Charge-off and Delinquency Rates from the Fed

Third quarter shows a slowing in the rate of acceleration of real estate loan charge-offs and delinquencies - again, this plot is looking at the rate of change of the rate of change - what was the delta in CHGDEL over the starting number (going from 4% to 5% is +25%, going from 5% to 4% is -20%). The total percent of loans going bad will be going up until this plot crosses the zero line.

So the rate of charge offs and delinquencies for RE loans is still more than doubling on a YoY basis, but the good news appears to be that the rate loans are going bad stopped accelerating...the question being, is this a real trend change or hiccup (as CRE appears to be really hitting the wall in 4Q2008, spending declines by consumers, more layoffs, etc.)?

U-6 Redux: Casting the Unemployment Rate net a bit wider

U-6 is one of the Bureau of Labor Statistics alternative measures of unemployment, and I think a better reflection of what is happening in a consumer driven economy at large than the headline unemployment rate (U-3 in BLS speak). The plot above is the year over year rate of change: if we went from 4% to 5% over the course of a year, that would be a 25% increase; if it went from 5% to 4% that would be a -20%.

Here is the definition for U-6:

Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule. For more information, see "BLS introduces new range of alternative unemployment measures," in the October 1995 issue of the Monthly Labor Review. Updated population controls are introduced annually with the release of January data.

I like to look at the second derivative as it were - the rate of change of the rate of change - so for the U-6 unemployment rate to actually go down, the plot above would have to go below zero. Looking at the 2001 recession, U-6 unemployment did not begin to decrease until the first quarter of 2004.

For the August post on U-6

http://energyecon.blogspot.com/2008_08_01_archive.html