Mortgage delinquencies are not at a seriously problematic level, but they are rising for ominous reasons.

Mortgage Delinquency Data from Hud, chart by Mish

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.

This chart is pretty striking. Shows the share of new 90 day delinquencies citing unemployment for reason of delinquency of FHA single family loan.

H/t gopal sharath
Source: https://t.co/GaVqC7NbDG pic.twitter.com/kR5neJBodi

— Anna Wong (@AnnaEconomist) July 19, 2024

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

Unemployment Data from the BLS, Calculation and Chart by Mish

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.

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