January consumer prices, 4th quarter Household Debt and Credit Report and the MBA National Delinquency Survey

this week saw the two reports from the BLS on prices in January, producer prices and consumer prices; there was also the January report on Housing Permits, Starts and Completions (pdf) from the Census Bureau, which showed a 16.0 percent (±10.5%) seasonally adjusted decline in new home starts from December, and a 5.4 percent (±0.7%) drop in new building permits, with starts 2.0 percent (±10.8%)* below last January and permits up 2.4 percent (±1.0%) from a year earlier; how much of the decrease was weather related is impossible to tell; meanwhile, the National Association of Realtors reported that existing-home sales fell 5.1% in January to an 18 month low, which they blamed on the weather despite the fact that sales fell the least in the hard hit Northeast and the most in the West, where January temperatures were above normal…and we also saw two regional Fed Manufacturing Surveys for February; the New York Fed reported a composite reading of 4.5, down from 12.5 last month, where levels above 0.0 indicates expansion, and below zero indicates contraction; meanwhile, the Philadelphia Fed’s February Manufacturing Survey‘s (pdf) broadest diffusion index decreased from a reading of 9.4 in January to a negative 6.3 this month; it’s likely that both of those lower readings were at least in part due to the storms and cold weather…

starting with the January report, the calculation of the Producer Price Index by the Bureau of Labor Statistics was completely revamped for the first time since 1978; formerly it reported on wholesale prices for raw, intermediate and finished goods, with this month its price coverage more than doubled to include services, exports, government purchases and construction, and they’ve generated data going back to at least January 2013 for at least the purposes of comparison…the headline reading is now called the producer price index for final demand, with price indexes for intermediate demand by commodity type, for intermediate demand by production flow, and for selected commodity groupings by final demand category…producer prices for services is a difficult concept, and economic bloggers didn’t touch it; even Doug Short, who covers inflation releases with nine reports monthly, left his monthly Producer Price Index Update unchanged on December…for now, neither will we, except to note that this new Price Index for final demand increased 0.2% in January, with food prices up 1.0% and energy prices up 0.3%, and was 1.2% higher over the 12 months ended in January, which BLS says is the largest year over year increase since October 2013, which we’ll take their word for, since it wasn’t even reported then…

January Sees a 0.1% Rise in Consumer Prices on Higher Rent and Heating

in the more widely watched report on the Consumer Price Index for for All Urban Consumers (CPI-U) for January, the BLS reported that average prices for goods and services rose at a seasonally adjusted 0.1% rate for the month, largely due to higher prices for rent equivalent housing, home heating and medicine, while prices for a host of other goods declined in price…core prices, which are for all items except food and energy, also rose by 0.1% as food price increases were modest and lower gasoline prices offset other energy price increases…over the 12 months ending January, overall prices rose by 1.58%, which is conventionally rounded to a 1.6% annual rate, and core prices rose by 1.62%, which is also rounded to 1.6%…the unadjusted all-items consumer price index, which is based on 1982-84 prices equal to 100, was at 233.916, up nearly 0.4% from the 233.049 reading in December; and up 1.56% from the index level of 230.280 last January…the core index reading was at 235.367 in January, up about 0.15%  from December and 1.60% from the 231.612 index level of a year earlier…

the seasonally adjusted energy index was up 0.6% in January as the cost of energy services rose 2.2% and prices for energy commodities fell 0.5%…most of the energy price increases related to heating; the electricity index rose by 1.8% in January, its largest increase since March 2010, while the index for natural gas rose 3.6%; as it was January, the unadjusted indices for both were up even more; 2.4% for electricity and 4.0% for gas, while unadjusted prices for fuel oil were up 3.7%, and unadjusted prices for other fuels (propane, kerosene, and firewood) rose 9.4% over December’s prices…meanwhile, the price index for all types of gasoline fell 1.0%, dragging the overall increase for energy down to 0.6%…for the 12 months ending with this report, energy commodities were up just 0.5% as gasoline prices were down 0.1%, while energy services saw a 4.5% price increase as both natural gas and electricity prices are now both more than 4.4% higher than a year ago…

