Jobless Rate Peaks at 12.5 MillionThere are a record high 12.5 million people unemployed in this country. The government report today shows the jobless rate in February hit 8.1 percent, bringing total job losses over the last six months to more than 3.3 million. The unemployment rate has soared to its highest level in 25 years.
The government report shows companies cut 651,000 jobs in February, which is slightly down from the revised loss of 655,000 jobs in January. December's loss was also revised higher to a loss of 681,000 jobs. December's job losses for a single month were another record loss not seen in 59 years.
The forecast by economists had predicted a loss of 650,000 jobs lost last month. The unemployment rate is now at 8.1 percent, up from 7.6 percent in January. It was the highest recorded since 1983. A household survey shows the 12.5 million unemployed is the highest number since unemployment records began being recorded in 1940.
Ugly Day for Investors; Indexes Hit New Lows
The Dow Jones industrial average is down 21.6 percent this year, the worst start in the 113-year history of the Dow. Thursday's market shows how pessimistic investors are about the economy, as Nasdaq posted a six-year low and the Dow and S&P 500 fell to new 12-year lows on the news about GM's possible slump toward bankruptcy, Citigroup share prices and the gloom of the global economic outlook.
The Dow shed 281 points, or 4.1 percent and closed at 6,594.44 -- its lowest point since April 1997. It was even lower during the trading day, hitting 6,544.10. The S&P 500 fell 30 points and lost 4.3 percent to close at 682.55, the lowest it has been since September 1996. It dipped to 677.93 during trading.
The Nasdaq composite dropped 54 points, or 4 percent to end at 1,299.59, its lowest point since 1279.24 on March 12, 2003, at the bottom of the previous bear market.
Where and when the market will hit bottom is what investors are asking, as stocks have slid since the market's peak in October 2007. The Dow hit its all-time high at 14,164.15 on October 9, 2007. It has dropped 51.5 percent since then. The S&P hit a high of 1,565.15 on the same day in 2007, and has now lost 54.5 percent of its value.
1.5 Million Homeowners Near Foreclosure
More than 1.5 million homes are seriously delinquent and close to foreclosure, making up more than 11 percent of all mortgages, according to an industry report.
The percentage of borrowers at least one month behind in their mortgage payments, but not yet in foreclosure, rose to almost 8 percent in the fourth quarter of 2008. This news comes from the Mortgage Bankers Association. This number is the highest rate of delinquency ever recorded in the survey since it began in 1972.
Subprime ARM loans and prime ARM loans, which include Alt-A and pay-option ARMs, continue to make up the majority of delinquency numbers. Nationally, 48 percent of subprime ARMs were at least one payment past due, the report says.
Combined, the number of delinquencies and loans in foreclosure came to 11.18%, the highest ever recorded by the association. The most troubling news of the report shows that the delinquency rates continue to climb across the board for prime fixed-rate and subprime fixed-rate loans, loans whose performance is driven by the loss of jobs or income rather than changes in payments.
The five states of California, Nevada, Arizona, Florida and Michigan were again at the top of the list for delinquent loans, but the number of loans 90 days late or more increased significantly in New York, Louisiana, Georgia, Texas and Mississippi.
OTS Examiner Retires After IndyMac Fraud Scandal
The West Coast regional director at the Office of Thrift Supervision has been allowed to retire from his job as a government regulatory official even though there are allegations that he allowed a bank under his supervision to falsify financial records.
Darrel Dochow quit his OTS position last week. The Treasury Department Inspector General's investigation is continuing to look at claims he allowed IndyMac to change numbers in government filings that misstated the financial health of the bank prior to its failure last July.
Treasury Department Inspector General Eric Thorson said back in November his office would probe how Dochow allowed the bank to change its records, making it appear that it had more deposits than it actually did. Treasury officials say that Dochow allowed IndyMac to register an $18 million capital injection it received in May in a report that described the bank's financial condition at the end of March. Investigators say that instead of being a "cop on the beat," Dochow may have suggested to the bank it falsify deposit dates to satisfy banking rules, thus disguising how poor the bank was really doing.
The FDIC took over IndyMac in July after the bank revealed it had financial troubles due to defaulted mortgages and subprime loans. The failure cost the FDIC Insurance Deposit Fund more than $9 billion.