Posting will be a little light tonight as I have the first of the Season’s festivities to attend. Over the weekend I have quite a few thoughts that I want to put down and get out. I can’t, however, let the day go by without acknowledging two extremely bad pieces of economic news.
First, the jobs report. Nonfarm payrolls declined by 533,000. That’s really all you need to know. Over a half million jobs disappeared in November. The spin on it is that it’s the largest drop since 1974. That is misleading since the labor market was much smaller in 1974 still it is huge and the pace at which it occurred is perhaps of most concern.
The Mortgage Bankers Association reported that the delinquency rate on mortgages increased to 6.99% at the end of the third quarter. An additional 2.97% of mortgages were somewhere in the foreclosure process. You can do the math. Ten percent of the mortgage loans in the country are in trouble. Foreclosures would have been higher-in fact the percentage of loans 90 days or more past due burgeoned-were it not for state and local mortgage moratoriums. Lenders report that the surge appears to be caused more by economic circumstances than more borrowers falling behind on houses they couldn’t originally afford.
Taken together you have a picture of an economy in serious condition. Paul Kedrosky at Infections Greed feels the speed of the contraction is completely unnerving. I agree that it has been a spectacular fall but I don’t quite share his pessimism (more on that tomorrow).
The Fed meets in a couple weeks and this data is sure to provoke another round of rate cutting. Some are even uttering the zero word. If not this time then probably the next meeting for sure. We are getting into uncharted waters here.
Posted in 
