Week of August 9–August 13, 2010 Produced by NAR Research
Weekly Economic Forecast <ul><li>NAR's monthly official forecast as of August 3rd </li></ul>Produced by NAR Research Indic...
Monday, 08/09/10 <ul><li>The average 30-year fixed rate mortgage hit an all-time record low of 4.49% last week as measured...
Monday, 08/09/10 (Cont’d) <ul><li>After hitting a low of $66.8 per barrel in late May and floundering in June, oil prices ...
Tuesday, 08/10/10 <ul><li>Wholesale trade declined in June, reflecting doubts lingering over the direction of the economy....
Tuesday, 08/10/10 (Cont’d) <ul><li>After five consecutive quarters of strong growth, employment productivity declined.  Ba...
Wednesday, 08/11/10  <ul><li>Mortgage purchase applications increased 0.3 percent for the week ending August 6 th , the fo...
Thursday, 08/12/10 <ul><li>Thomas Hoenig, President of the Federal Reserve Bank of Kansas City, and a voting member of the...
Thursday, 08/12/10 (Cont’d) <ul><li>Initial unemployment insurance claims rose by 2,000 to 484,000 for the week ending Aug...
Friday, 08/13/10 <ul><li>After three months of declines, CPI rebounded 0.3 percent. The increase is due to the increase in...
Friday, 08/13/10 (Cont’d) <ul><li>Consumer sentiment increased at August's mid-month point to 69.6 from July's point of 67...
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Economic Indicators for week of August 09-13, 2010

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The Research staff analyzes the week's key data releases and tell you what they mean for you and your business.

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Economic Indicators for week of August 09-13, 2010

