Smart Money with Keith Springer Saturdays at 1PM and Sundays at 6AM on NewsRadio KFBK 93.1 FM and 1530 AM

Breaking News – Ugly data

Posted At : August 24, 2009 1:14 PM

Jobless claims, mortgage delinquencies and Sears (retail) earnings all disappoint

On Thursday the Labor reported Initial Jobless Claims for mid-August were 576,000.  This was greater than the consensus projection of 550,000 and +15,000 above last week. Although this is less than the 600,000+ levels we saw each week from January through June, the persistence of 550,000+ levels suggests companies are still cutting workers at a fairly rapid clip. The only good thing here is that as long as the labor markets remain relatively weak, it is doubtful that the Fed will undertake any change in monetary policy, and they will keep rates at or very near current levels for some time.  The Fed will probably continue to provide liquidity to the banking system as a way to encourage bank lending, which is the key to a sustained economic recovery.

Also reported were mortgage delinquencies. Americans fell behind on their mortgage payments at a record pace in the second quarter as job losses and falling real estate prices thwarted government efforts to stabilize the housing market. The share of loans with one or more payments overdue rose to a seasonally adjusted 9.24 percent of all mortgages, an all-time high, from 9.12 percent in the first quarter. The inventory of homes in foreclosure increased to 4.3 percent, the most in three decades of data, and loans overdue by at least 90 days, the point at which foreclosure proceedings typically begin, rose to a whopping 7.97 percent, the highest on record. It’s now no longer just a problem with subprime loans as we’ve moved now to a problem with prime fixed-rate loans. I strongly disagree with the pundits who claim that unemployment is a backwards looking #, at right now. As long as the # is rising, the problems will get worse! Also, Sears Holdings Corp., the biggest U.S. department-store company, reported an unexpected second-quarter loss. Sales at U.S. Sears stores open at least 12 months declined 13 percent as consumers bought fewer washers, dryers and refrigerators and clothing. Same-store sales at Kmart also fell 3.9 percent, Sears said.

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