Economy Watch: Mortgage Delinquencies, Durable Goods Orders Drop in July; U.S. to Reach Debt Ceiling in October
- Aug 27, 2013
Lender Processing Services, in its First Look report for July, said on Monday that the percentage of delinquent U.S mortgage loans decreased from 6.68 percent in June to 6.41 percent in July, and from 7.03 percent in July 2012. Some of the monthly decline, but not all of it, is seasonal in nature. According to LPS, a delinquent mortgage is one 30 or more days past due, but not actually in foreclosure.
The delinquency rate continues to approach, but hasn’t reached a “normal” range—that is, roughly where it was pre-recessionary years. The normal delinquencies rate by that definition is one that hovers between 4.5 percent to 5 percent.
The percentage of mortgages in foreclosure also dropped month over month and year over year. In July, the foreclosure rate was 2.82 percent, down from 2.93 percent the month before. A year earlier, 4.08 percent of mortgages were in foreclosure, according to LPS.
Durable Goods Orders Tumble
The U.S. Department of Commerce reported on Monday that orders for durable goods (those expected to last three or more years) dropped 7.3 percent in July, which is the steepest decline in nearly a year for the economic indicator. The decline followed three straight months of increases, including an uptick of 3.9 percent in June.
The unexpectedly weak report (economists had predicted a drop, but not that steep) might be more ammunition for those in the Federal Reserve who don’t want to slow the central bank’s bond buying just yet. The Fed might make its decision about tapering as soon as Sept. 17-18, during the next meeting of the Federal Open Market Committee.
On the other hand, the report wasn’t all bad. Take out transportation equipment—airplanes in particular, a notoriously volatile category—and orders were down only 0.6 percent. Also, other kinds of durable goods orders showed relative strength. Car and car part orders, for instance, edged up 0.5 percent in July, and compared with the same month last year, were up 14 percent.
Federal Government to Reach Debt Ceiling in October
Treasury Secretary Jack Lew said in a letter to Speaker of the House John Boehner on Monday that the federal government will reach its borrowing limit sometime in mid-October. “Protecting the full faith and credit of the United States is the responsibility of Congress because only Congress can extend the nation’s borrowing authority,” Lew wrote. “Failure to meet that responsibility would cause irreparable harm to the American economy.”
Wall Street was up most of the day on Monday, but took a dive at the end. The Dow Jones Industrial Average was down 64.05 points, or 0.43 percent, while the S&P 500 lost 0.4 percent percent and the Nasdaq lost a microscopic 0.01 percent.