Economy Watch: Residential Foreclosures Down, But Still High

By Dees Stribling, Contributing Editor

Foreclosure specialist RealtyTrac reported on Thursday that foreclosure filings—which it defines as default notices, scheduled auctions and bank repossessions—dropped a little less than 1 percent during the third quarter of 2011 compared with the second quarter. One in every 213 U.S. housing units received a filing during the quarter. Year-over-year for the quarter, foreclosure activity was down 34 percent.

The company posits that the annual drop merely represents an interlude before foreclosures head upward again. “Lenders are cautiously throwing more wood into the foreclosure fireplace after spending months trying to clear the chimney of sloppily filed foreclosures,” James Saccacio, CEO of RealtyTrac, said in a statement, using an aptly destructive metaphor.

The top foreclosure state—the one with the most properties in the fireplace—was Nevada once more, with one in every 44 residential properties experiencing a foreclosure filing during the third quarter of 2011. Metro Vegas had the number-one rate among MSAs. California is number two state and Arizona number three in foreclosures, and California also has the unhappy distinction, according to RealtyTrac, of accounting for one in four of the foreclosure filings in the entire country.

Employment applications, trade deficit stuck in neutral

The U.S. Department of Labor reported on Thursday that for the week ending October 8, 2011, initial claims for unemployment insurance were 404,000, only a small decrease of 1,000 from the previous week’s revised figure of 405,000. The four-week moving average was 408,000, a decrease of 7,000 from the previous week’s 415,000. Not bad, but not quite enough to dip below the psychologically important 400,000 threshold.

Another economic indicator that has barely moved lately is the U.S. trade deficit, which came in at $45.6 billion in August, according to the Census Bureau on Thursday. Both imports and exports decreased slightly, in both goods and services. The lopsided deficit with China did see some upward movement, with imports increasing $2.2 billion to $37.4 billion (mainly including household goods and toys, games, and sporting goods), while exports to increased only $200 million (mainly including soybeans, fish and shellfish, and nonferrous metals) to $8.4 billion.

U.S. imports and exports have both been steadily increasing since the worst of the recession, roughly in tandem, though imports have slowly been outpacing exports. The August 2011 deficit of $45.6 billion compares unfavorably with August 2009, when the deficit was $31 billion, but the most recent number is down from earlier this year. In May the U.S. trade deficit hit a recent peak of $50.1 billion.

Gap to contract in U.S., expand in China

Consumers are notoriously fickle when it comes to clothiers, and Gap Inc. has been on the receiving end of U.S. consumer indifference lately. Same-store sales worldwide in its most recent fiscal quarter were down 2 percent compared with the same quarter a year ago. The company, whose brands include the Gap, Banana Republic and Old Navy, said on Thursday that it’s going to respond to the situation by closing almost 200 stores in the United States, as well as making other locations smaller. Currently there are 889 domestic stores; by 2013, there will be around 700.

The Gap Inc. didn’t detail which U.S. stores it plans to close. But the company did add that it’s going to open about 45 Gap-brand stores in China by the end of 2012, which represents a near tripling of its presence in that country. Among other Sino-Gap locations, the first flagship Gap will open in Hong Kong before the end of this year.

Wall Street was mostly down on Thursday, depressed by bank stocks, but managed to end mixed. The Dow Jones Industrial Average lost 40.72 points, or 0.35 percent, while the S&P 500 was down 0.3 percent. The Nasdaq was a gainer, however, ending up 0.6 percent.