the food price index rose 0.1% in January and was 1.1% higher than a year earlier, as both the food at home index and the food away from home index rose by 0.1%…full service restaurants saw prices rise 0.2%, while prices at fast food restaurants were unchanged…of the major food at home groupings, prices for cereal & bakery products were 0.5% higher, with prices for breakfast cereal, rice, cornmeal and pasta all up 0.7% while overall bread prices were unchanged…prices for dairy and related products also rose by 0.5% as milk prices were up 0.9% and cheese prices fell 1.3%…the price index for meats, poultry, fish, and eggs rose 0.4% as fresh fish and seafood rose 2.8%, pork prices were up 0.3% on 1.9% higher prices for breakfast sausage, beef prices fell 0.1% and volatile eggs prices fell back 1.6%…..meanwhile, the price index for fruits and vegetables was 0.3% lower as lettuce prices fell 4.1%, apples fell 1.9%, oranges rose 4.0% while processed fruits and vegetable prices were generally unchanged…prices for non-alcoholic beverages and beverage materials were also down, by 0.2%, as carbonated drink prices rose 0.3% and coffee prices fell 1.0%…,in addition, the prices for the broad group of other foods at home were unchanged as sugars and artificial sweeteners rose 1.2%, soups rose 1.1%, salad dressings fell 1.6% and frozen or freeze dried foods fell 1.8%…

core price changes continued in the pattern we’ve observed in recent months, with prices for goods generally down a bit and most prices for services up a bit ….the index for shelter, which is over 32% of the CPI, rose 0.3%, with rent of shelter rising 0.2%, as both rent and owner’s equivalent rent were up 0.2%, while prices for lodging away from home rose 1.3%…prices for apparel, meanwhile, fell 0.3% and are now 0.3% lower than they were a year ago, as prices for men’s clothing fell 1.7%, prices for women’s clothing rose 0.9%, while footware prices fell 0.9%…the index for medical care was rose 0.3% in January after two months without change as prices for medical care commodities rose 0.5% on drug prices that were 0.9% higher while prices for medical care services rose 0.2% as inpatient hospital services charges rose 1.4% while doctor’s fees fell 0.2%…prices for transportation commodities not including fuel were 0.4% lower as prices of new cars and new trucks were 0.3% lower and used car and truck prices fell 0.5%, while prices for transportation services were up 0.1% on 0.5% higher car insurance, 0.2% higher prices for vehicle maintenance and repair, and 0.4% higher motor vehicle fees, which was partially offset by public transportation fares that were 1.4% lower, with airline fares falling 2.2%…in addition, the recreation price index was up 0.2% as recreation commodities fell 0.2% on TV prices that were 0.3% lower, 0.6% lower prices for sports equipment and a 1.2% drop in toy prices, while recreation services rose 0.4% as rental of video and audio discs media rose 1.0%, pet services rose 0.4% and club dues and fees rose 1.1%, and finally the education and communication index was unchanged as education and communication commodities fell 1.1% on prices for college textbooks and personal computers that were both 1.4% lower while prices for telephone hardware rose 0.9%, while education and communication services were 0.1% higher on 0.4% higher telephone services, and 0.2% higher tuition, while prices for postage and delivery services fell 1.0%…of approximately 300 line items in this report, only 4 saw year over year price changes greater than 10%; televisions, which were 13.5% cheaper, lettuce prices, which fell 11.7%, film and photographic supplies, which rose 12.7%, and other fuels including propane, kerosene, and firewood, where average prices were 24.1% higher than a year ago…

