Employment has fallen 3 percent so far in this recession (about 4 million). Full time employment has fallen 5 percent.
Thanks to unemployment compensation, high rates of pay for many of those who still have jobs, and last year's increase in social security benefits, real disposable personal incomes have been rising for the last six months.
Yet 12 percent of households with mortgages are late on their mortgage payments. Just yesterday I read how, in a Catholic high school near Chicago, 20 percent (sic) of the students were taken out of class because they were delinquent on their tuition payments [employment in the Chicago area has fallen about the same -- a bit less -- than it has in the nation].
The press account of delinquencies is that people lost their jobs. But the arithmetic doesn't add up. Either the official statistics on job loss are way too low, or most of the delinquencies are by people who kept their jobs.
Why would so many people who kept their jobs be delinquent?
When it comes to mortgage payments, I understand:
- housing prices have fallen, leaving many houses under water (the house is worth less than the mortgage)
- under water mortgages (12 million or more) are much more common than job loss (4 million)
- often, it is a good financial decision to stop paying the bank on an underwater mortgage -- you could move into a nicer house for cheaper than you're paying now
But why pay the Catholic school tuition late (and likely other bills too)?
Were a lot of people using home equity to pay high school tuition? I am dubious of that explanation, because the home equity was already gone when school started last fall.
Any ideas, commenters?