September 30, 2014
Housing data continues to stream in with mixed numbers. This morning, a leading housing price index showed that annual and monthly home appreciation rates continue to ease after the big numbers in 2013. The S&P/Case Shiller 20-city Home Price Index rose by 6.7% from July 2013 to July 2014, which was below the 7.4% expected and down from the 8.1% that was recorded in June on an annual basis. In addition, the 0.6% increase from June to July is down from the 1% gain from May to June.
Americans grew concerned over job prospects and the U.S. economy in September as a recent softening in growth prospects dampened consumer confidence. The Conference Board’s Consumer Confidence Index in September fell to 86.0 from 92.4 in August and below the 92.0 that was expected. It was the lowest reading since May. The assessment of the job markets declined more appreciably as the index fell to 15.1 from 17.6. In addition, consumers are somewhat mixed regarding their future earnings potential.
It is growing more costly to use a bank ATM not associated with your account, a new survey shows. Out-of-network ATM fees have surged to as high as $4.35 per transaction. The increase comes as lenders adjust to federal banking laws and regulations enacted after the 2008 financial crisis when there was a reduction in the fees that banks charge merchants for each customer who purchases goods and services with either a credit or debit card. What did banks do? They hiked overdraft and ATM fees along with a hike in how much money customers must maintain at the bank to avoid checking account fees. The consumer usually gets the short end of the stick.
September 29, 2014
U.S. housing data continues to flip between positive and negative. The National Association of REALTORS® (NAR) reported that August Pending Home Sales declined by 1.0% from July and comes after weak Existing Home Sales data and a strong New Home Sales data last week. Pending Home Sales were expected to decline by a modest 0.2%. The -0.2% in August comes after four straight months of gains. Pending Home sales are based on signed real estate contracts for existing single family homes, condos and co-ops. The NAR said, “With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”
Black Knight Financial reported today that home price appreciation is slowing in both month-over-month and year-over-year. The big gains that were seen in 2013 are coming back down to more normal levels. The real estate analytics firm reported that prices declined by 0.2% from June to July and are now down just 10.2% from the 2006 peak. Black Knight said that the home price index average is $241,000. In addition, seven of 20 largest states registered monthly declines in home prices.
Consumers ramped up spending in August due to the back-to-school shopping season, a positive sign for the U.S. economy headed into the major shopping season of the year. The Commerce Department reported that Personal Spending rose by 0.5% last month from July, which was just above the 0.4% expected. The solid spending numbers were somewhat impacted by a decline in the personal savings rate, which edged down from a 1 1/2 year high in July.
September 26, 2014
Economic growth surged in the second quarter of 2014, after the anemic reading that was seen in the first quart of this year. The big gains were led by an uptick in exports and business investments. The Bureau of Economic Analysis (BEA) reported that the final reading for 2nd quarter Gross Domestic Product rose to 4.6%, from the second reading of 4.2% and well above the -2.1% that was recorded in the first quarter of the year. The BEA said, “the general picture of economic growth remains the same” since the last reading on GDP was released.
Consumer Sentiment hit a 14-month high this month due to a rise in optimism surrounding the economy coupled with a brighter outlook on future earnings. The University of Michigan’s Consumer Sentiment Index came in at 84.6 for the final reading in September, the highest level since July 2013 and up from the 82.5 registered in August. The report signaled an uptick in consumer spending on the next 12 months, which is one of the main drivers of the U.S. economy.
U.S. consumers, already paying high prices for meat, will have to shell out even more money this year as prices for beef, pork and other meats continue to rise. The record high prices are due to a severe drought and diseases across the country. The Agriculture Department expects meat prices to rise 6.5% this year, up from the 5.5% that was forecasted a month or so ago, which is well ahead of the 20-year average increase of 3%. To break it down, beef and veal is expected to increase by 8.5% this year, pork up 8%, while chicken is expected to increase by 3.5%.
September 25, 2014
Homeowners gained back $1 trillion in home equity in the second quarter of 2014 from the year earlier period, led by a rise in home prices, reported analytics firm CoreLogic. CoreLogic reported that 946,000 residential properties regained equity in the second quarter though 5.3 million with a mortgage are still in negative territory. Home equity is the value of ownership built up in a home or property that represents the current market value of the house less any remaining mortgage payments.
