December 31, 2015
New unemployment claims rose sharply last week, the highest level since July. The increase might be a direct result of temporary holiday employment. Initial claims for state unemployment benefits rose 20,000 to a seasonally adjusted 287,000 for the week ended Dec. 26, the Labor Department said. Despite the increase, claims have been below 300,000 for 43 consecutive weeks–the longest stretch since the early 1970s–which is considered good.
One sure sign of a strengthening economy is Hollywood’s $11 billion record-breaking year at the box office. As moviegoers flocked to the year’s films in droves, the spoils go to two dominant movie churners: Universal Pictures and Walt Disney. In contrast, Paramount Pictures, 20th Century Fox, Sony Corp. and Lions Gate had a year that should go straight to VHS with losses across the board. Higher ticket prices commanded by luxury seating and high-tech screens aided the boon.
Finally, in the last day of 2015 trading, global markets bid adieu to a lackluster year without a rallying cry. European shares as well as Japanese and Shanghai stocks ended up. U.S. Stock markets will trade on a full day today. Will they end the year on a positive note? At the opening bell, the S&P 500 was fighting to remain positive, the Nasdaq was up, and the Dow was down in 2015. Bond markets close early at 2 p.m. EST. Markets will be closed tomorrow in observance of New Year’s Day.
December 29, 2015
The world’s wealthiest few are a little less rich this year. The Bloomberg Billionaires Index showed the 400 wealthiest individuals shed $19 billion in 2015. U.S. investor Warren Buffett lost $11.3 billion and Microsoft Corp. co-founder Bill Gates fell by $3 billion. In contrast, Amazon.com Inc. founder, Jeff Bezos, more than doubled his fortune to $59 billion. Global stock market swings are to blame. A wilder ride is expected in 2016 due to emerging-market currencies and the U.S. election.
For the average American, builders across the U.S. are paying attention to the affordability issue in housing. Many are shifting focus from larger, luxury pads to more affordable models catering to first-time homebuyers, especially in more expensive regions of the country. Small yards, lower-grade building materials and shrinking square footage are characteristic of the affordable housing movement.
And home prices continue to rise. The S&P/Case-Shiller U.S. 20-city Home Price Index recorded a slightly higher year-over-year gain in October 2015 at 5.5 percent versus 5.4 percent reported in September. San Francisco, Denver and Portland continue to report the highest year-over-year gains among the 20 cities with another month of double-digit price increases of 10.9 percent for all three. Phoenix had the longest streak of year- over-year increases, reporting a gain of 5.7 percent in October 2015, the eleventh consecutive increase in annual price gains.
December 28, 2015
Would you like that recliner gift wrapped? Big-ticket items like furniture spurred U.S. retail sales growth by 7.9 percent between Black Friday and Christmas Eve, according to MasterCard Advisors SpendingPulse. This was up from the 5.5 percent wrapped up last year during the height of holiday buying season. Online sales also grew 20 percent.
Adding fuel to financial woes, oil prices are near 11-year lows, coming in close to $37 a barrel today. Excess supply has more than cut prices in half since mid-2014. The Organization of the Petroleum Exporting Countries noted excesses of more than 2 million barrels per day. This oversupply is expected to continue the first half of 2016.
Finally, Freddie Mac ushers in the New Year with five predictions for 2016. Prediction one: the 30-year fixed-rate mortgage will average below 4.5 percent for 2016. Prediction two: despite gradually higher home loan rates presenting an affordability challenge, a strengthening labor market and pent-up demand will carry home sales momentum into 2016. Prediction three: home price growth will moderate to 4.4 percent. Prediction four: housing starts will increase 16 percent year-over-year and total home sales will increase 3 percent. Finally, higher interest rates will reduce the refinance volume and push overall mortgage originations lower in 2016 than in 2015.
December 23, 2015
The Commerce Department reported on Wednesday that New Home Sales rose 4.3% in November from October to an annual rate of 490,000 units. However, October was revised lower to 470,000 from 405,000, while estimates for November were to see sales rising to 505,000. New Home Sales are up 9.1% from a year earlier. Within the report it showed that inventories were at a 5.7 month supply, while the median price was $305,000, up 0.8% from a year earlier.
