October 31, 2014
Consumers across the nation finished October feeling the best they have in seven years as the prospects for economic expectations rose to the best level in seven years. The final reading on October Consumer Sentiment rose to 86.9, the highest reading since July 2007 and up from the 84.6 recorded in September. The survey’s chief economist, Richard Curtin, said that six in ten respondents said the economy has improved lately, the highest proportion in more than ten years.
The Commerce Department reported today that Personal Spending in September declined by 0.2% after a big shopping spree in August, which was mostly likely fueled by back-to-school spending. The decline was led by falling energy prices and an ease in auto sales. The spending index, which makes up 70% of economic activity, has only declined three times since the recession ended in 2009.
An unexpected move by the Bank of Japan (BOJ) was announced today as it increased the size of its stimulus program, sent global Stock markets higher, which has caused the major Stock indexes here in the States to hit all-time high intraday records. The BOJ announced the measures to to dwindling inflation along with weak economic data. The U.S. Dow Jones Industrial Average hit a record high of 17,395 today, which is up from 6,547 seen on March 9, 2009 at the height of the recession.
October 30, 2014
U.S. growth in the third quarter of 2014 declined from the previous quarter led by broad based gains across the economy. Government spending was a big driver of the gains due to a pickup in defense spending. The Gross Domestic Product (GDP) rose by 3.5% in the third quarter, down from the robust 4.5% recorded in the second quarter. However, within the report it showed that consumer spending grew at a 1.8% rate, down from the 2.5% recorded in the second quarter, while business investment also declined. GDP measures the value of the production of goods and services in the U.S.
The Federal Reserve ended its easy money policies at its Federal Open Market Committee meeting, which has been an ongoing program since early 2009. The Federal Reserve has been purchasing Mortgage Backed and Treasury securities in an effort to spur on economic and job growth. The Unemployment Rate has gone from 10%, at the height of the Great Recession, to the current rate of 5.9%, while Gross Domestic Product has gone from -8.2% in the fourth quarter of 2008 to the present level 3.5% . The next step the Federal Reserve must take is to begin raising short term interest, which have been near zero percent since December 2008.
Rental prices for apartments have risen 7% in the past year, while in the same time wages have risen just 1.8%, which has made it increasingly harder for Americans to afford the payments. The average renter now spends about 30% of their income on rent, up from the norm of 25%. Real estate experts predict that rental prices will continue to rise for the foreseeable future. In a recent report, 85% of property managers have raised their rental rates over the past year.
October 29, 2014
The big foreclosure problems that occurred after the Great Recession seem to be easing in the past few years as the housing sector continues on its road to recovery. Leading global property information, analytics and data-enabled services provider CoreLogic reported today that completed foreclosures in September totaled 46,000, down nearly 33% from the 68,000 completed in September 2013. In addition, completed foreclosures are down a whopping 61% from the peak in 2010.
A recent poll conducted this month by CNN/ORC International found that 38% of Americans feel that the economy is in good shape, which is down from 42% in September. The survey revealed 62% view economic conditions as somewhat poor or very poor. There was somewhat of a disconnect – 43% of urban Americans say it’s in good shape compared to 39% of those surveyed in suburban areas and 31% in rural areas. Rounding out the poll, 52% feel the economy will be in good shape a year from now, while 46% say it will be in poor shape.
In keeping with its values, CostCo announced today that it will be closed on Thanksgiving, bucking the trend of many retailers who have chosen to open on the great American holiday. CostCo said that its employees work very hard during the holiday season and CostCo feels that employees “deserve the opportunity to spend Thanksgiving with their families.” One complaint from Wall Street about CostCo is how well it pays its employees. The company’s hourly wage is around $20.89, which is well above the minimum wage. In addition, the company offers low premium health insurance, and matching and profit sharing in their 401(k) plans.
October 28, 2014
The Census Bureau reported today that the U.S. homeownership rate fell to a 20-year low as stricter credit terms sidelined first time home buyers. The rate now stands at 64.4% in the third quarter of 2014, down from 64.7% in the second quarter, which is the lowest since the first quarter of 1995. In addition to the tighter credit standards, slower wage growth is also holding back entry-level buyers from purchasing their first homes.