A government report out this morning showed that orders for products lasting more than three years posted its largest decline on record in August, due to big gyrations in aircraft orders. The Commerce Department reported that August Durable Orders fell by 18.2% after a 22.5% gain in July, which was the highest gain on record. However, within the report, most components were positive. In addition, when striping out volatile transportation, orders were up 0.7%.
The Labor Department reported that Americans filing for first time unemployment benefits rose by 12,000 in the latest week to 293,000. Expectations were calling for a rise to 300,000. Weekly Initial Jobless Claims continue to hover near pre-recession levels as the jobs market regains its footing. The four week moving average of claims, which irons out seasonal abnormalities, fell 1,250 to 293,500. The Labor Department said there were no special factors impacting this week’s initial claims.
September 24, 2014
Americans purchasing new homes surged in August as sales pushed to the highest level in six years and was the biggest monthly percentage increase since January 1992. The Commerce Department reported that August New Home Sales rose by 18% from July to an annualized rate of 504,000 units, well above the 435,000 expected. The gains were led by a 50% rise in the west from July, while the south came in at a distant second of an 8% increase. The 504,000 units are up 33% from August of 2013.
The home loan lending arena reversed course in the latest week as volumes decreased in both refinancing and purchases. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total home loan application volume, fell by 4.1% for the week ending September 19. The refinance index declined by 7%, while the purchase index fell 0.3%. Home loan rates did tick up last week, which was one of the reasons for the decline in volumes.
In a sign of the times, Coke, Dr. Pepper and Pepsi have all said that they will be cutting the number of sugary drink calories by one-fifth in about a decade. The big three soda makers have also pledged to reduce calorie consumption in sugary drinks by 20% on average by 2025. The adult obesity rate in the U.S. is now more than one-third, 34.9% or 78.6 million Americans, while obesity related conditions include heart disease, stroke, type 2 diabetes and certain types of cancer. Sedentary lifestyles coupled with a high intake of sugar related products are the main causes behind the ever growing obesity problems in the U.S.
September 23, 2014
The Treasury Department announced on Monday that it will begin cracking down on “tax inversions.” This would target U.S. companies that are looking to move their headquarters overseas by purchasing a foreign company and switching citizenship to that country in an effort to avoid paying U.S. taxes. Just recently, President Obama called the tax inversion moves, unpatriotic, while some high ranking Democrats have introduced legislation to curb inversions.
Government sponsored entity Fannie Mae released its September 2014 Economic and Housing Outlook on Tuesday, revealing that a recent rebound in business investment has bolstered expectations for solid economic growth during the remainder of 2014. Fannie Mae predicts that Gross Domestic Product should move to 3% for the second half of the year, which was inline with its previous forecast and above the 2% recorded in the first half. In housing, the firm said that recent housing activity isn’t quite as positive, having shown only lukewarm growth since a promising start to the third quarter.
A recent survey reveals that 22% of workers laid off in the past five years have yet to find employment. Some 54% of laid off workers said they received unemployment benefits once they were let go, but 83% of those who lost their jobs said they ran out of benefits before they found jobs. In 2010, there were 6.6 million Americans unemployed, which has since fallen to 3 million.
September 22, 2014
Sales of previously owned homes declined from July to August to the first monthly decline in five months, due in part to a decrease in all cash Sales. The National Association of REALTORS® (NAR) reported August Existing Home Sales fell by nearly 2% from July to an annual rate of 5.05 million units. Sales increases in the Northeast and Midwest were offset by declines in the South and West. Lawrence Yun, NAR chief economist said, “As long as solid job growth continues, wages should eventually pick up steadily to improve purchasing power and help release pent-up demand for buying.”
Popular tech giant and consumer products maker, Apple, said that sales for the new iPhone 6 and iPhone 6 Plus were through the roof this past weekend, which set a new internal record at Apple. Sales were 10 million alone this past weekend, which shattered the previous record of 9 million for the 5s and 5c. The 10 million in sales doesn’t include one of the world’s largest smart phone markets, China. Apple is waiting for government approval from China to begin selling the new smart phones in that country.
