from my story on MarketWatch:
By one simple measure, the cash that homeowners took out from new mortgages dropped to a seasonally adjusted annual rate of $151 billion in the first quarter, down from about $168 billion in the fourth quarter of 2006.
(This is a quick method favored by Haver Analytics that subtracts the implied new investment in construction from the amounted borrowed in the quarter.)
Also, note that home-equity loans plunged to just $23 billiion annualized, about 1/10 the level at the peak.
I see the biggest indicator being the G.19 Consumer Credit report. Last months report:
Consumer credit increased at an annual rate of 4-1/2 percent in the first quarter of 2007. In March, consumer credit increased at an
annual rate of 6-3/4 percent.
Should be out today or tomorrow based on previous release dates...I think.
Curious, first, we will probably have the Kennedy MEW numbers today or tomorrow. Second, a simple approach to calculating MEW starts with the increase in mortgage debt, in this case $127.6 Billion and subtract a portion of debt associated with New Homes (This debt isn't mortgage extraction). If New Home debt declines - then the number subtracted from the increase in mortgage debt isn't as large.
All, the percent of household equity has fallen to a record low - even though valuations have increased significantly. I'll have some data up soon - as soon as blogger starts working again.
YAL,
Remember consumer uses MEW for 6 to 9 months after extraction then they max out credit cards. After that they go back to MEW again(which wont be there based on housing declining) so...
Unless- Consumer gets smart(doubt it) and saves the $'s on last trip to the well(MEW) slowdown gets pushed out.
Bill, just out. April consumer credit expanded much less than forecast. Total increased at an annualized rate of just 1.3%, and revolving credit actually contracted, 0.5% annualized. The consumer is pulling in the reins.
Thanks winjr. Hopefully we see this reflected in the savings rate otherwise I fear they've dug the hole as far as it could go. I picture the tired consumer raising their hand out of the ditch hoping the chinese investor will pull them out.
If MEW increased than the consumer will not crumble - yet. Q2 gdp will bounce. Looks like end of year or next year for slowdown/recession.
No way.
This is over now.
Unless china is back buying the long bonds.
consumer is not that stupid. They kept going with MEW for a while but this trend will stop.
from my story on MarketWatch:
By one simple measure, the cash that homeowners took out from new mortgages dropped to a seasonally adjusted annual rate of $151 billion in the first quarter, down from about $168 billion in the fourth quarter of 2006.
(This is a quick method favored by Haver Analytics that subtracts the implied new investment in construction from the amounted borrowed in the quarter.)
Also, note that home-equity loans plunged to just $23 billiion annualized, about 1/10 the level at the peak.
CR,
Please could you clarify what you mean by:
"This is because a significant portion of the lower increase in mortgage debt was due to fewer new home sales"
Thanks.
I see the biggest indicator being the G.19 Consumer Credit report. Last months report:
Consumer credit increased at an annual rate of 4-1/2 percent in the first quarter of 2007. In March, consumer credit increased at an
annual rate of 6-3/4 percent.
Should be out today or tomorrow based on previous release dates...I think.
Curious, first, we will probably have the Kennedy MEW numbers today or tomorrow. Second, a simple approach to calculating MEW starts with the increase in mortgage debt, in this case $127.6 Billion and subtract a portion of debt associated with New Homes (This debt isn't mortgage extraction). If New Home debt declines - then the number subtracted from the increase in mortgage debt isn't as large.
All, the percent of household equity has fallen to a record low - even though valuations have increased significantly. I'll have some data up soon - as soon as blogger starts working again.
Best to all.
YAL,
Remember consumer uses MEW for 6 to 9 months after extraction then they max out credit cards. After that they go back to MEW again(which wont be there based on housing declining) so...
Unless- Consumer gets smart(doubt it) and saves the $'s on last trip to the well(MEW) slowdown gets pushed out.
Short term, the MEW gained by not paying your mortgage should be accounted for!!!
(Or at least your second.) In a few areas, neg-am and non-pays appear to be signficant in supporting consumer spending.
CR,
Thank you very much for the explanation.
Bill, just out. April consumer credit expanded much less than forecast. Total increased at an annualized rate of just 1.3%, and revolving credit actually contracted, 0.5% annualized. The consumer is pulling in the reins.
Thanks winjr. Hopefully we see this reflected in the savings rate otherwise I fear they've dug the hole as far as it could go. I picture the tired consumer raising their hand out of the ditch hoping the chinese investor will pull them out.