Home price gains across the nation continue to ease and come back down to more normal levels turning in their smallest year-over-year gains since November 2012. The August S&P/Case-Shiller 20-city Index rose by 5.6% year-over-year, down from the 6.7% recorded in July on an annual basis. Within the report it showed that annual gains fell in 19 of the 20 cities. David Blitzer, chairman of the Index Committee at S&P said, “The deceleration in home prices continues but despite softer price data, other housing data perked up as figures for housing starts, permits and sales of existing homes were all up.”
Consumer Confidence surged in October due to gains in the jobs sector along with declining gas prices at the pump. The Conference Board reported that its Consumer Confidence Index rose to 94.5 this month, which was well above the 87.2 expected and above the 86.0 recorded in September. The report also revealed that those anticipating more jobs in the months ahead increased to 16.8% from 16%, while expectations for income growth rose to 17.7% from 16.9%.
October 27, 2014
Americans who purchase gas to fuel their cars have been receiving a sort of tax break in the past five months as the price of regular gas at the pump continues to decline. The national average price for a regular gallon of gasoline is at $3.04 a gallon as the price of crude oil declines. The drop in oil prices comes on several factors, global supplies are rising, a rising dollar and after a report was published by Goldman Sachs that West Texas Intermediate (WTI) could fall to $70/barrel in the second quarter of 2015. The current price of WTI is $80/barrel, a two-year low.
The National Association of REALTORS® (NAR) reported on Monday that the number of contracts signed to purchase previously owned homes rose by 0.3% in September, reaching its second highest level since August 2013. The index was expected to rise by 0.5% after the 1% decline in August. The report signals that the housing recovery is well on its way back to more normal levels. The Pending Home Sales index measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops.
Information services company Markit reported on Monday that the service sector of the U.S. economy eased a bit in October compared to September and fell to its lowest level in six months. The index fell to 57.3 this month from 58.9 in September. In addition, Markit reported that new business growth slipped to a three-month low. Markit reported that the index, which is based on approximately 85% of usual monthly replies, remained well above the 50.0 mark that separates expansion from contraction, but the latest reading signaled a further moderation in overall activity growth from the post-crisis peak seen in June.
October 24, 2014
The foreclosure sector of the housing market received positive news this morning after Black Knight Financial Services reported that foreclosure inventory for September is at the lowest level since February 2008, at 1.76% of active mortgages. However, foreclosure starts rose 12% last month, while the inventory of seriously delinquent loans declined by 25,000.
Fannie Mae reported late yesterday that it appears that U.S. growth in the second half of this year will exceed 3%, which could be a building block for higher growth in 2015. The mortgage provider went on to say that the global economic slowdown has had little negative impact on the fundamentals of the U.S. economy so far. In the housing sector, Fannie anticipates that overall home sales will be weaker in 2014 than in 2013 and sees a moderate pickup in total home sales in 2015.
The Commerce Department reported on Friday that New Home Sales in September rose by 0.2% to an annual rate of 467,000, which was below the 475,000 that was expected. However, August was revised lower to 466,000 from 504,000, and both June and July were also revised lower. The September data pushed sales to a six-year high, but the lower revisions in the three previous months signals the housing recovery remains on shaky ground. Within the report it showed that the median home price fell 4% to $259,000 from a year ago.
October 23, 2014
Americans who are underwater on their home mortgages received some good news today. RealtyTrac reported that the amount of seriously underwater properties fell to the lowest level in two years. There are now 8.1 million residential properties seriously underwater in the third quarter of 2014, down from 9.1 million in the second quarter and down from 10.7 in the third quarter of 2013.
RealtyTrac estimates that there is $1.4 trillion in negative equity across the U.S. After hitting 14-year lows in the previous week, Americans filing for first time jobless claims rose in the latest week. However the 283,000 in claims, which were up 17,000 last week, are still at historically low levels, signaling that the sector continues to improve. Weekly Initial Jobless Claims have remained below the 300,000 level for six straight weeks, the first time it has happened since early 2006.