Gas prices at the pump continue to fall this week as the summer driving season officially ended today with the first day of fall. The national average price for a regular gallon of gasoline is at $3.33, down from $3.43 last month. Pushing prices lower is cheaper prices for oil along with the transition to winter-blend gasoline, which is cheaper to produce. Motorist club AAA expects the national average to fall another 10-20 cents by the end of October. In parts of the country, a regular gallon of gasoline has fallen below $3.
September 19, 2014
Headlines out of Europe today saw that the Scottish people voting no on independence, remaining under the rule of the United Kingdom, which it has been under for 307 years. The no vote put to rest the mechanics of which currency Scotland would use if the vote was yes. The news pushed global Stock markets a bit higher.
The credit card breach at Home Depot just recently has taken a turn for the worse this week. The security breach has now reached 56 million credit and debit cards, much worse than the breach at Target last year. The recent breaches signal that large retailers are particularly vulnerable to cyber-attacks. Home Depot currently says that the breach is costing the company $62 million, which could grow larger by the end of the year.
In what could be largest Initial Public Offering (IPO) in the U.S. and the biggest IPO ever, today Chinese e-commerce firm Alibaba will debut its shares on the New York Stock Exchange under the ticker symbol, BABA. The shares were priced at $68 last night, with indications that the first trade could be in the mid-$80 range. The price of $68 raised $21.8 billion, the largest sum for a company listed on a U.S. exchange and values the company at $168 billion, larger than Walt Disney and Coca Cola.
September 18, 2014
The housing markets received some sour news today as sales for new home construction declined in August from July. The Commerce Department reported that New Home Sales fell by 14.4% last month to an annualized rate of 956,000 units, which was below the 1.117 million rate in July and below the 1.045 million expected. The sector continues to improve, but tight credit conditions coupled with a still higher than normal unemployment rate is constraining further gains. Single family homes declined by 2.4% while multi-family dwellings plunged nearly 32%.
Americans filing for unemployment benefits plunged in the latest week to the lowest levels since July, which could signal that the low amount of job creation in August could be just a one-off aberration. The Labor Department reported that Weekly Initial Jobless Claims fell by 36,000 in the latest week to 280,000, near a 14-year low, and well below the 305,000 expected. The four week moving average, which irons out any seasonal abnormalities, fell by 4,750 to 299,500. The data suggests that the jobs market continues to improve, and will be a key factor to the members of the Federal Reserve.
The improving U.S. economy and labor markets have caused the poverty rate to decrease significantly in 2013 for the first time since 2006, reported the Census Bureau. The U.S. poverty rate fell to 14.5% last year from 15% in 2012. The Latino population saw the biggest decline in the poverty rate with a 2.1% decline while median household income posted its first increase since 2000. Within the report it showed that those Americans with year-round full-time jobs increased by nearly 2.8 million to 105.8 million in 2013.
September 17, 2014
The Labor Department reported today that consumer prices pushed lower in August mainly due to a big drop in energy prices, which offset advances in food and shelter costs. The Consumer Price Index (CPI) fell by 0.2% last month, below the 0.0% that was expected and was the first decline since April 2013. When stripping out volatile food and energy, prices were unchanged and was the first unchanged reading since October 2010. CPI measures the average change over time in the prices paid by consumers for a market basket of consumer goods and services.
Home builder confidence in the newly built single home sector of the market, hit its highest level since November of 2005 in September. The National Association of Home Builders (NAHB) reported that its Housing Market Index rose by four points this month to 59, which was above the 56 that was expected and up from the 55 recorded in August. “Since early summer, builders in many markets across the nation have been reporting that buyer interest and traffic have picked up, which is a positive sign that the housing market is moving in the right direction,” said NAHB Chief Economist David Crowe.
Holiday season hiring is expected to hit the highest level this year since 1999, as reported by outplacement firm Challenger, Gray & Christmas. The busiest shopping season of the year is right around the corner as many retailers have already begun to display holiday scenes in their stores. Challenger estimates that retailers will add more than 800,000 seasonal jobs for the first time since 1999. In 2013, there were 786,200 workers added to the payrolls of retailers around the country. Yesterday, United Parcel Service reported that it will be adding twice as many seasonal drivers, to the tune of 95,000, than it did in 2013.