As the holiday shopping season got underway in November, Americans stepped up spending as the U.S. economic expansion continues, despite the sluggishness from abroad. Personal Spending rose by 0.3% in November from October, which measures what households pay for everything from washing machines to groceries. Consumer spending makes up about two-thirds of U.S. economic output. Within the report it showed that Personal Incomes rose 0.3% after rising 0.4% in October.
Black Knight Financial Services reported on Wednesday that foreclosure starts hit the lowest level in nine years in November. There were 66,000 foreclosure starts last month, down 9% from October and down nearly 10% from November 2014. The report also showed that the number of properties that are 30 or more days past due, but not in foreclosure is 2.491 million, which represents a month-over-month increase of 76,000 and a year-over-year decline of 546,000.
December 22, 2015
The National Association of REALTORS® (NAR) reported on Tuesday that Existing Home Sales in November fell 10.5% from October to an annual rate of 4.76 million units. It was the sharpest monthly decline since July 2010. A spokesperson from the NAR said that new regulations from TRID, affordability and lower inventories led to the decline. Sales declined around the nation, down 13.9% in the West, 6.2% in the South, 15.4% in the Midwest and 9.2% in the Northeast.
The government reported the final figures on economic growth for the third quarter of 2015 today revealing that Gross Domestic Product (GDP) edged lower to 2% from 3.9% recorded in the second quarter. Growth fell due to a larger trade deficit and a smaller buildup in inventories. So far in 2015, GDP is running at 2.16%. well below the historic rate of 3.3%. If the economy continues on this lackluster pace through December 31, it will have failed to reach 3% growth for the 10th straight year, marking the slowest stretch since the end of WWII.
With the holiday shopping season coming to a close, retailers were looking to the weekend before Christmas to boost sales in what has turned out to be a slow start to the season. This past weekend retailers did have increased store traffic, but they were led by promotions. In many parts of the country, the temperatures have been unseasonably high, which slowed sales of sweaters, winter coats, scarves and the like. So if you are heading out for some last minute shopping, there could be some great deals on winter apparel.
December 21, 2015
Just in time for those Americans taking the road for the holidays, gas prices have fallen below the $2 level. Motor club AAA reports that the national average price for a regular gallon of gasoline is at $1.99, the first time below $2 since March of 2009, which was at the height of the Great Recession. One key reason for the decline in oil prices is the glut of oil flowing through global pipelines. In some parts of the country prices can be seen at $1.60.
U.S. Stock markets are rising on Monday in the holiday shortened week. The Stock markets will be closing early on Thursday, December 24th at 1:00 p.m. EST, while the Bond markets will close early at 2:00 p.m. EST. All capital markets will be closed on Friday in observance of Christmas. Stock markets begin the week higher as investors look for bargains after the major Stock indexes fell last week.
The holiday spirit is alive and well in Monroe County, Georgia. Last week an anonymous donor gave $5,000 to the sheriff’s office and asked if the deputies could pull over people with minor violations and instead of giving them a ticket, the deputies handed out $100 dollar bills in an effort to help out during the holidays. The spirit of the holiday season is alive and well.
December 18, 2015
Freddie Mac reports that even in the midst of the Federal Reserve raising the benchmark short-term Fed Funds Rate, mortgage rates may see modest increases, but will stay at historic lows in 2016. Freddie went on to say that home sales will remain strong next year, while refinance activity should somewhat cool. Analysts at sister company Fannie Mae said the current fixed of 3.97% will rise only to 4.1% next year this time.
With millions of young Americans entering the workforce or already working, many are straddled with student loans to pay off. With the Federal Reserve raising short-term interest rates earlier this week, the question many are asking is that will their interest rates go up for their existing loans? The answer is no. Those already with loans will not see the rate go up, for they are fixed rates over the life of the loan. It is possible that borrowers taking out new student loans next year may feel a rate increase. The bulk of student loans are issued by the federal government, so as mentioned, those rates will not increase. However, those with private student loans often carry a variable rate and could edge higher.
December 17, 2015
The Federal Reserve Bank (the Fed) of the U.S. finally raised its short-term interest rate for the first time in nearly a decade yesterday. There is a misconception amongst consumers that mortgage rates automatically will push higher because of this. The Fed, however, does not control long-term rates, which are actually based based on economic conditions and inflation expectations. On the other hand, consumers will be impacted as the following rates are adjusted higher – short term interest rate loans, credit card rates, HELOC rates, and auto, business and student loans.
