Unemployment, Foreclosure Data Show Slow Recovery

While there's no question the economy is beginning to recover from the worst recession since the Great Depression, with GDP increasing by six percent in the fourth quarter, data released today shows that the recovery is far from a strong one.

The Department of Labor reported that initial unemployment claims declined by 6,000 to 462,000.  The four week moving average came in at 475,500, which was an increase of 5,000 from the previous week's figure.  Continuing claims increased by 37,000 to 4.558 million, and the four week moving average here was unchanged at 4.581 million.

Eight states reported a decrease of more than 1,000 claims, with Pennsylvania's drop of 4,772 leading the way.  On the down side, four states reported claims increased by more than 1,000, with California's increase of 16,112 claims the highest.

Analysts had expected initial claims to decrease slightly more than they did, with the consensus estimate for a drop to 460,000.  Estimates ranged from 440,000 to 480,000

Not surprisingly, the less than stellar job market translates into higher foreclosures.  Many people live paycheck to paycheck and when they lose their jobs, they can't pay their mortgages.  That was shown by a report from RealtyTrac, which said that foreclosures increased by six percent in February from the year ago period.

While the increase in foreclosures was the slowest rate of increase in four years, it's still an increase and some of it may be due to delays in processing claims due to the severe winter weather that hit much of the country in February.  And RealtyTrac's CEO said that the data doesn't show that fewer homeowners are at risk.  Instead, he said, foreclosure prevention programs, legislation, and processing delays may be capping the number of monthly foreclosures.

Not surprisingly, the worst markets for foreclosures were the ones who saw the biggest run up in the bubble.  Las Vegas was the worst market, where one in 90 properties is in foreclosure.  That helped put Nevada at the head of the list of states with high foreclosure rates, with one in 102 homes suffering that fate.  Arizona and Florida were next, with one in 163 homes in foreclosure.

There is likely not going to be a positive trend in foreclosures as long as the jobs market remains tough.  The latest data shows that while the pace of layoffs is slowing, the economy is still isn't creating jobs.  In order for that to happen, according to the global chief economist at MF Global, initial "claims will likely have to resume a downward trend if payrolls are to improve."

However, things are moving in that direction.  According to the director of worldwide recruiting for Accenture, there is "a very broad uplift globally" in demand for Accenture's services.  He added that demand is heading "right back to the pre-recession levels."

Still, until we see payrolls expand, it's hard to see how the economy can grow strongly.  And as long as unemployment remains high, foreclosures are going to remain high as well.  The trend may be towards a slower rate of foreclosures, but the trend still is up.

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