Economy Watch: Bank Failures to Trickle This Year; Oil, Gas Prices May Drop; Vegas Residential Market Recovers
- Aug 12, 2013
The Bank of Wausau, in the central Wisconsin town of the same name, became the 18th U.S. bank to fail this year, when the FDIC took action on Friday to forcibly merge the small bank into Nicolet National Bank in Green Bay, Wis. So far 2013 has seen only a trickle of domestic bank failures, especially when compared to the recession and post-recession years from 2008 to 2012.
In 2008, a year that included clear indications that the housing bubble had burst, and then the onset of the Great Recession, 25 banks failed, but that included the whopping Washington Mutual ($307 billion in assets) and the smaller but also sizable IndyMac ($32 billion in assets). In 2009, the total was up to 140; in 2010, 157 banks failed. The totals started dropping in 2011, when 92 banks went under. Last year, 51 did.
The relative size of bank failures has been going down as well. The Bank of Wausau, with only one branch and $43.6 million in assets, is a small fry, but also more typical of the size failures in recent years. No U.S. bank with more thqan $1 billion in assets has failed since Tennessee Commerce Bank of Franklin, Tenn., failed in January 2012.
Oil, Gas Prices May Drop
The U.S. Energy Information Agency is predicting that the price of oil is going to decline later this year and in 2014 compared with earlier this year, which will probably drive the retail price of gasoline down as well. During the first half of 2013, Brent crude – an important international benchmark price – averaged $108 per barrel. The agency believes that Brent will average $104 per barrel during the second half of this year, and $100 next year.
A number of factors are at work. Flooding in June in Alberta disrupted energy production in that province, but the industry has mostly recovered since then. Also, domestic production of oil is up: U.S. crude oil production increased to an average of 7.5 million barrels per day in July, the highest monthly level of production since 1991.
The EIA expects the U.S. retail price of a gallon of regular gasoline to average $3.59 per gallon in in third quarter of 2013. That’s down somewhat from the annual average of $3.63 per gallon in 2012. Next year, the agency is predicting a steeper drop, to an average of $3.37 per gallon.
Vegas Residential Market Recovering
The Great Las Vegas Association of Realtors reported on Friday that the total number of existing residential units in the market sold in July was 3,633, down slightly from 3,642 in June, but up from 3,572 in July 2012. The Vegas market is worth tracking in some detail because it was the poster child for the impact of the housing bubble, and then the recession, on local markets. As of the summer of 2013, however, it’s made something of a recovery.
In July, “traditional” sales accounted for a recent high of 64 percent of all local home sales, up from 60 percent in June. By contrast, 28 percent of all existing home sales were short sales, down from 31 percent in June. Another 8 percent of all July sales were REO, down from 9 percent of all sales in June. By the end of July, GLVAR reported 4,681 single-family homes listed without any sort of offer, which is up 22.3 percent from June and up 9 percent from one year ago.
Wall Street was moderately grumpy on Friday, with the Dow Jones Industrial Average down 72.81 points, or 0.47 percent. The S&P 500 slid 0.36 percent and the Nasdaq was off 0.37 percent.