Five economic reasons to be thankful

by calculated risks 11/24/2022 11:28:00 AM

Here are five economic reasons to be grateful this Thanksgiving. (Hat Tip by Neil Irwin who started this years ago)

1) The unemployment rate is close to a 50-year low

The unemployment rate was 3.7% in October. The unemployment rate is down from 14.7% in April 2020 (the highest since the Great Depression).

The unemployment rate is down from 4.6% a year ago (October 2021).

This was up slightly from 3.5% in September – and this corresponds to the lowest unemployment rate since 1969!

2) Low unemployment claims.

This chart shows a 4-week moving average for weekly claims since 1971.

Weekly claims were at 240,000 last week.

The dashed line on the chart is the current 4-week average.

Although weekly claims have risen slightly recently, the 4-week average is near a 50-year low.

3) Mortgage debt as a percentage of GDP is much lower than it was during the housing bubble

Mortgage debt as a percentage of GDP This graph shows household mortgage debt as a percentage of GDP.

Note that this graph was affected by the sharp decline in GDP for the second quarter of 2020.

Mortgage debt increased by $1.46 trillion from the peak during the housing bubble, but as a percentage of GDP it was 48.9%, down from a peak of 73.3% of GDP during the housing crash.

4) The mortgage overdue rate is at its lowest level since at least 1979

MBA is delayed by period

This graph, based on data from MBAs through the third quarter of 2022, shows the percentage of loans in arrears by days past due. Mortgage defaults were at their lowest level since the MBA survey began in 1979.

Note: The sharp increase in 2020 in the 90-day group was due to non-performing loans (included as delinquent, but not reported to the credit bureaus).

The percentage of loans in foreclosures increased year over year in the third quarter with the end of foreclosure freeze periods.

5) Household debt burdens are at low levels

financial obligationsThis graph shows, based on data from the Federal Reserve, the total debt service ratio (DSR), the DSR for mortgages (blue) and consumer debt (yellow).

The household debt service ratio was 13.2% in 2007 and is down to less than 10% now, and the DSR for mortgages (blue) is near its lowest level in the past 35 years.

This data indicates that the overall cash flow of households is in a strong position.

Happy thanks everyone!

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