Tuesday, July 10, 2007

Economic Report for 7/9/2007

Last Week in the News

The nation's service economy expanded at a faster-than-expected pace in June, as the Institute for Supply Management (ISM) said on July 5 that its index of business activity in the non-manufacturing sector registered 60.7, topping May's reading of 59.7 and Wall Street's forecast of 58.1. A reading above 50 indicates expansion, while one below 50 signals contraction. The June reading was the highest since April 2006, when it hit 61.1.

Output at U.S. factories, plants and utilities also expanded in June, the ISM reported July 2. The ISM's manufacturing index rose to 56 in June, above the May reading of 55, and higher than the market expectation of 55.4. The reading marked the fifth consecutive month of growth for the manufacturing sector.

Late payments on home equity loans -- payments that are 30 days or more past due -- rose to 2.15% in the first quarter of this year, up sharply from 1.92% in the final quarter of 2006, the American Bankers Association (ABA) reported July 3. On a brighter note, the ABA also reported that late payments on credit card bills dropped to 4.41% in the first quarter, down from 4.56% in the fourth quarter of 2006, the best showing in nearly a year.

The average rate for a 30-year, fixed-rate mortgage fell to a one-month low, Freddie Mac said July 5. Rates have ebbed in recent weeks as investors' fears concerning inflation have eased.
This week look for updates on the trade balance on July 12 and retail sales on July 13.

Monday, May 21, 2007

Economic Update for 5/21/2007

Last Week in the News
The Consumer Price Index (CPI), which measures inflation at the retail level, rose 0.4% in April, compared with a 0.5% rise in March, the Commerce Department reported May 15. Economists had forecast a 0.6% increase. The more closely watched core CPI, which strips out volatile food and energy prices, rose 0.2%, after a 0.1% gain in March. While core CPI edged up in April, the 12-month core CPI average declined to a 2.3% rise, the lowest rate since April 2006.

Industrial production jumped a bigger-than-expected 0.7% in April, the Federal Reserve said May 16. Analysts expected production to rise only 0.3%. April's rise, paced by gains in auto and high-tech manufacturing, was only the third increase in the last eight months.

The Conference Board's Index of Leading Indicators -- a key gauge of future economic growth -- slipped 0.5% in April, greater than the 0.1% decline analysts had predicted. Of the 10 indicators, only stock prices and the money supply (the total amount of currency and checkable deposits in circulation, which influences interest rates) moved in a positive direction.

Housing starts unexpectedly rose 2.5% in April, confounding analysts who had forecast a 2.2% drop, the Commerce Department reported May 16. But applications for building permits plunged 8.9% in April, the sharpest fall in 17 years.

Americans filed 5,000 fewer jobless claims for the week ended May 12, the Labor Department said May 17. Economists expected a slight rise. Meanwhile, mortgage rates for the week ended May 16 nudged up on lingering Federal Reserve concerns about inflation.

This week look for updates on new home sales on May 24 and existing home sales on May 25.

Tuesday, May 15, 2007

Economic Update for 5/15/2007

The Producer Price Index (PPI), which measures the price of goods at the wholesale level, rose 0.7% last month, down from a 1% gain in March, the Labor Department reported May 11. But the more closely watched core PPI, which strips out volatile food and energy prices, showed no rise after also remaining unchanged in March. Economists had forecast a 0.2% percent rise in core PPI.

The Federal Reserve kept the federal funds rate, an overnight bank lending rate that affects credit card, home equity and other loan rates, at 5.25%. In its statement, May 9, the Fed noted that "the predominant policy concern remains the risk that inflation will fail to moderate as expected."

Retail sales unexpectedly fell 0.2% in April, hurt by rising gasoline prices and a sluggish housing market. Economists had forecast a 0.4% increase.

The U.S. trade deficit widened more than expected in March to $63.9 billion, as higher oil prices helped push total imports to the second highest level on record, the Commerce Department reported May 10. The trade gap swelled 10.4% from February, surprising Wall Street economists who had pegged the trade gap at $60 billion.

The Mortgage Bankers Association's index of mortgage applications increased 3.6% for the week ended May 4, the third consecutive week the MBA's applications index has risen. Meanwhile, Freddie Mac reported that mortgage rates on 30-year terms eased slightly for the week ended May 11.

This week look for updates on the Consumer Price Index on May 15 and housing starts on May 16.