our first FRED graph below shows the track of the major aggregate price indexes going back to 1997, when two of these composite indexes were first set; except for those noted, the indexes shown represent the aggregate prices changes based on prices from 1982 to 1984 = 100.…the track of price index for food and beverages, which is 13.9% of the CPI, is shown in blue, while the track of the composite price index for housing, which includes rent or equivalent, maintenance, and utilities and accounts for 41.45% of the CPI, is in red…the apparel index in violet at just 3.44% of the CPI had been falling since the 1990s until 2011, when it rose on much higher cotton prices…the rising orange line is the medical care composite index, which accounts for 7.55% of the CPI; it’s now at 429.621, an increase of more than fourfold from the index years; next, in light green, we have the volatile transportation index, which at 16.4% of the CPI reflects the volatile cost of gasoline and fuel related costs of transportation services, moderated by the slow change in the cost of vehicles and parts; lastly, we have our two indexes benchmarked to 1997 prices equal to 100: education and communication price changes are shown in dark green and account for 7.09% of the aggregate CPI, while the recreation index, at 5.8% of the CPI, is shown in bright blue…

FRED Graph

next, we have a FRED bar graph below which maintains the same color coding as the above, but shows the monthly percentage changes in each of those major CPI aggregate indexes over the past year, with increases in prices above the “0” line and price decreases below it…it’s obvious that the only index which has shown monthly price changes much greater than half a percent is transportation, again reflecting the volatile prices changes in the cost of gasoline…

FRED Graph

Household Debt Rises in 2013 for the First Time Since 2008

there were also two quarterly reports released this week; the first one we’ll look at is the New York Fed’s 4th Quarter Household Debt and Credit Report (pdf), which indicated that total household debt, including real estate debt, rose by $241 billion in the 4th quarter to $11.52 trillion, a 2.1% increase over the 3rd quarter level….as a result, total household debt for 2013 increased by $180 billion, the first annual increase since 2008…mortgages, the largest component of the aggregate, increased by $152 billion to $805 trillion, a 1.9% increase; home equity lines of credit fell by $6 billion to $529 billion, a 1.1% drop, and non-housing debt rose by 3.3%, with increases of $18 billion in auto loans, $53 billion in student loans, and $11 billion in credit card debt outstanding…

the delinquency rates for most loan types improved over the 3rd quarter, with $820 billion, or 7.1% of total debt outstanding in some stage of delinquency as of December 31, down from a delinquency rate of 7.4% at the end of the third quarter; of that, $580 billion was seriously delinquent, ie, more than 90 days past due, or “severely derogatory”, which is either in foreclosure or referred to a 3rd party for collection….the serious delinquency rate rose to 11.5% on student loans, was up slightly to 9.5% on credit cards, was unchanged at 3.4% of auto loans,  fell to from 4.3% to 3.9% for home loans, and fell from 3.5% to 3.2% for home equity lines of credit….157,000 individuals were noted with a foreclosure notation added to their credit report in the 4th quarter, which is about half the number of new foreclosure starts reported by the lenders and mortgage servicers over the same period….

much like some of the other reports we’ve reviewed, this 31 page pdf report from the NY Fed is almost entirely graphs; it only has one page of text covering the data and a glossary of terms used at the end of the report, so we’ll include pictures of a few of the graphs and discuss what they show us….the first bar graph below shows the components of total household debt for each quarter since the beginning of 2003, with each bar on the graph representing a quarter of a year, and within each bar is a color coded representation of the amount in dollars of each type of debt that was outstanding at the end of that given quarter…in each bar, orange represents the amount of mortgage debt that was outstanding at the end of that quarter, while violet indicates the home equity loans outstanding, green are the amount of auto loans, blue is unpaid credit card debt, red are student loans outstanding, and grey is ‘other’ debt outstanding in the quarter…although mortgage debt has been trending down until recently, we should note that this report and its graphics does not distinguish between mortgage debt that has been paid off and mortgage debt that has been extinguished through a foreclosure or a short sale, and there is no good source for that data…we can also see below the jump in debt over the 3rd and 4th quarters of 2013 in the bars on the left, driven, as we mentioned, by increases in all types of debt except revolving home equity loans…

NY Fed Q4 Total Household Debt Composition

the next bar graph following uses the same color coding for the type of loans represented as the graph above and covers the same time period; in this one, each bar has a color coded representation of the amount of newly delinquent loans by type as they first became delinquent in each quarter; here we can see a pretty clear peak with over $400 billion of newly delinquent debt in the last quarter of 2008; we can also see that newly delinquent student debt, or the red in each bar, has become larger as time goes on, and also clearly see a noticeable increase in newly delinquent debt over the past two quarters, which is still lower than the 3rd and 4th quarter of last year…