  1. 1. Week of August 9–August 13, 2010 Produced by NAR Research
  2. 2. Weekly Economic Forecast <ul><li>NAR's monthly official forecast as of August 3rd </li></ul>Produced by NAR Research Indicator This Week Last Week GDP 2010 Q3: 2.4% 2.4% ↔ GDP 2010 Q4: 2.6% 2.6% ↔ GDP 2011 Q1: 2.3% 2.3% ↔ Unemployment rate by the year-end 2010: 10% 10% ↔ Average 30-year fixed mortgage rate by the year-end 2010: 5.0% 5.0% ↔
  3. 3. Monday, 08/09/10 <ul><li>The average 30-year fixed rate mortgage hit an all-time record low of 4.49% last week as measured by Freddie Mac. The spread between the 30-year fixed and the 10-year Treasury, which normally track in the same direction, has widened over the last few weeks as the Treasury has sunk below 3.0% on economic concerns in Europe, soft U.S. economic data and the BP oil spill. </li></ul>Economic Updates Produced by NAR Research
  4. 4. Monday, 08/09/10 (Cont’d) <ul><li>After hitting a low of $66.8 per barrel in late May and floundering in June, oil prices began to climb in July and jumped 7% last week from the prior week to finish at above $82 per barrel. </li></ul><ul><li>One reason for the increased spread between the 30-year fixed rate mortgage and the 10-year Treasury is that mortgage investors have less incentive to buy mortgage securities as rates go below 5.0%. Rates significantly below 5.0% could trigger a wave of refinancing, thereby cannibalizing the holdings in the portfolios of MBS investors. </li></ul><ul><li>Higher oil prices will work their way through the production cycle and into consumer prices soon. This process will place upward pressure on long-term Treasury rates and mortgage rates. However, the 30-year fixed rate mortgage rate may not rise as much as the 10-year Treasury rate in the short term as MBS investors increase purchases to take advantage of higher mortgage yields causing the rate spread to shrink. </li></ul>Economic Updates Produced by NAR Research
  5. 5. Tuesday, 08/10/10 <ul><li>Wholesale trade declined in June, reflecting doubts lingering over the direction of the economy. </li></ul><ul><li>Sales of merchant wholesalers in June 2010 totaled $347.4 billion, a 0.7 percent decrease from the revised May level. Compared with June 2009, sales were up 12.9 percent. </li></ul><ul><li>Wholesale businesses have been increasing their inventories over the past six months at a moderate pace. Inventories of merchant wholesalers were $399.2 billion at the end of June, representing a 0.1 percent advance from the revised May level. On a yearly basis, inventories declined 0.3 percent. </li></ul><ul><li>The changes should provide for a moderate increase in the demand for warehouse space. </li></ul>Economic Updates Produced by NAR Research
  6. 6. Tuesday, 08/10/10 (Cont’d) <ul><li>After five consecutive quarters of strong growth, employment productivity declined. Based on a Department of Labor report, labor productivity declined at a 0.9 percent annual rate during the second quarter of this year, prompted by a 1.1 percent decrease in business sector productivity and a 2.8 percent drop in nondurable manufacturing sector productivity. </li></ul><ul><li>On a year-over-year basis, business output was up 3.9 percent, while hours worked remained unchanged. </li></ul><ul><li>Labor costs increased slightly by 0.2 percent in the second quarter. Labor costs were down 2.8 percent compared with the same period a year ago. </li></ul>Economic Updates Produced by NAR Research
  7. 7. Wednesday, 08/11/10 <ul><li>Mortgage purchase applications increased 0.3 percent for the week ending August 6 th , the fourth consecutive increase in the index but still near 13-year lows. Purchase applications do not take into consideration all-cash purchases which according to the June REALTORS® Confidence Index made up roughly one-fourth of transactions. </li></ul><ul><li>Purchase applications were down 34.1 percent from the same week a year ago. </li></ul><ul><li>Refinances were up only 0.6, despite mortgage rates of 4.57 percent for a 30-year fixed mortgage the lowest reading in the history of the Mortgage Bankers Survey. </li></ul><ul><li>The trade balance in June widened to $49.9 billion, with imports rising 3 percent and exports falling 1.3 percent. Today’s data reflects rising pessimism about the strength of the global recovery. </li></ul>Economic Updates Produced by NAR Research
  8. 8. Thursday, 08/12/10 <ul><li>Thomas Hoenig, President of the Federal Reserve Bank of Kansas City, and a voting member of the Federal Open Market Committee (FOMC), dissented from Tuesday’s post-meeting FOMC statement. The statement indicated that the FOMC will continue to hold the target for the Federal Funds rate at the currently low range of 0 – 0.25 percent and expects that economic conditions “are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” </li></ul><ul><li>Read the FOMC statement to see a fuller summary of Hoenig’s dissent, and attend the Economic Issues & Residential Real Estate Business Trends Forum at NARdiGras 2010 where Thomas Hoenig and Lawrence Yun will discuss issues and trends in the economy and housing market.in the sector). </li></ul>Economic Updates Produced by NAR Research
  9. 9. Thursday, 08/12/10 (Cont’d) <ul><li>Initial unemployment insurance claims rose by 2,000 to 484,000 for the week ending August 7. Insured unemployment for the week ending July 31 receded 118,000 to 4.452 million. Looking at the four-week averages, which smooth out some of the volatility of the weekly data, we see the same pattern: initial claims were higher and insured unemployment was lower. </li></ul><ul><li>Freddie Mac reported that the rate on 30-year fixed-rate mortgages fell to 4.44 percent this week, another record low. Weakness in the employment market, however, has translated to weakness in the post-tax credit housing market. While mortgage application data released yesterday showed slight increases, these came from very low levels. Low rates have not enticed the same increase in demand as seen historically. </li></ul><ul><li>  </li></ul>Economic Updates Produced by NAR Research
  10. 10. Friday, 08/13/10 <ul><li>After three months of declines, CPI rebounded 0.3 percent. The increase is due to the increase in energy costs of 2.6 percent. Excluding food and energy, the CPI increased 0.1 percent. </li></ul><ul><li>Core CPI showed shelter costs increased by only 0.1 percent. The weak housing market pushed some unsold homes into the rental market. </li></ul><ul><li>Retail sales increased in July by 0.4 percent, but it was largely attributed to the increase in auto sales--retail sales without auto sales increased by only 0.2 percent. This is lower than analysts had predicted. </li></ul><ul><li>Sales of home goods related to housing declined in July: furniture and home furnishings, appliances, building materials and garden equipment. </li></ul>Economic Updates Produced by NAR Research
  11. 11. Friday, 08/13/10 (Cont’d) <ul><li>Consumer sentiment increased at August's mid-month point to 69.6 from July's point of 67.8. Despite the improvement, consumer sentiment remains weak. </li></ul><ul><li>The consumer sentiment index is directly related to the consumer spending and we know from today's retail sales it remains tepid. </li></ul>Economic Updates Produced by NAR Research

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