Consumers Still A Little Peevish
- Jun 01, 2010
June 1, 2010
By Dees Stribling, Contributing Editor
The Bureau of Economic Analysis noted on Friday that disposable personal income was up 0.5 percent in April. Personal consumption, by contrast, rose less than 0.1 percent. So it seems that people, on average, saved a bit last month, which has been a more common pattern since the panic of 2008 than during the bubble years before.
But are consumers feeling better about the economy? Only a little. The Reuters/University of Michigan Consumer Sentiment for the end of May came in at 73.6, compared with 72.2 at the end of April and 69.5 in mid-April. Consumers aren’t as worried about losing their jobs as they once were, according to the survey, but that doesn’t mean they aren’t worried.
Mostly they’re hesitant to be cheerful because of the sluggish pace of the economic recovery. “Although fears of unemployment have receded at a record pace, consumers also anticipated that the pace of the ongoing recovery would continue to slow during the year ahead,” the survey said.
Serious Delinquencies in Fannie Mac Portfolio Drop
Fannie Mae said before the holiday that “serious delinquencies”–the more than 90-day variety–on single-family mortgages in its portfolio fell in March from February. Not a vast drop, but a noticeable one: 5.59 percent to 5.47 percent. It’s the first month-over-month drop in many moons; three years’ worth of moons, in fact.
On the other hand, a year ago in March, the serious delinquency rate in Fannie’s portfolio was 3.15 percent. So if the serious delinquency rate has plateaued, it’s plateaued at a painfully high rate. Also, the rate of serious delinquency for apartment building mortgages edged up in March to 0.79 percent from 0.73 percent in February.
In a separate report earlier in May, the Mortgage Bankers Association said that more than 10 percent of U.S. homeowners with mortgages missed at least one payment during 1Q10. Not serious delinquency territory, but close enough to wave howdy over the fence to serious delinquency. The organization’s chief economists estimates that 4.3 million Americans are at risk of losing their homes.
Underwater Homeowners Say, “What Me Worry?”
About losing their homes eventually, that is. The New York Times, in a mortgage-foreclosure trend piece over the weekend, cited figures compiled by LPS Applied Analytics that say that the average borrower in foreclosure has been delinquent for 438 days before being evicted–over 14 months, and some hold out longer–up from 251 days at the beginning of 2008. The variety of delaying tactics are available to borrowers, as well as the mass backlog of foreclosures, has made that possible.
Anecdotal evidence, said the paper, suggests that more mortgage holders who are underwater have stopped paying their mortgages, living rent-free for a while, and are refusing to feel bad about it. And they’re also daring their bank, or whoever happens to hold the note, to kick them out.
Wall Street took a breather on Monday for the holiday after a drop on Friday. The Dow Jones Industrial Average fell 122.36 points, or 1.19 percent, on Friday, while the S&P 500 was down 1.24 percent and the Nasdaq dipped 0.91 percent.