Carpe Diem

World’s Most Recession-Proof Economy? Superbowl

ESPN: “In these dark economic times, there is still one beacon of light: Super Bowl XLII. America’s corporations and citizens might be paring expenses and bracing for hard times in every other respect; but in metro Phoenix this week, the mantra is: Recession? What recession?

The bull market for Super Bowl tickets is the inverse of Wall Street’s bearish one. The average price of tickets sold on StubHub is currently $4,227, a hefty premium from their face values of $700 and $900. Rooms at Scottsdale’s 5-star resorts are going for $3,000 a night (four-night minimum).”

(HT: Welcome Back Friedman)

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Subprime ARMs Are Only 7% of Loans Outstanding

Here’s a follow-up graph to the one in the post below, this one is through 2007-Q3 for “foreclosures started,” from the Mortgage Bankers Association(MBA). What is pretty obvious is that subprime mortgages in general are not the problem, but subprime ARMs that are the real problem. Subprime fixed foreclosures in 2007-Q3 were actually below the last peak in 2003-Q4, and still aren’t much higher than FHA foreclosures. Foreclosures on prime fixed-rate mortgages haven’t moved much at all in the last 5 years.

Fortunately, subprime ARMs make up only 7% of the total mortgage loans outstanding according to the MBA, or about one out of every 14 loans, and of those subprime ARM loans outstanding, about 1 out 20 were in foreclosure in 2007-Q3, or about 1/3 of 1% of all mortgages.

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Freddie Mac: Delinquency Rates

Interesting chart above from Freddie Mac, showing foreclosures through the middle of 2007. Note that delinquency rates for FHA and VA loans were declining in 2007 and flat for prime conventional mortgages, so the delinquency problems (at least through the middle of 2007) were affecting only the subprime mortgage sector. It will be interesting to see how this changes in the last half of 2007.

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8% Jobless Rate Good? In Germany It’s 15-Yr. Low

Jan. 31 (Bloomberg)Germany’s unemployment rate fell to the lowest level in 15 years in January. The jobless rate, adjusted for seasonal swings, dropped to 8.1%, the Federal Labor Agency in Nuremberg said today.

Comment: We haven’t had an unemployment rate in the U.S. above 8% in almost a quarter century, since December of 1983 (see chart above, click to enlarge), following the longest post-WWII recession in U.S. history (16 months).

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Forbes’ Inaugural List: Top 10 Most Miserable Cities

Forbes Magazine introduces the Forbes Misery Measure, based on a city’s unemployment rate, personal tax rate, commute time, weather, crime, and toxic waste proximity. The top ten “most miserable” cities, according to Forbes:

1. Detroit, MI
2. Stockton, CA
3. Flint, MI
4. New York City
5. Philadelphia, PA
6. Chicago, IL
7. Los Angeles, CA
8. Modesto, CA
9. Charlotte, NC
10. Providence, RI

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24th Month of Real Disposable Income Growth

The BEA reported today that Real Disposable Income grew by 2.1% in December from a year ago, the 24th consecutive month of positive growth (see chart above).

Bottom Line: Real Disposable Income is one of the 5 economic recession-indicating variables watched by the NBER (the others are real GDP, industrial production, trade sales, and employment), and the 2.1% growth in December suggests that there is still no evidence yet that recessionary conditions are affecting the U.S. economy.

Update: Graph now goes back to 2001
.