Monday, May 7, 2007

Economic Report for 5/7/2007

Employers added a net gain of 88,000 jobs to their payrolls in April, down from the 177,000 net increase in March and below Wall Street's forecast of a 100,000 net gain, the Labor Department reported May 4. April's job growth was the weakest since November 2004, when there was a gain of only 65,000 jobs. The unemployment rate edged up to 4.5% in April from the 4.4% reading in March.

U.S. business productivity -- a measure of how much any given worker can produce in an hour -- grew a greater-than-expected 1.7% in the first quarter of 2007. Economists expected a rise of only 1%. Meanwhile, unit labor costs grew 0.6% in the first quarter of 2007, well below the 4% rise analysts predicted.

The Institute of Supply Management (ISM) reported May 3 that its April index of manufacturing activity moved to 54.7, from 50.9 in March. Readings above 50 point to expansion in the economy. Forecasters expected the April index to hit 51.

The ISM also said its non-manufacturing index rose to 56 in April from 52.4 in March, beating Wall Street expectations for a reading of 53. The service sector represents about 80% of U.S. economic activity.

The National Association of Realtors' Pending Home Sales Index fell 4.9% in March, following a 1.1% increase in February, the trade group reported May 1. Economists had predicted a 0.4% rise in the index.

Mortgage rates for the week ended May 4 remained unchanged on signs of weakening consumer spending and cooling inflation, Freddie Mac said.

This week look for updates on the Producer Price Index and retail sales on May 11.

Monday, April 23, 2007

Economic Update for 4/23/2007

Last Week in the News

Fueled by surging energy prices, the closely watched Consumer Price Index (CPI) shot up 0.6% in March, the biggest increase since a similar rise in April 2006. However, core inflation -- which excludes volatile energy and food prices -- rose 0.1% in March, the smallest increase in three months, and better than the 0.2% rise Wall Street had expected. Inflation for the first quarter of 2007 was 4.7%, far above the 2.5% increase for all of 2006.

The Conference Board said its Index of Leading Economic Indicators climbed a tepid 0.1% to 137.4 in March, as analysts had expected. The latest reading reverses two straight months of declines. The index is designed to forecast economic activity over the next three to six months.
Retail sales rose 0.7% in March, up from a 0.5% gain in February. It was the best showing since a 1.1% rise in December, the Commerce Department reported April 16. Analysts had predicted a 0.8% increase.

Construction of new homes edged up 0.8% in March, the second straight monthly rise, the Commerce Department reported April 17. Applications for new building permits also rose by 0.8% in March, the first advance in three months, providing a glimmer of hope that the worst of the housing downturn might be over.

For the week ending April 19, interest rates on 30-year and 15-year fixed-rate mortgages declined, remaining well below year-ago levels, Freddie Mac said April 19.

This week look for updates on existing and new home sales on April 25.

Tuesday, April 17, 2007

Economic Update for 4/16/2007

Last Week in the News

American consumers lost confidence for the third straight month, with the Reuters/University of Michigan preliminary Consumer Sentiment Index, released April 13, hitting an eight-month low of 85.3 in April from March's 88.4. Consumers responding to the survey said they expect inflation to rise.

The March Producer Price Index (PPI) -- which measures prices before they reach consumers -- rose 1 percent after February's 1.3 percent increase, the Labor Department reported April 13. March's jump was slightly ahead of a 0.7 percent increase predicted by experts, who attributed March's jump to rising energy and food costs. Meanwhile the core PPI, which excludes food and energy prices, was unchanged.

Contrary to economists' predictions of a widening U.S. trade deficit, the gap actually narrowed in February to $58.4 billion from January's $58.9 billion, the Commerce Department reported April 13. Economists had predicted the deficit would widen in February to $60 billion. Imports of goods and services fell 1.7 percent to $182.4 billion and exports declined by 2.2 percent to $124 billion.

Imports from China fell to their lowest level since May 2006, with the trade gap dropping to $18.4 billion in February from January's $21.3 billion.

This week look for the Census Bureau's retail sales report April 16, and updates on the Consumer Price Index, housing starts and housing permits April 17.

Monday, April 2, 2007

Economic Update for 4/2/2007

Consumer spending rose 0.6% in February, the best showing since a 0.7% jump in December, the Commerce Department reported March 30. The gain was double what analysts had expected, which should help alleviate recession fears fueled by a slump in housing and the domestic auto industry.

Personal income also was up 0.6% in February, which followed a 1% surge in January. Even with the rise in income, the savings rate remained at a negative 1.2% in February, the 23rd consecutive month the savings rate has been in negative territory.

