Epain Homes

As a logical consequence of the prolonged economic downturn it appears that participation in the federal food stamp program is on the rise.

In fact, household participation has been climbing so steadily that it has far surpassed the last peak set as a result of the immediate fallout following hurricane Katrina.

The latest data released by the Department of Agriculture shows that, on a year-over-year basis, household participation has increased a whopping 25.25% while individual participation, as a ratio of the overall population, has increased 22.83%.

The August results confirm that participation is continuing to climb dramatically, likely as a result of the recent jump in total unemployment, driving the nominal benefit costs up an astounding 62.61% on a year-over-year basis to $4,853,114,719 for the month.

Looking at the last chart that plots the total unemployment rate (unemployment rate of all traditionally unemployed workers plus all marginally attached and part time workers) and the population adjusted individual program participation rate normalized since 2005, one can plainly see that program participation would be expected to continue its surge.

Today, the U.S. Census Bureau released their September read of construction spending showing a continuation of the government’s tax-carrot fueled bounce in residential construction spending while indicating an acceleration in weakness to non-residential construction spending.

Even with the governments tax-credit gimmick residential construction spending is still 26.96% below the level seen last year and a whopping 62.16% below the peak set in March 2006.

Worse off though was private single family residential construction spending which declined 34.99% as compared to September 2008 and a truly grotesque 76.39% from the peak set in February 2006.

Non-residential construction spending, currently accounting for just under half of all private construction spending, posted another significant year-over-year decline of 15.42%.

The following charts (click for larger versions) show private residential construction spending, private residential single family construction spending and private non-residential construction spending broken out and plotted since 1993 along with the year-over-year and peak percent change to each since 1994 and 2000 – 2005.

Today, the National Association of Realtors (NAR) released their Pending Home Sales Report for September showing a whopping 21.2% year-over-year increase in pending home sales nationally coming largely as a result of the governments historic housing tax gimmick.

Meanwhile, the NARs chief economist Lawrence Yun reports that there has been a “rush” of first-time “buyers” racing for a chance to jump at the governments housing tax carrot… the result… wealth stabilization for middle class families?

“What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month, … Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.”

The following chart shows the national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Look at the seasonally adjusted pending home sales results:

• Nationally the index increased 21.2% as compared to September 2008.
• The Northeast region increased 16.9% as compared to September 2008.
• The Midwest region increased 17.8% as compared to September 2008.
• The South region increased 22.8% as compared to September 2008.
• The West region increased 23.7% as compared to September 2008.

The math is trivial… Recovery.gov states that the American Recovery and Reinvestment Act has already “created or saved” 640,329 jobs as a direct result of $52.1 billion of funds (a.k.a. your tax dollars) payed out in “contracts, grants and loans”.

So… $52.1 billion divided by 640,329 = $81,364 per each job “saved or created”.

Here is a nice image widget that you can embed in your favorite web page in order to keep track of the governments costly shenanigans … Ill updated it as the stats at recovery.gov are updated.

Decades from now the summer of 2008 will likely be remembered to mark the turning point where legislative blundering took an otherwise serious financial crisis and molested it into an epic financial collapse.

By fully assuming the liabilities of Fannie Mae and Freddie Mac, the two colossal and corrupt (and conduit of corruptness funneling junk Countrywide Financial loans onto the implied balance sheet of the federal government) government sponsored enterprises, the federal government, led by Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke, has thrust taxpayers into an abyss of insolvency with one mighty shove.

Given the sheer size of these government sponsored companies, with loan guarantee obligations recently estimated by Federal Reserve Bank of St. Louis President William Poole of totaling $4.47 Trillion (That’s TRILLION with a capital T… for perspective ALL U.S. government debt held by the public totals roughly $4.87 Trillion) this legislative reversal making certain the “implied” government guarantee is reckless to say the least.

The following chart (click for larger ultra-dynamic and surf-able chart) shows what Fannie Mae terms the count of “Seriously Delinquent” loans as a percentage of all loans on their books.

It’s important to understand that Fannie Mae does NOT segregate foreclosures from delinquent loans when reporting these numbers.

Finally, the following chart (click for larger ultra-dynamic and surf-able chart) shows the relative movements of Fannie Mae’s credit and non-credit enhanced (insured and non-insured) “Seriously Delinquent” loans.