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Weekly Update- Economic Advisor

2/13/2015

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Last week's voluminous economic headlines featured a mixed bag of gains in personal incomes and consumer credit, while consumer spending dipped, the unemployment rate saw a slight increase, and layoffs increased as well.

Unemployment

Let's start with the unemployment news: The economy added 257,000 jobs in January, while unemployment rate for January ticked up by a tenth of a percent to 5.7 percent for the month, according to last week's Bureau of Labor Statistics report. Also, hourly earnings went up 12 cents to an average of $24.75 for the month.

So why did the unemployment rate go up while the economy actually added jobs? The answer is that more employable people were joining the job market. The Bureau's civilian non-institutional population, which is a fancy way of saying, "all employable Americans", grew by 696,000 people to hit 249,723,000.

Moreover, the labor force participation rate, which describes the number of employable Americans either with a job or looking for one, increased by 0.2 percent to 62.9 percent, while the number of discouraged workers (out-of-work Americans who have given up on hunting for a job) dropped to 682,000, which was down 155,000 people from the same period a year ago.

The net-net is that employment is on good enough an upswing and more workers want in on an economy that has added 1 million jobs since November.
"These are pretty amazing numbers," IHS Inc. Chief Economist Nariman Behravesh told Bloomberg. "The January number is strong, but then you've got sizzling November and December numbers too. And then you've got the wage gains."



Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed saw a moderate gain after a massive plummet from two weeks ago. Initial jobless claims for week ending Jan. 31 grew to 278,000, a gain of 11,000 claims from the preceding week's total of 267,000, the Employment and Training Administration reported last week.

The four-week moving average, considered a more reliable measure of lay-off activity, dipped to 292,750, a decline of 6,500 claim from the prior week's revised average of 299,250.


Incomes and Spending

Personal incomes grew by 0.3 percent to hit $41.3 billion, as did disposable personal income (DPI; income after taxes), which increased 0.3 percent $35.8 billion, according to last week's report from the Bureau of Economic Analysis. Meanwhile, personal consumption expenditures (PCE; consumer spending) dropped $40.0 billion, or 0.3 percent.

Meanwhile, personal saving — DPI less PCE, personal interest payments, and personal current transfer payments — grew to $643.2 billion in December from $568.2 billion in November. Similarly, the personal saving rate — personal saving as a percentage of DPI — grew 4.9 percent in December, compared with 4.3 percent in November.

"Consumers appear to be saving most of their recent windfall from lower gasoline prices," PNC Financial Services Group senior economist told Morningstar. "However, consumer spending growth will be solid in 2015 thanks to more jobs, higher wages, and lower energy costs. Households will be able to both spend more and save more this year."


Consumer Credit

Last but not least, consumer credit grew by 5.4 percent in December to hit a total of $3.3 trillion, a $14.7 billion gain, the Federal Reserve reported last week.

Encouragingly, the big gain was in revolving debt, such as credit cards, which grew 7.9 percent to $887.9 billion. This showed an increased willingness on the part of Americans to use credit cards for their spending. Meanwhile, non-revolving debt, such as student and car loans, showed a healthy 4.5 percent increase to reach $2.4 trillion for the month.



This Blog is for informational/advertisement purposes only and is not considered an offer to extend credit. Products are subject to change without notice. The information contained herein may not be applicable to every situation or jurisdiction, and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.
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February NewsFlyer

2/10/2015

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Preparing Your Home for an Open House

2/6/2015

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After you’ve set the date and posted pictures of your house online, you need to get your house into tip-top shape for those up-close looks. Remember though pictures online are the first impression given to agents wanting show your house so make sure your house is presentable that way they will want to show your house.