Sales of new homes dropped 3.9% in February to a seasonally adjusted annual rate of 848,000 units, the slowest pace in nearly seven years, the Commerce Department said March 26. Meanwhile, the median price of a new home fell to $250,000 in February, down 0.3% from a year ago.

Orders to factories for durable goods -- big-ticket items expected to last three or more years -- increased 2.5% in February. Even with the rebound from January's 9.3% drop, the gain was smaller than the 3.5% gain expected by Wall Street.

On March 30, oil prices reached $66.55 a barrel on the New York Mercantile Exchange, the highest level in six months. Concern over rising gasoline prices helped undermine consumer confidence, as the Conference Board's Consumer Confidence Index fell from 111.2 in February to 107.2 in March. The March index was the lowest since November when the reading was 105.3.
This week look for updates on factory orders on April 4 and unemployment on April 6.

Monday, March 26, 2007

Economic Update for 3/26/2007

Sales of existing homes unexpectedly rose by 3.9% in February, the largest monthly gain in three years, the National Association of Realtors reported March 23. The price of a median home sold last month dropped to $212,800, down by 1.3% from the same month in 2006, marking a record seven straight months that the median home price has fallen.

Construction of new homes and apartments rose 9% in February to a seasonally adjusted annual rate of 1.53 million units, the Commerce Department reported March 20. Construction had fallen by 14.3% in January. Even with the better-than-expected rebound, construction activity remained 28.5% below last year's level.

Builders' applications for new permits, considered a reliable gauge of future activity, continued falling in February, dropping by 2.5% to an annual rate of 1.53 million units. That marked the 12th decline in the past 13 months in building permits.

Federal Reserve policymakers announced on March 21 that they would leave the central bank's key federal funds rate -- the rate that banks charge one another for overnight loans -- at 5.25%, where it has remained since June 2006.

The Conference Board's Composite Index of Leading Economic Indicators slipped 0.5% in February. The drop, while expected, was the steepest since February 2006. The index is important because it often foreshadows the performance of the economy over the next six to nine months.

This week look for updates on new home sales on March 26 and durable goods orders on March 28.

Tuesday, March 13, 2007

Economic Update - 3/13/2007

The nation's unemployment rate dipped to 4.5% in February, as employers added 97,000 jobs to their payrolls, close to economists' forecast for a gain of approximately 100,000, the Labor Department reported March 9. Unemployment fell despite bad winter weather that forced construction companies to slash 62,000 jobs, the most since 1991.

The Labor Department also reported that the number of laid-off workers filing unemployment claims fell by 10,000 for the week ended March 2. The decline provided a break from a recent rise in layoffs stemming from a weakness in the housing and auto sectors.

Former Federal Reserve Chairman Alan Greenspan said there was a "one-third probability" of recession in the United States this year, according to a March 6 interview with Bloomberg news service. His comments contrasted with those of current Federal Reserve Chairman Ben Bernanke, who said that the Federal Reserve continues to foresee "moderate growth going forward."

The nation's trade deficit narrowed slightly to $59.1 billion in January, down 3.8% from a December deficit of $61.5 billion. Exports of goods and services rose by 1.1% to an all-time high of $126.7 billion in January, reflecting gains in sales of airplanes, computers and farm products.
Rates on 30-year mortgages fell to their lowest level since mid-December, as investors moved to the safety of bonds after last week's stock market turmoil. Typically, more money flowing into the bond market makes more money available for mortgage lending.

This week look for updates on producer prices on March 15 and consumer prices on March 16.

Monday, March 5, 2007

Economic Update - 3/5/2007

Bolstered by bonus payments to high-income executives and pay raises for federal workers, personal incomes rose 1% in January, the largest advance since a 1.3% jump in January 2006, the Commerce Department reported March 1. The extra income helped support a better-than-expected 0.5% increase in consumer spending, the major force driving the U.S. economy.

The Institute for Supply Management's manufacturing index, which measures the nation's manufacturing activity, climbed to 52.3 in February, beating Wall Street's expectation of 50 and January's reading of 49.3. A reading above 50 indicates growth in the sector.

Sales of existing homes in January rose 3%, the biggest one-month increase in two years, the National Association of Realtors reported February 27. Median home prices, however, fell 3.1% from a year ago, the sixth straight monthly decline.

Sales of new homes dropped 16.6% in January, the sharpest monthly decline in 13 years, the Commerce Department said February 28. Yet, the median sales price of a new home rose $400 to $239,800 in January. The backlog of unsold new homes rose from a 5.7 months' supply in December to a 6.8 months' supply in January.

