Mortgage delinquencies are not at a seriously problematic level, but they are rising for ominous reasons. 
The two top reasons for rising delinquencies are reduction of income and excessive obligations.
A National Emergency (Covid) was third at 13.7 percent, down from 83.8 percent in 2024 Q4.
I created the chart from the Hud May 2024 Credit Risk Report.
90-Day New Mortgage Delinquencies
There is a noticeable seasonal impact so the small current dip is likely a mirage.
I picked up this idea from Anna Wong.
Reduction of Income
I agree that the reasons are striking, even more so if you include “Reduction of Income“.
Supposedly, jobs are going gangbusters, so why would a decline in income be so pronounced? Here’s the answer.
Full-Time Employment is Falling
Counting negative revisions, there was unexpected weakness across the board in June, especially private and manufacturing payrolls.
But it’s not just June.
Please consider Jobs Much Weaker than Expected, the Unemployment Rate Ticks Up
Job Stats vs One Year Ago
- Nonfarm Payrolls (Blue): +2,611,000
- Employment (Red): +195,000
- Full Time Employment (Yellow): -1,551,000
Job Stats vs Two Years Ago
- Nonfarm Payrolls (Blue): +2,611,000
- Employment (Red): +6,280,000
- Full Time Employment (Yellow): +709,000
In the last year, nonfarm payrolls are up 2.6 million while fulltime employment is down 1.5 million.
Employment-Jobs Discrepancy
The discrepancy between jobs and employment is persistent and rising.
These monthly jobs reports (CES – Current Employment Statistics) are based on a 5.6 percent sample of the data. Job numbers based on the entire data (QCEW – Quarterly Census of Employment and Wages) lag by about 5 months.
The most recent QCEW data is from December of 2023.
2022 Q4-2023 Q4 CES vs QCEW
- CES: 155,211,000 to 158,269,000 (+3.06 million)
- QCEW: 152,525,000 to 154,848,000 (+2.32 million)
CES reports 32 percent more job gains in 2023 vs QCEW.
Nonfarm Payrolls NSA Minus QCEW
The BLS does not revise the previously reported numbers in its annual benchmark adjustments making the historical charts, including my lead chart, wrong. Jobs are overstated on all the charts.
For discussion of the difference between QCEW and the monthly jobs report please see How Much Does the BLS Overstate Monthly Jobs?
Finally, the rising trend in payrolls vs QCEW corresponds to the rising discrepancy between jobs and payrolls.
And now we see mortgage delinquencies corresponding to a peak in full-time employment.
Recession Has Already Started, Let’s Now Discuss When
On July 8, I commented Weak Data Says a Recession Has Already Started, Let’s Now Discuss When
I’ve seen enough. A recession has started. Let’s discuss starting with a very good indicator that has few false positives and no false negatives.
Click on the above link for details.
Continued Unemployment Claims Jump to the Highest Level Since Nov 2021
On July 18, I noted Continued Unemployment Claims Jump to the Highest Level Since Nov 2021
After stabilizing for about a year, continued unemployment claims have surged in the last two months.
Add it up. All of this is hard data except the above Fed report.
Ironically, nearly everyone spotted a recession that did not happen (me included), but few can put this data together now.
where is mish? he hasn’t missed a day ever? i’m more concerned about mish than biden or trump. hope he is well
The median house in Rockford IL is 110,000. Rockford IL RE taxes are the highest
in the nation relative to home prices : $3,400. In Westchester and silicon valley RE
prices are the highest. Those who lost their high tech jobs, whose their severance packages expired, or businesses can’t pay mortgages and can’t sell. Renters can move. Home owners can’t. They are stuck.
The employment level stalled. Full time jobs are down 1.5M. Payroll is up 2.6M.
Working two part time jobs are not good enough to cover excessive obligations and maintenance.
Shipped all the jobs to China and only hire illegal immigrants to do domestic labor, what could go wrong?
I’m only amazed it took these many years since Clinton gave Red China Favorable Nation status, for the economic foundation to finally collapse.
Perhaps its time for the USA to start spending domestically a fraction of what they spend on aid to Israel and other foreign aid? Perhaps rebuild manufacturing and training and stop selling overpriced degrees in DEI and Social Justice.
When the young aspire to be an “Influencer” above all other, it should certainly be ringing alarm bells in anyone with any remaining intelligence and reasoning abilities.
