adds to the pain lasting.”

Statewide, data is not yet available for 2010. But trends from 2009 show that while foreclosure filings increased — there were 18 percent more in 2009 than in 2008 — foreclosure sales decreased by 4 percent.

These trends indicate that “lenders, borrowers and housing counselors are meeting success in implementing a variety of loss mitigation strategies,” according to a report from the state Department of Local Affairs. “However, the increase in new foreclosure filings indicates that foreclosure activity will continue in Colorado at least through the first half of 2010.”

The DOLA report also notes that “most of the new growth in foreclosure activity is taking place outside of the Denver Metro area.”

Foreclosure filings have risen across Colorado nearly every year since 2003, according to state data, with a big spike in 2007. Filings rose to 39,900 that year, from 28,400 in 2006. They went down just slightly in 2008, to 39,300, but rose again, to 46,400, in 2009.

Foreclosure sales have been decreasing since 2007, when there was a high of 25,000 completed foreclosures.

Both foreclosure filings and sales are roughly triple what they were in 2003.

The largest amount of foreclosure activity last year was taking place on the Front Range, even though some metro counties are seeing the biggest drops in foreclosure sales totals.

Mesa County (home to Grand Junction), on the other hand, saw about 300 percent more foreclosure filings and sales in the fourth quarter of 2009, compared to the same period in 2008 — likely due to the decrease in oil and gas activity. Otherwise, foreclosure rates (number of homes per completed foreclosure) have generally been lower in the mountains and on the Western Slope, according to DOLA.

Pitkin County’s foreclosure rate in 2009 was .3 percent, which translates to 393 households per completed foreclosure, among the lowest in the state. Garfield County had 408 foreclosure filings in 2009, and 82 foreclosure sales. That’s compared to 108 filings and 10 sales in 2008. Still, its 2009 foreclosure rate was .4 percent, compared to the state average of 1.1 percent.

Locally, it’s unknown how many of the foreclosure filings will translate into sales at auction. The first scheduled foreclosure sale of the 2010 filings in Pitkin County is May 12.

Meanwhile, banks that have been acquiring more and more property due to foreclosures are doing everything they can to avoid future foreclosure sales.

If a foreclosure sale goes through, there are additional costs to the bank, including legal fees, property taxes and the time spent by staff, said Scott Gordon, president of Alpine Bank Aspen.

“The bills add up pretty quick,” said Gordon.

Gordon also pointed out that property values have been low recently, and while the bank may prefer to hold the property for a couple years in hopes of better recouping costs when the market goes up, federal regulators want them to sell it sooner rather than later.

“We’re not in the business of buying and selling real estate; that’s not apart of our core business model,” he said.

Gordon said that it’s to everyone’s advantage to try to negotiate avoiding a foreclosure sale.

“Strategically the best thing you can do is to find what the borrower and the bank can work out,” he said. “If you have some level of income coming in, the last thing you want to do is not have a conversation with your bank.”

CBS4 Promotions

The Foreclosure Hotline communications guru (Sarah Noel) and I helped put together a nice little partnership between the Colorado Association of Realtors and the Foreclosure Hotline that has led to a series of spots on CBS4 featuring foreclosure issues and homeownership. They can be viewed here.

February 2010 Housing Snapshot

Housing Snapshot is a very brief summary of the housing economy in Colorado. It's 4 pages of short articles and graphs covering mostly job growth and housing demand, and the housing markets in general.

Here's February's issue.