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Economic Indicators for Week of September 27-October 1, 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 September 27-October 1, 2010

  1. 1. Week of September 27–October 1, 2010 Produced by NAR Research
  2. 2. Weekly Economic Forecast <ul><li>NAR's monthly official forecast as of September 2 </li></ul>Produced by NAR Research Indicator Updated Forecast Past Week’s Forecast Directional Shift GDP 2010 Q3: 1.6% 1.8% ↓ GDP 2010 Q4: 2.7% 2.6% ↑ GDP 2011 Q1: 2.6% 2.7% ↓ Unemployment rate by the year-end 2010: 9.9% 10% ↓ Average 30-year fixed mortgage rate by the year-end 2010: 4.6% 4.7% ↓
  3. 3. Monday, 09/27/10 <ul><li>The Chicago Fed's index shows the three-month moving average growth below its historical trend at -0.53 and suggests subdued economic growth and low inflationary pressure for the coming months. </li></ul><ul><li>Job creation will thus be slow.  However, low inflation will mean continuing low mortgage rates. </li></ul><ul><li>The index is a composite index of 85 economic indicators that comprise the four categories: production and income; employment, unemployment and hours; personal consumption and housing; and sales, orders and inventories. </li></ul>Economic Updates Produced by NAR Research Source: Federal Reserve Bank of Chicago
  4. 4. Tuesday, 09/28/10 <ul><li>The Case-Shiller 20 city price index increased 3.1% from July 2009 to 147.6, but was down 0.1% from June. </li></ul><ul><li>San Francisco, San Diego, and Los Angeles exhibited the largest gains from July 2009, all of which increased by over 7%. Tampa, Charlotte, and Las Vegas showed the largest declines from July 2009, all of which decreased by at least 3%. </li></ul><ul><li>The Conference Board’s consumer confidence index decreased by 8.8% In September to 48.5. </li></ul><ul><li>The decrease in September was primarily driven by a decline in consumer expectations over the next six months, which decreased by 9.2% in September. </li></ul><ul><li>Home values are holding on, but without a recovery in confidence buyers will continue to hesitate. </li></ul>Economic Updates Produced by NAR Research
  5. 5. Wednesday, 09/29/10 <ul><li>Mortgage purchase applications increased 2.4 percent for the week ending September 24 th . Applications are slightly up from July and August but remain near 13-year lows. Purchase applications do not take into consideration all-cash purchases which according to the July REALTORS® Confidence Index made up 30 percent of transactions. </li></ul><ul><li>Mortgage purchase applications were down 32.4 percent from the same week a year ago. </li></ul><ul><li>Most of the gains in purchase applications came from the government (FHA) portion of the index which rose 4.5 percent, conventional purchase applications were up slightly at 0.8 percent. </li></ul><ul><li>Refinances fell 1.6 percent yet still made up 81 percent of mortgage activity as mortgage rates fell to a new survey low of 4.38 percent for a 30-year fixed mortgage. </li></ul>Economic Updates Produced by NAR Research
  6. 6. Thursday, 09/29/10 <ul><li>The labor market continues to show signs of improvement, with new claims for jobless benefits falling more than expected. Initial unemployment claims dropped by 16,000 to 453,000 last week. The four-week average fell by 6,250 for the fifth straight week and is also at its lowest level since the end of July. It is lower a significant 30,000 from a month ago. Initial claims need to fall below 400,000 for job creation to outpace job losses. Continuing claims are also trending down with drop of 83,000 in the week ended 9/18, to 4,457,000. </li></ul>Economic Updates Produced by NAR Research
  7. 7. Thursday, 09/29/10 (cont’d) <ul><li>The largest decrease in new claims was in Florida, due to fewer layoffs in the construction, trade, service, manufacturing and agriculture industries. California saw the largest increase in claims due to the return to a five-day work week after the Labor Day holiday and more layoffs in the service industry. </li></ul><ul><li>The third revision of the second quarter GDP edged up slightly due to higher consumer spending and a higher estimate for inventories. It is at 1.7 percent annualized from 1.6 percent in the second revision. Real GDP in the second quarter is up 3.0 percent year-over-year, compared to 2.4 percent in the first quarter. The inflation measure remained unchanged. </li></ul>Economic Updates Produced by NAR Research
  8. 8. Friday, 10/01/10 <ul><li>Personal Income and Outlays were released this morning and the headline figure rose 0.5%. The wage component was 0.3%, down slightly from July’s increase of 0.4% but still strong. </li></ul><ul><li>Also in this release was the report on Personal Consumption Expenditures (PCE), the growth of which is used as a measure of inflation like the Consumer Price Index. PCE rose 0.2% from July to August and was up 1.7% compared to August of 2009. The PCE index excluding food and energy prices rose just 0.1% from July, while the energy goods and services component jumped 2.3% over this same period. </li></ul><ul><li>Construction spending rose 0.4% in August after falling 1.4% in July. The private sector contribution was weak as the increase resulted from a 2.5% increase in public spending, which more than offset the 0.9% decline in private spending. Spending on public highways rose 5.1%. </li></ul>Economic Updates Produced by NAR Research
  9. 9. Friday, 10/01/10 (cont’d) <ul><li>The ISM manufacturing index was released this morning as well. A score above 50 points to an expansion in manufacturing. The index measured 54.4, down slightly from August and has been trending lower since March. Of more concern are the rise in inventories, up 4.2 points to 55.6, and the decline in new orders, down 2 points to 51.1, a pattern that points to further deceleration in this sector. This weakness was reflected in manufacturing employment which eased from 60.4 to 56.5. </li></ul><ul><li>William Dudley, President of the New York Federal Reserve Bank, commented earlier this morning that the Fed would resume purchases of Treasuries and mortgage backed securities if signs of economic weakness continued. In this remarks, Mr. Dudley suggested that lower rates would help to support home prices, make home purchases more affordable, and enable many households to refinance their mortgages at lower rates. All of these results, he suggested, would help to stimulate the economy. </li></ul>Economic Updates Produced by NAR Research
  10. 10. Friday, 10/01/10 (cont’d) <ul><li>Price growth is being driven by fluctuations in energy prices, while core prices and wages remain relatively flat. This trend gives the Fed room to use quantitative easing to stimulate demand, while the private sector weakness pointed out in today’s construction report and ISM index results suggests that the Fed will be more likely to use it. </li></ul><ul><li>  </li></ul>Economic Updates Produced by NAR Research