Americans filing for first-time unemployment benefits declined in the latest week, signaling ongoing improvement in the labor markets. Weekly Initial Jobless Claims fell 11,000 in the latest week to 271,000, the 41st straight week below the 300,000 level. That is the longest stretch since the early 1970s. The four-week moving average of claims, which irons out seasonal abnormalities, remained unchanged at 270,500. Continuing claims or those who still receive benefits fell 7,000 to 2.24 million.
Fannie Mae released its December 2015 Economic and Housing Outlook this week revealing that economic activity in the fourth quarter appears to be weaker than expected. The report went on to say that real consumer spending is expected to rebound early next year amid a tightening labor market and a renewed decline in gasoline prices, helping to offset persistent economic headwinds. “Home sales will likely remain subdued in the near term, but private residential construction spending started the fourth quarter on a strong note and housing demand is looking up as we head into next year,” said Fannie Mae Chief Economist Doug Duncan.
December 16, 2015
The housing sector is ending the year on a high note! The Commerce Department reported on Wednesday that Housing Starts in November rose 10.5% from October to an annualized rate of 1.173 million units, above the 1.135 million expected. The big jump in November nearly erases the 12% decline from September to October. Within the report it revealed that single-family starts were up 7.6 percent from October to the highest level since January 2008. Housing Starts are up nearly 17 percent in November from a year earlier.
Americans are gearing up for the end of year holiday traveling to Grandma’s house in a big way. Auto club AAA predicts that year-end holiday travelers will hit over 100 million for the first time ever. AAA reports that 1 in 3 Americans will travel 50 or more miles between December 23 and January 3, which is a 1.4% increase over last year and the seventh consecutive year of travel growth for the holiday period. The auto club cites low gas prices at the pumps and a strengthening economy and labor market for the increase. AAA went on to say that driving will be the most popular way to travel.
The decline in gas prices this year has put some extra money in the pockets of American drivers. It is estimated that drivers saved about $540 in 2015 thanks to the low prices at local gas stations. And if you have two drivers in your household, that would double to $1,100. So, what are people doing with the extra cash? Dining out more. The low gas prices have also helped Americans buy a record number of new vehicles this year. If you think gas prices are low now at an average price for a regular gallon of gas at $2, 2016 may bring even lower prices.
December 14, 2015
Oil prices continue to drift lower hitting 11-year lows as a glut of oil supply flows through the global pipelines. West Texas Intermediate oil fell to $34.53 in today’s trading. The drop in oil prices has led prices lower at your local gas stations. The national average price for a regular gallon of gasoline is at $2.01, while prices have fallen below $2 a gallon in 41 states. Last year at this time prices at the pumps averaged $2.55, and prices have fallen from the $2.17 seen a month ago. The drop in prices could boost holiday spending, but we will see when the numbers are reported in a few weeks.
The two-day Federal Open Market Committee meeting kicks off on Tuesday and will culminate on Wednesday with the 2:00 p.m. ET release of the monetary policy statement. It is widely expected that the central bank will raise its benchmark Fed Funds Rates by a 1/4 point for the first time in nine years. The Fed has kept the fed Funds Rate near zero percent since 2008 in an effort to promote economic stability and job growth. The Fed Funds Rate is the rate in which financial institutions lend balances held at the Federal Reserve to one another on an overnight basis. The increase could raise interest rates on bank fees, car loans and credit cards.
Be on the lookout for the Grinch in your neighborhood when getting packages delivered from the Post Office, UPS, FedEx and the like this season. U.S. online sales during the season pose a big feast when those packages lay idle at your doorstep. A recent report shows that an estimated 23 million Americans have had packages stolen from their homes and the number is expected to increase as online shopping begins to overtake the traditional brick and mortar stores. So called “Porch Pirates” usually trail a delivery truck and pounce on the merchandise as soon as the driver is out of sight. Delivery companies are now giving alternatives to how they receive their packages. UPS is expanding its UPS Access Point network, which offers package pickup and drop off primarily at neighborhood convenience and grocery stores, dry cleaners and delicatessens to 8,000 U.S. locations and 22,000 worldwide by the end of this year.