NY Fed Q4 new delinquent debt by type

the next graph below shows the percentage of each type of loan that was 90 days or more delinquent over the same time period covered by the bar graphs above; we can see how seriously delinquent mortgage debt shown in yellow peaked in 2009, with even worse seriously delinquent rates for credit card debt in blue extending into 2011…and while the percentage of seriously delinquent debt for those categories and auto loans in green has been trending down since 2011, the percentage of seriously delinquent student loans shown in red continued to rise, and is now at 11.5% of all student debt outstanding

NY Fed Q4 percent 90 day delinquent by type

all graphs after page 19 in the report are state level debt and credit graphs showing relevant statistics for the ten largest states by population, plus Arizona and Nevada, apparently because those two states were at the center of the mortgage crisis…the state graph we’re including below shows the historical track of the average amount of debt outstanding for each person with a credit report in each of these 12 states over the period from 2003 to the present, with the dashed line showing the national average…the mortgage debt related peak is obvious, as is the fact that California, with its higher priced real estate, has the highest debt per capita…in the 3rd quarter there was a change in credit reporting standards that increased the headcount and hence reduced the per capita debt outstanding for each state, nonetheless, per capita debt still increased over the 4th quarter in all 12 states covered here… 

NY Fed 4th qtr debt per capita by state

MBA Shows Crisis Low for Mortgage Delinquencies and Homes in Foreclosure

in addition to the Fed credit report, the Mortgage Bankers Association’s (MBA) released their National Delinquency Survey for the 4th quarter of 2013 and, as the headline on the press release tells us, both the mortgage delinquency rate and foreclosure rate fell to their lowest in 6 years…now, you might recall from the December Mortgage Monitor that we reviewed two weeks ago that mortgage delinquencies were up slightly in December, after rising 2.6% in November; and that mortgage delinquencies had generally been up since September after bottoming out in May…the reason for the discrepancy is that the MBA seasonally adjusts their mortgage data and quotes percentage changes, whereas LPS reports the hard numerical count of active loans in each situation…and as we’ve noted repeatedly, mortgage delinquencies do tend to rise in the fall, likely as school expenses impact family budgets, and peak around the holidays, as it seems common practice for homeowners to forego a mortgage payment or two while Christmas shopping, only to catch up in the first few months of the new year…so what the MBA is telling us is that based on the historical percentage of mortgage delinquencies that have occurred in 4th quarters of past years, this year’s increase was less, and hence their adjusted percentage of delinquencies is marked lower than previous quarters this year, which makes it the lowest delinquency rate since before the crisis..

what we’ll do this week is compare the percentages that the MBA gives us in this report, which is in effect for the last day in December, to the percentages we’ve derived from the December LPS Mortgage Monitor, which is as of that same date…historically, the MBA’s delinquency count has been a bit higher, but with the seasonal adjustment on the 4th quarter, we find that they’re a bit lower… the MBA has the seasonally adjusted mortgage delinquency rate (not including those in foreclosure) at 6.39% of all 1 to 4 unit residential loans outstanding at the end of the fourth quarter of 2013, down from their delinquency rate of 6.41% in the 3rd quarter; and down from 7.09% for the 4th quarter of 2012… the unadjusted delinquency rate from LPS was 6.47% at the end of December, down from the year earlier delinquency rate of 7.17%…in contrast, the NY Fed, whose data is from credit reports, had the mortgage delinquency rate a 3.9%….the MBA also reports a 2.86% foreclosure rate, which is the percentage of loans in foreclosure, down from 3.08% in the 3rd quarter and 3.74% a year ago; that’s in contrast to the 2.48% foreclosure rate reported by LPS for December, down from 3.44% in foreclosure in December of last year…MBA further reports a serious delinquency rate of 5.41%, which is the percentage of both those home loans that are over 90 days past due plus those in foreclosure; that ‘s down from their seriously delinquent rate of rate of 5.65% in the 3rd quarter and down from the 6.78% serious delinquency rate a year ago….LPS shows 1,244,000 in foreclosure at the end of December, with seriously delinquent loan count at 1,280,000, which together are just 5.03% of the 50,164,000 active loans outstanding….so it’s evident that even with the seasonal adjustment, the MBA shows a considerably higher percentage of loans in serious trouble than are reported so troubled by LPS…in addition, the MBA reports that foreclosure actions were started on 0.54% of mortgage loans in the 4th quarter, down from 0.61% in the 3rd; LPS put new foreclosure starts at 104,759 in December and 328,535 over the last three 3 months; which would  be a foreclosure start rate of .65% of 50,164,000 active loans they cover over the same period…