Are you taking enough vacation time? It is estimated that American workers are leaving an estimated $52.4 billion on the table by not taking all of their paid vacation time. Remember the old proverb, “All work and no play makes Jack a dull boy.” American workers are now taking the least amount of vacation time in 40 years. Workers have been forfeiting 4.9 out of 21 days paid vacation in comparison to the years from 1976 to 2000 when workers used 20.9 vacation days per year.
October 22, 2014
Consumer prices edged higher in September led by rising costs for food and housing, though offset by a decline in gas prices at the pump. The Consumer Price Index rose by 0.1% last month after a 0.2% decline in August and above the 0.0% that was expected. Within the report it showed that food costs were up 0.3%, beef prices up 2% (up 17% since January), while dairy products have been on a steady rise. Energy prices have declined 0.6% in the past 12 months and with lower prices at the gas pumps, it should put extra cash in the pockets of consumers for the holiday shopping season.
Home loan rates are now at 18-month lows, as reported by mortgage provider Freddie Mac last week. The decline in rates have led consumers to embark on refinancing their current mortgages at a rapid pace. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total loan application volume, rose by 11.6% last week with the refinance index soaring by a whopping 23%. The refinance index now stands at its highest level since November 2013 as consumers scramble to lock in the low rates. However, as late fall and winter sets in, which is typically a lull for buying homes, the purchase index fell by 5%.
In an unexpected move, Minneapolis based Target Corp. announced that it will offer free holiday shipping on all items as the retailer looks to compete better with the Amazon’s of online purchasing. The free shipping will begin Wednesday and last through December 20. Target is looking to bounce back from a weak 2013 holiday shopping season after the company suffered a major data breach in the early stages of the season, which cost Target $148 million. A spokesperson “for Target said “we believe our free shipping off will create excitement and incremental sales for Target.”
October 21, 2014
The National Association of REALTORS® reported today that sales of Existing Homes rose by 2.4% from August until September to the highest level this year. Sales rose to 5.17 million units on an annualized basis and above the 5.11 million expected. Within the report it showed that cash sales made up 24% of all transactions and down from 33% last year this time. However, sales are down 1.7% from the 5.26 million units recorded in September of 2013.
Consumer spending for candy, costumes and decorations this October is setting up 2014 as the most ever spent for Halloween. Spending is set to hit $7.4 billion this year and is making it the second-fastest growing holiday for consumer spending. The National Retail Federation said that 43% of shoppers start Halloween shopping in the first two weeks of the month, while just under 25% wait until the last minute.
Fast food giant McDonald’s reported on Tuesday that third-quarter earnings were worse than expected as the world’s largest restaurant company struggles with sales in other parts of the globe. President and Chief Executive Don Thompson said that there was a significant decline in the numbers from the same period as last year due to a higher effective tax rate, unusual events in Europe and Asia, as well as under performance here in the U.S. McDonald’s reported a profit of $1.07 billion in the latest quarter compared with $1.52 billion a year earlier.
October 20, 2014
Federal Housing Finance Agency’s Director Mel Watt will be speaking this week at the Mortgage Bankers Association’s conference in Las Vegas and could announce loosening of GSE credit standards. Rumors are swirling that Mr. Watt could lay out a plan to make credit more available to potential home buyers, many of whom have been cut off from securing a mortgage due to the tighter credit standards enacted after the housing crisis took place in late 2007.
A recent study done by non-profit Transamerica for Retirement Studies found that many companies across the nation say they have been hiring in the past year. The study went on to show that 74% of those polled say they have increased salaries versus 12% that have frozen salaries. Of the companies polled, 79% are offering 401(k) plans or similar plans up from 72% in 2007.
RealtyTrac reported last week that foreclosure filings, including default notices, scheduled auctions and bank repossessions increased in the third quarter of this year, which was the first quarterly increase since the third quarter of 2011. The minor increase was just 0.42% from the second quarter, but are down 16% from a year ago. In addition, foreclosure filings were down 9% from August and down 19% from a year ago. September was also the 48th consecutive month where foreclosure activity declined on a year-over-year basis.