Meanwhile, the New York-based Conference Board said its Consumer Confidence Index increased to a rousing 112.5 in February, its highest level in five years. The better-than-expected gain reflected increased optimism about jobs and business prospects.
For the week ended February 28, interest rates on 30-year mortgages fell for a second straight week to the lowest level since the start of the year.

This week look for updates on February unemployment and the trade deficit on March 9.

Monday, February 26, 2007

Economic Update - 2.26.2007

The Consumer Price Index rose by 0.2% in January, as falling energy prices only partially offset big increases in the cost of medical care and airline tickets, the Labor Department reported February 21. Although smaller than December's 0.4% rise, consumer prices were higher than the 0.1% increase Wall Street had forecast. Core inflation, which excludes volatile energy and food prices, also was up more than analysts had expected, rising by 0.3%. It was the largest one-month gain in seven months.

However, in minutes released on February 21 from its late-January policy meeting, the Federal Reserve said the outlook for core inflation had improved. It stated that a confluence of "better-than-expected news" on the economy and inflation suggested there were smaller risks to growth and improved prospects for inflation.

The Conference Board's Index of Leading Economic Indicators -- designed to forecast economic activity over the next three to six months -- rose by 0.1% in January. Although not the 0.2% rise analysts had anticipated, the reading suggested continued modest growth for the U.S. economy.

The number of people filing new claims for unemployment insurance fell by 27,000 for the week ended February 17, the Labor Department said February 23. Although not as large a drop as economists had expected, it was a sharp improvement over the prior week when claims jumped by 46,000.

For the week ended February 22, interest rates on 30-year and 15-year mortgages fell, Freddie Mac said. With the latest decline, mortgage rates are slightly lower than they were at this time a year ago.

This week look for updates on existing home sales on February 26.

Monday, February 19, 2007

Economic Update 2/19/2007

The Producer Price Index -- wholesale prices that suppliers charge retailers for their goods -- fell 0.6% in January, the largest drop since October, the Labor Department reported February 16. Core wholesale inflation, which strips out volatile food and energy prices, rose 0.2%. Both numbers were in line with economists' expectations.

The U.S. trade deficit widened to $61.2 billion in December, a 5.3% increase over November. Economists had expected a deficit of only $59.5 billion. For all of 2006, the trade deficit was a record $763.6 billion, a 6.5% increase from the previous high of $716.7 billion set in 2005.
Construction of new homes and apartments plunged by 14.3% in January, the Commerce Department said February 16. The bigger-than-expected drop left construction at a seasonally adjusted annual rate of 1.4 million units, the lowest level in 10 years.

Nationally, home sales fell 10.1% in the fourth quarter of 2006, compared with the same period a year ago, the National Association of Realtors said February 15. The states with the biggest declines in sales from October through December were Nevada, down 36.1%; Florida, down 30.8%; Arizona, down 26.9%; and California, down 21.3%. The national median price -- the point where half of homes sold for more and half sold for less -- fell to $219,300, down 2.7% from the fourth quarter of 2005.

Retail sales were essentially flat in January, the Commerce Department reported February 14. While sales at department stores showed strength, auto sales fell 1.3%, the biggest one-month drop since falling 2.4% last June.

This week look for updates on the Consumer Price Index on February 21.

Monday, February 12, 2007

Economic Update 2/12/2007

U.S. productivity -- the amount of output per hour of work -- grew at a healthy 3% in the final quarter of 2006, the Labor Department reported February 7. It was the fastest quarterly pace since the first three months of 2006 and nearly double the 1.7% gain economists had expected. However, for all of 2006, productivity rose by 2.1%, the slowest pace since 1997. Economists keep close tabs on productivity, because declining worker output, coupled with higher wages and benefits, can ignite inflation.

U.S. retail sales rose 3.9% in January, beating analysts' 3.1% estimate. Retailers Limited Brands, Nordstrom, Federated Department Stores and Wal-Mart Stores reported better-than-expected results. The arrival of frigid temperatures in much of the country helped spur sales of cold-weather items.

The U.S. service sector expanded in January, signaling a strong start to economic growth in 2007, the Institute for Supply Management reported February 5. The trade group's index advanced to 59 in January from 56.7 in December. A reading above 50 indicates expansion.
The Labor Department reported February 8 that claims for jobless benefits rose by 3,000 from the previous week, in line with economists' expectations. The national unemployment rate edged up from 4.5% in December to 4.6% in January. On the news of weaker job growth, mortgage rates dipped slightly for the week, Freddie Mac said February 9.