The USA economy has basically become a ponzi scheme, and the FED are multi-level marketers.
the amerikan president is the ultimate influencer. the CEOs are the same. give the dumb tik tok generation a break. the boomers raised them to be as dumb as daddy and screwed them financially and spiritually…..too……..
Mish, please compare the year of mortgage origination to the delinquencies. Melody Wright did this and found mostly newer mortgages (last two years) are going into default. She thinks this is because these unfortunate people bought houses at peak prices and during a period of rising 30-year mortgage rates. She says that people who locked in mortgages under 4% seem to have a very low mortgage defaults and foreclosures.
Auto insurance is outrageously expensive because every illegal must steal a car or truck.
as absurd as it may sound, they are probably hired by the insurance companies to steal the cars to part out or sell overseas. This is the level of business intelligence employed within large corporate structures these days. Use the proceeds to fund stock buybacks and raise premiums..
Jim in the new business unit, got a bonus for this idea and a real nice parking spot.
Airbnbust?
Or like my friend thst bought his house 20 years ago and now has 13k property taxes and has to sell. Complete BS ive had it with these govt clowns. They closed all our courthouse entrances except 1 and it has a metal detector with armed guards now. I wonder why!
What state or city is this? I feel for your friend. That is shameful.
Let me guess: Chicago region in Illinois or Bay area in California?
banks are offering HELOC’s to make those Tax payments. Time to use that equity in that property!!!!
That would be known as “going full retard”.
Can’t be Cali, they have prop 13 limiting taxes.
Hes in olathe ks. Im not far from there mine were 2k last year. 3100 this year. Over a 50% increase in 1 year.
Thanks RJ for the info. That’s rough. Sorry for your friend.
https://uploads.disquscdn.com/images/a96adc3feb72001e4e16cc84b46e787d6388ac5d0dc389674273da0eafa2cbae.jpg
They are probably out there, but it would be interesting to see long term labor stats that eliminate government jobs (at least fed … as they are doing most of the hiring) and viewing just full time employment. Seems like the picture might be far different. Obviously part time jobs are real … but understanding the full time segment would be helpful.
And how do we add into the equation X million low-skilled non-English speaking illegals into the mixture, so that they’re not subsisting on government handouts and further dragging down the economy?
How Biden/Obama?
If you look back historically, “normal” unemployment claims tend to hover around 2 million in good economic times. So we’re not even close right now, though the trend is certainly up (from an all time low).
As to mortgage delinquencies, the only times we’ve been at lower levels were 2020 and 2001, going back to 1979. So I wouldn’t panic just yet.
Remember, reversion to the mean works both ways.
There are reasons to think that “normal” isn’t normal anymore. The process for trading houses, for instance, is much more efficient than it used to be, so the housing inventory level is lower than it used to be. Similarly, online job-searches and interviews have made the process for finding a job more efficient (when there are jobs available), so the “labor inventory level” (unemployment rate, claims rate) should tend to be lower than it used to be. This is one reason given for why weekly claims have been at record historic lows even though the labor force is larger than it has ever been. So the rising trend in continued claims is potentially a concern at levels not much higher than current.
Mmm, I don’t know about the efficiency of sales being the reason for lower inventory. Maybe a tiny bit, but that’s got to be reason 5 or 6. I think it has more to do with Boomers not wanting to budge, for a variety of sensible reasons, most notably incredibly favorable interest policy for many years, even decades. While sensible for boomers, it’s proven very unfortunate for younger folks.
Yes, anecdotally I know a generation X scientist who works for UCLA with a $1.6 million home on the market for two years. He has a job lined up in Florida but he won’t budge on price.
Maybe he can AirBnB it
Well, he’s shooting himself in the foot by being greedy, because we’re probably not getting another Covid property bubble anytime soon. There’s A LOT of pent up inventory being held at bay, despite the narratives that claim the opposite is true.
He should have taken at least one class of Marketing and one of Finance. His loss. PS: He should listen to his wife
or at least pretend to listen to his wife in todays law, she is the most favored creditor should the union dissolve and she can force the sale to cover this obligation.
Had a friend who lost a 5 million dollar building his business was in, because of a divorce. He didn’t have the cash to give her half of everything, He gave her the builiding and had to lease from her for 5 years.
Insult to injury is a California Law Firm…
He should start doing the math on that decision.
He’s paid 2 years of property taxes and utilities (electric/water) etc. On top of that, everything in the home has aged by 2 years (roof, water heater, appliances etc) and is that much closer to needing to be replaced which means buyers will be discounting those items by that much.
Guess it’s cost him 50K at least holding the home for 2 years, if not more.