Economy Watch: Consumer Sentiment Unexpectedly Peppy; Serious Mortgage Delinquencies Down; President Mum on New Fed Chairman Pick
- Jul 29, 2013
The University of Michigan reported on Friday that its consumer sentiment index for July came in at 85.1, an improvement from June’s final reading of 84.1, and also up from the mid-July reading of 83.9. In fact, the end-of-July reading is the highest the index has been since July 2007, when the recession was still just a distant rumble on the horizon.
The increase was unexpected. Though sentiment has more-or-less on an upward track since the worst of the recession ended – and especially since the housing market started to recover – there’s also been a lot of backsliding. The most pronouncing bump in the road was during the summer of 2011, when a default by the United States, while perhaps never a real possibility, was nevertheless being suggested by less responsible members of Congress.
Over the decades, the sentiment index has been fairly consistent in tracking the economic health of the country. The recessions of the late 1970s and early ’80s saw steep drops, with a recovery during the later ’80s Reagan-era prosperity. There was a sharp downturn in the early ’90s followed by much higher sentiment during the Clinton-era prosperity. The mid-2000s were a bit lower than mid- to late 1980s, and of course sentiment took a hit in 2008 that it hasn’t recovered from yet.
Serious Mortgage Delinquencies Down
Freddie Mac reported that the single-family “serious” delinquency rate—which the GSE defines as mortgages more than three months past due, or already in foreclosure—dropped in June to 2.79 percent compared with 2.85 percent in May. A year ago, Freddie Mac serious delinquency rate was 3.45 percent.
The June 2013 rate is now at its lowest level since May 2009, when the rate was headed skyward, toward a recent peak in February 2010 at 4.2 percent. The rate has been dropping more-or-less steadily since then, though a “normal” rate is considered around 1 percent, so serious delinquencies are still elevated in historical terms.
The Freddie Mac report in contrast to LPS, which reported an uptick in delinquencies earlier in the week, but the measurements aren’t the same. The GSE report only covers 90 days-plus delinquencies, while LPS bases its report on all mortgages over 30 days late. Also, seasonal factors are thought to have helped drive up the LPS numbers in June.
President Mum on New Fed Chairman Pick
In his interview with the New York Times on Saturday, President Obama told the paper that he’s narrowed the list of candidates to replace Fed Chairman Ben Bernanke down to some “extraordinary candidates,” but didn’t specify anyone, nor a timetable beyond “in the next few months.” Bernanke’s term as chairman ends in January, and it’s widely believed, though impossible to confirm, that Fed vice chairman Janet Yellen and former White House economic adviser and Treasury Secretary Lawrence Summers are on the top of the short list.
Wall Street had a mild up day on Friday, with the Dow Jones Industrial Average gaining 3.22 points, or 0.02 percent. The S&P 500 was up 0.08 percent and the Nasdaq advanced 0.22 percent.