This week look for updates on housing starts and housing permits on February 16.

Monday, February 5, 2007

Economic Update 2/5/2007

Citing healthy economic growth and reduced inflation, the Federal Reserve on January 31 held its key federal funds rate at 5.25%. The fed funds rate is the overnight interest rate that banks charge one another to borrow money. It was the fifth straight time the Fed has held steady, a move that was widely expected by Wall Street analysts.

In the final quarter of 2006, the economy grew at a faster-than-expected 3.5% pace, despite lagging automotive and real estate markets, the Commerce Department said January 31. The performance exceeded analysts' forecasts for a 3% growth rate. For all of 2006, the gross domestic product (GDP) increased by 3.4%, an improvement over 2005's 3.2% showing.

Pending sales of existing homes in December increased at a seasonally adjusted annual rate of 4.9%, the National Association of Realtors (NAR) said February 1. The climb was the biggest since March 2004. "Some of the monthly gain may be weather-related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out," said David Lereah, NAR's chief economist.

For all of 2006, income climbed 6.4%, the biggest annual gain since 8.0% in 2000, the Commerce Department reported February 1. However, the personal savings rate for 2006 was a minus 1%, meaning that people spent not only all the money they earned, but also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than the negative 0.4% in 2005 and was the poorest showing since a minus 1.5% savings rate in 1933 during the Great Depression.

This week look for updates on worker productivity on February 7.

Sunday, January 28, 2007

Beware...

After being in the loan business for almost five years now, I've decided to start this blog because of something that really rattle my cages (as they say). Let me start out by saying that I didn't wake up one day and say, I want to be a loan officer. Nor did I say I want to be a loan officer because of the notoriety. No, I said I want to be a loan officer because I needed a job at the time. Since then I've really come to enjoy helping people not only obtain their dreams in homeownership but to also be a lender who will care about your needs.

Recently, I found out a relative had her home for sale. When other family members asked why she didn't come to me for assistance my only response was, "she probably didn't know I was in the business." So not only did she not know I was a loan officer but she didn't know that I work closely with Realtors. Realtors whom I trust and work hand in hand with in helping them build their business.

Here's the story, she was referred to one of those realtor/loan guys. He took over as the second agent to list her home for sale. The plan was to sell her home in time to move into her newly built home in another state. Problem was that her agent wasn't doing anything to sell her home so that she could have money to purchase the new home. As to no lose the purchase of her new home, the agent helped refinance the home she was selling. He refinanced the loan and she was able to move to her new home out of state. Meanwhile, the same agent was not doing much to sell her home. Not only did he live out of the area, but he just didn't know how to market the home. There were no ads, open house or door knocking to let people know about the home. That's when I eventually informed her that I was in the business and recommended that she use someone who knew the market and would actually lift a finger to market her home to get it sold.

I referred a business partner/friend of mine he had her home in escrow in a month. At that time, we found out the horrible news her loan that was to be paid off had a $13,000 pre-payment penalty even after the realtor/loan guy told her there was no pre-payment. His words to her were, "this loan doesn't have a pre-payment penalty." When the realtor/loan guy was confronted, of course he basically said, "Too bad, she knew what she was signing." Then he claimed that he did tell her.

You don't have to be in this business long to know what it takes to get this type of loan and how to make the pre-payment penalty go away. Her settlement statement showed that this guy made approximately $18,000 in commissions for her refinance. That's 4.5% of the loan amount. Real estate agents typically make 2.5 to 3% on the sale of the home. He made $18k just from the refinance and was due to make at least another 3% from the sale. Fortunately, he wasn't as good at selling home as he was at selling bad loans. His idea of selling her home was to put a sign in front of the house and hope that someone sees it and makes an offer. His other idea was to just keep lowering the price.

So basically, he took my relative to the cleaners with the loan refinance he got her into. He made $18k and she has to pay $13k to get out of the loan. Believe me, it just doesn't make sense and it sickens me to no end that this guy didn't care who he was hurting.

I'm now on a quest to be sure that everyone I know knows what I do for a living. I may not have years and years of experience in the mortgage industry but I have a lifetime of integrity experience. I will always say, even if you don't want to use my services for your home loan needs, at least ask my opinion so that this doesn't happen to you.

I plan on publishing tips and advice on home loans once a week to help you better understands. You may not be financing your home today but it's always a good idea to stay informed so that when you do, you have a little more armor.