QUOTE OF THE WEEK… “The best preparation for tomorrow is to do today’s work superbly well.”–William Osler, Canadian physician and educator
INFO THAT HITS US WHERE WE LIVE… The work done in January in the housing market was done superbly well indeed, as Pending Home Sales were UP 4.5% over December and UP 9.5% versus a year ago. They’re at their highest level since April 2010, when home buyer tax credits were juicing up demand. Today’s demand is drawing down inventory in most areas, which is why the National Association of Realtors chief economist observed,”… we’re experiencing the strongest price growth in more than seven years.”
That view was doubly supported. The FHFA index of prices for homes financed with conforming mortgages was UP 0.6% in December and UP 5.8% the past year. The Case-Shiller index of home prices in 20 major metros, UP 0.9% in December, is UP 6.8% for the year, the biggest gain since 2006! Yet prices are still very affordable and mortgage rates remain low, so smart buyers are moving forward. New Home Sales shot up 15.6% in January, their fastest pace in five years. And they’re UP 28.9% from a year ago, to their highest level since July 2008.
BUSINESS TIP OF THE WEEK… The key to content marketing is compelling content. Instead of posting blog posts and videos about you and your company, focus on answering your customers’ most pressing questions – even if they’re the difficult ones.
>> Review of Last Week
NO WORRIES ON WALL STREET… While Washington politicians and the media got all hot and bothered over looming spending cuts mandated by the sequester, Wall Street remained sanguine. Sure, mindlessly trimming budgets across the board isn’t very smart. But reducing $3.8 trillion in government spending by $85 billion in sequester cuts neither dampens economic activity nor shrinks a $901 billion deficit by very much. So investors went their merry way and pushed stocks up to near-record levels. This was not mindless, as economic data came in mostly better than expected.
In addition to the housing good news, Consumer Confidence, Chicago PMI manufacturing, and Michigan Consumer Sentiment all bested estimates. Continuing Unemployment Claims dropped to 3.07 million, marking a new low in the recovery.All was not perfect, as the Q4 GDP Second Estimate inched up to a positive 0.1% growth, but 0.5% had been forecast. And Personal Income fell in January by 3.6%, the most in 20 years. To end on an up note, Core PCE Prices, the Fed’s favorite measure of inflation, were up just 0.1% in January and up just 1.3% over a year ago.
The week ended with the Dow up 0.6%, to 14090; the S&P 500 up 0.2%, to 1518; and the Nasdaq up 0.3%, to 3170.
Monday saw a flight to safety to bonds after the Italian election missed picking a winner. In the end, bonds did well in spite of the strong stock market. The FNMA 3.5% bond we watch ended the week up .16, at $105.25. Mortgage rates quietly edged lower on Friday, putting to a close their best week since mid-January. National average fixed mortgage rates remain near historical lows. The Mortgage Bankers Association index of purchase loan applications dipped slightly for the week but is 14% higher than a year ago.
DID YOU KNOW?… The debt ceiling (amount of debt that can be carried by the government) was created in 1917 to limit spending and hold the President accountable for financial decisions. But since then, it’s been raised many times.
>> This Week’s Forecast
ALL ABOUT JOBS… Economic observers will be single-mindedly focused on Friday’sJobs Report. Our painfully slow recovery in this area is predicted to continue, with around 165,000 new nonfarm payrolls added in February, not enough to budge theUnemployment Rate from a way-too-high 7.9%.