2 Weeks Before
 
  • Reserve a trusted cleaning service for the day before your open house.
  • If you’ve never used one before, have a trial cleaning to make sure you get someone you really like; then request that same person to clean for your open house.
  • Fix chipped paint spots (outside and inside).
  • Plant flowers.
  • Repaint bold walls with neutral colors.
  • Unclutter closets and bookshelves.
  • Secure a storage facility with an open unit (or your parents’ basement).
  • Make plans for pets to be away starting 24 hours before open house.
  • Have rugs cleaned and floors polished.
 1 Week Before
 
  • Trim hedges.
  • Clean gutters.
  • Move excess furniture, appliances, books, clothes, and canned goods to the storage unit (basically, you want to make the house, closets, and cabinets look as spacious as possible).
  • Scrub the doors and deck.
  • Create handouts (or make sure your Realtor does) so visitors can take information about your house with them for reference.
 2 Days Before
  • Hide cords (even if it means unplugging electronics).
  • Hide traces of a pet or a smoker (air out your place as much as possible).
  • Lock up your valuables.
  • Verify cleaning service.
 1 Day Before
 
  • Check in on the cleaning service before they leave; make sure the house meets your standards.
  • Place handouts by the door.
  • Get a sign-in sheet ready so people can write down their names and contact info.
 Morning-Of
 
  • Open drapes and curtains to get maximum light.
  • Turn on lights in dark rooms.
  • Ensure temperature is comfortable throughout house.
  • Straighten up bedrooms and bathrooms.
  • Create a nice scent by grinding coffee beans or by baking cinnamon rolls in the oven on low.
  • Turn on soothing music at a low volume.
  • Leave the house (if you have a Realtor).


Agents and For Sell by Owners contact our office to see how we may help with your open house at no expense.

This Blog is for informational/advertisement purposes only and is not considered an offer to extend credit. Products are subject to change without notice. The information contained herein may not be applicable to every situation or jurisdiction, and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof. Credit to Nest.com
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FHA MIP Lowered

2/6/2015

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The Federal Housing Administration (FHA) has just reduced the annual Mortgage Insurance Premium (MIP), which could mean additional savings for your customers.

What’s changed?

The new change reduces the required annual FHA mortgage insurance premium from 1.35% to 0.85%. This lowers the cost of insurance for FHA loans and could mean a lower monthly payment for your customers. 

What could this mean for you?

The new FHA premium could result in saving more than two million FHA homeowners an average of $900 annually* and will allow qualifying first time home buyers to enjoy the benefits of a more affordable FHA loan with lower costs.

*Sourcing visit:
HUD.GOV Press Release - HUD No. 15-001

This Blog is for informational/advertisement purposes only and is not considered an offer to extend credit. Products are subject to change without notice. The information contained herein may not be applicable to every situation or jurisdiction, and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.
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Do Oil Prices Affect Mortgage Rates

2/6/2015

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It may be hard to see how the sharp decline in oil prices will affect the housing market. We can all see that home heating bills will be lower, and it will cost less to make trips to the home-improvement store! But there are relationships between oil, inflation, and interest rates that you may want to pay attention to that can help you instill a sense of urgency in your clients who are thinking of buying or selling anytime soon.

A really basic way oil and the housing market are connected is that when oil and gas prices drop, people have more disposable income, and therefore can spend more on a home purchase. According to housingwire.com, non-oil-producing states may see housing prices rise as the population realizes benefits from lower prices. Manufacturers may be able to increase production inexpensively and hire more workers as well. On the flip side, oil-producing states may see layoffs and a climb in unemployment, which translates to less disposable income and less money to put into a home purchase. Experts do caution that the changes may not take effect immediately.

A more complicated relationship exists between oil and interest rates and the bond market. In general, the bond market and interest rates have an inverse correlation — that is, when one goes down, the other goes up. Bond prices and interest rates are inversely related: as one goes down, the other goes up. However, bond yield — the interest earned — and interest rates move in the same direction: when one goes up, so does the other. So when a Treasury bond has a high yield, overall interest rates are also higher. With more disposable income, investors are looking to the bond market and putting more money there. More investors equates to a lower yield, or return, on the bond investment. So as the yield on bonds is dropping, so is the interest rate on mortgages. It's a complex relationship but ultimately it can benefit your business as more people look at investing in a new home.