the bar graph below is from Bill McBride’s coverage of this report at Calculated Risk; like the first NY Fed graph above, each bar on the graph represents a quarter of a year going back to 2005, and within each bar is a color coded representation of the percentage of loans that were in foreclosure or delinquent, and by how many days delinquent, at the end of that given quarter….starting at the bottom of each bar, the percentage of 30 day delinquencies reported by the MBA each quarter is in violet, the number of 60 day delinquent mortgages each quarter is represented by the blue portion of each bar, the number of mortgages more than 90 days late is in yellow, with the percentage of mortgages in the foreclosure process shown in red…we can see on that graph that the percentage of mortgages in trouble peaked at 14.7% in the first quarter of 2010 and has been trending downward since, although it’s still well above the levels of the pre-crisis year of 2005, especially with regards to 90 day delinquencies and homes stuck in foreclosure…

MBA Q4 delinquency and foreclosure buckets

the next bar graph below is from the MBA and it shows the percentage of all mortgages in foreclosure by state, with the judicial states, where the bank must prove their right to foreclose, coded in navy blue, and non-judicial states coded in red…obviously, the states with the highest percentages of homes remaining in foreclosure according to the MBA are all judicial, led by Florida, which has 8.56% of their mortgages in foreclosure, which is nonetheless down from 9.48% in 3rd quarter; New Jersey, with the 2nd most at 7.90% in foreclosure down from 8.28% last report, as is New York, where the foreclosure inventory fell from 6.34% in the third quarter to 6.24% in the 4th, followed by Maine, with 5.00% of mortgages in foreclosure, down from 5.44% three months ago…Nevada is the only non-judicial state among the top dozen states with the highest foreclosure inventories, because they passed a law in 2011 making it a felony if a mortgage servicer made fraudulent representations concerning a title, and imposed fines up to $5,000 for falsifying documents, which slowed foreclosures in that state to a near standstill….

MBA Q4 2013 foreclosures by state

to compare the state foreclosure data in the chart above to the same metrics from LPS, we’ll include the table from LPS showing the percentage of mortgages either non-current or in foreclosure in each state (pdf source)…in the LPS table below, the first column shows the delinquency rate (Del%), for each state, which on this table is the percentage of mortgages in each state that are at least one month behind and not yet in foreclosure…the second column is the percentage in each state that are in foreclosure (FC%), while the total percentage of mortgages that aren’t current with their payments (NonCurr%) is shown in the 3rd column, which is the sum or the first two….in contrast to the 8.56% in foreclosure in Florida shown by the MBA, LPS shows 7.4%; for New Jersey, MBA showed a foreclosure inventory of 7.9%, while LPS shows 7.2%; for new York, the MBA says 6.24% of mortgages were in foreclosure at year end; LPS shows 5.6% of New York mortgages in foreclosure at the end of December…similar differences in state foreclosure inventory percentages continue throughout the table, consistent with the higher totals of seriously delinquent mortgages reported by the MBA…and as we noted, both show considerably higher foreclosure rates than the NY Fed, which might call all their data into question…we, of course, have no idea which of these reports is the most correct…

Dec LPS states non-current table

(the above is my weekly commentary that accompanied my sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s