National economic news comes with good and bad mix

Economic reports continue with a mix of good and bad news. First, the good news.

The U.S. Commerce Department reported Wednesday (Sept. 30) that economic activity fell just 0.7% in the second quarter (April-June), a significant improvement over the 6.4% annualized dip in the first three months of 2009. In the last three months of 2008, the annualized GDP dip was 5.4%.

Also, consumer spending continued to fall, but not as much as in previous quarters. The real gross domestic purchases — purchases by U.S. residents of goods and services wherever produced — fell 2.3% in the second quarter, considerably less than the 8.6% dip in the first quarter.

Export and import activity continued to fall, but also at a lower rate. The real exports of goods and services fell 4.1% in the second quarter, compared with a big decline of 29.9% in the first quarter. Real imports of goods and services decreased 14.7% in the second quarter, an improvement over the 36.4% dip in the first quarter, according to the Commerce Department report.

An Increase in export/import activity is a good sign for metro areas like Fort Smith that have a heavy reliance on manufacturing jobs.

The not so good news comes from Fitch Ratings, which shows that delinquencies on asset-backed securities (ABS) tied to auto loans rose 10% in August. Fitch’s indexes track the performance of more than 100 transactions totaling $52.5 billion worth of prime and subprime auto ABS. Prime loans compose 78%, and subprime loans the remaining 22%.

"With loss frequency remaining the biggest driver of loss rates on auto ABS, Fitch expects losses to rise further in coming months," said Senior Director Hylton Heard. "That being said, rising losses should remain in check as the resilient wholesale vehicle market should help mitigate loss severity."

Prime annualized net losses (ANL) rose 6.3% in August to 1.85%, vs. July. This was the third consecutive monthly increase for the index, according to Fitch.