Now, to throw a monkey wrench into that scenario, consider that if oil prices stay low, leading to lower unemployment and possibly wage increases as well, fewer people will buy bonds, yields will increase, and interest rates — including mortgage interest rates — will also increase. Whew!

So are declining oil prices good for the housing market? The answer is … kind of, for now. And how does that affect you? It’s a great way to let clients know that If they're looking to make a change in their home ownership, whether buying or selling, it's a good time to make a move while interest rates are low and home prices have not yet risen. Please encourage your clients to contact me today to discuss their personal financial situation and to see how they can benefit from today's economic situation.

This Blog is for informational/advertisement purposes only and is not considered an offer to extend credit. Products are subject to change without notice. The information contained herein may not be applicable to every situation or jurisdiction, and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.

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Last Week’s Economic News in Review

2/6/2015

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New home sales enjoyed a solid surge in December, lay-offs plummeted to a 15-year low, and consumers are feeling upbeat.

New Home Sales

New home sales jumped to a six-year high in December with sales of new single-family homes hitting an annual rate of 481,000, according to last week’s report from the Census Bureau and the Department of Housing and Urban Development. This marked an 11.6 percent gain over November’s revised rate of 431,000 and an 8.8 percent increase from December 2013’s estimate of 442,000.

Looking at price, the median sales price of new homes sold in December was $298,100; the average sales price was $377,800. In terms of inventory, the estimated number of new homes for sale at the end of December was 219,000, constituting a 5.5-month supply at the December’s sales rate.

Looking at year-end performance, an estimated 435,000 new homes were sold in 2014, which was 1.2 higher than 2013’s total of 429,000.

“On the whole, the combination of lower mortgage rates and solid labor market activity appear to have ignited a meaningful pick-up in sales activity,” Millan Mulraine, deputy head of U.S. research and strategy at TD Securities, wrote in a public statement.

Initial Jobless Claims

After a couple weeks of increases, initial jobless claims plummeted to a 15-year low. First-time claims for unemployment benefits filed by the newly unemployed during the week ending Jan. 24, plunged to 265,000, a decline of 43,000 claims from the preceding week’s revised level of 308,000, the Employment and Training Administration reported last week. This is the lowest level for initial jobless claims since April 15, 2000 when it was 259,000.

The four-week moving average, considered a more stable measure of lay-offs, dropped to 298,500, a decline of 8,250 claims from the prior week’s revised average of 306,750.

“The labor market’s in good shape going into 2015 and looks like it will be in good shape for the rest of the year,” RBS Securities Inc. economist Guy Berger told Bloomberg.

Consumer Confidence

With good news in housing and employment, consumer opinions on the economy were looking more optimistic. The Conference Board’s Consumer Confidence Index shot up to 102.9 January from December’s already encouraging 93.1 (a baseline of 100 was set in1985).

“Consumer confidence rose sharply in January, and is now at its highest level since August 2007 (Index, 105.6),” said Lynn Franco, director of economic indicators for The Conference Board. “A more positive assessment of current business and labor market conditions contributed to the improvement in consumers’ view of the present situation.”

The Present Situation Index, which describes how consumers feel about current economic conditions grew to 112.6 in January from 99.9 December. The Expectations Index, which describes how consumers feel the economy will fare in the near future, increased to 96.4 from 88.5.                                            

This week we can expect:
  • Monday — Personal incomes and spending for December from the Bureau of Economic Analysis; construction spending for December from the Census Bureau.
  • Tuesday — December factory orders from the census Bureau; car and truck sales for January from the auto manufacturers.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; the December balance of trade from the Census Bureau; preliminary fourth quarter labor productivity scores from the Bureau of Labor Statistics.
  • Friday — December consumer credit from the Federal Reserve; January unemployment rate, payrolls, earnings and workweek from the Bureau of Labor Statistics.

This Blog is for informational/advertisement purposes only and is not considered an offer to extend credit. Products are subject to change without notice. The information contained herein may not be applicable to every situation or jurisdiction, and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.
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