U.S. Economy Dragging, Texas Shows Some Pep

Two different branches of the Federal Reserve issued economic reports on Monday, one not particularly sanguine about the U.S. economy, the other more hopeful about a region whose relatively strong economy has gotten some attention lately.

Two different branches of the Federal Reserve issued economic reports on Monday, one not particularly sanguine about the U.S. economy, the other more hopeful about a region whose relatively strong economy has gotten some attention lately. The Chicago Fed said that its National Activity Index decreased to –0.87 in August from –0.12 in July. All four broad categories of indicators that make up the index weakened from July, with each making a negative contribution to the index in August.

Moreover, the index’s three-month moving average, the ponderously named CFNAI-MA3, decreased from –0.26 in July to –0.47 in August—its lowest level since June 2011 and the sixth consecutive reading below zero. August’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend.

On the other hand, the Dallas Fed said that Texas factory activity increased in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 6.4 to 10, suggesting stronger output growth.

Other measures of Texas manufacturing activity also indicated growth in September. The new orders index rose to 5.3 following a reading of zero last month, pointing to a pickup in demand. As for the Texas general business activity index as reported by the Dallas Fed, it remained slightly negative but edged up from –1.6 to –0.9. The employment index remained positive but fell to 5.9, its lowest reading in more than a year.

Mortgage delinquencies still edging down

LPS reported on Monday that the percentage of delinquent U.S. residential loans decreased in August from July, and declined year-over-year as well. The percentage of loans actually in foreclosure was also down in August, but only slightly, and still considerably higher than historical norms.

The company said that the housing delinquency rate, meaning loans 30 or more days past due, but not in foreclosure, was 6.87 percent in August, compared with 7.03 percent in July. In August 2011, the delinquency was 7.68 percent. At one point during the worst of the recession, delinquencies reached 10.57 percent, according to LPS. More normal levels of delinquency are considered to be around 5 percent.

As for actual foreclosures, the rate was little changed month-over-month: 4.04 percent in August compared with 4.08 percent in July. Not only that, the foreclosure rate was 4.12 percent in August 2011, which might indicate that foreclosures are being avoided whenever other options, such as short sales, are feasible.

Wall Street spent another listless day on Monday, ending down somewhat. The Dow Jones Industrial Average lost 20.55 points, or 0.15 percent, while the S&P 500 was off 0.22 percent and the Nasdaq declined 0.6 percent.