The market volatility expected by many this week fortunately never appeared. With a week of so much economic news, it was expected to be a roller coaster of week of ups and downs. However, to our surprise, the markets were stable and the stock market continued is slow and gradual climb.
The real estate reports continue to indicate that housing is a drag on the economy and thus far no real indication of a strong recovery is in the making. The bright spot in the reports is that there are signs of stability and that is the first step in a housing recovery.
The Housing Market Index dropped 2 points which reaffirms that the housing market continues to remain weak. The Housing Starts report also came in worse than expected in that the report showed a decline of 5.9% after January showed a 6.6% increase.
When you break down the numbers in the report, overall activity is not as bleak as the reports indicate. The majority of the decline in housing starts is confined to the multifamily sector versus single family dwellings. The multifamily starts dropped 30.3% whereas single family declined only .6%. Additionally, many are attributing the declines to the extreme weather experienced in the North East and Mid Atlantic States during the month.
Other key economic reports making headlines for the week:
• Industrial Production had a small gain of .1%. The results were lower than expected especially after a strong report in January however weather is believed to be a factor in the results.
• The Producer Price Index and the Consumer Price Index both continue to show that inflation is not an issue at the present time. The PPI dropped .6% which was more than expected. The greater than expected decrease is being attributed to the lowering of energy costs during the month. The CPI continues to show that prices on the retail level are not increasing.
• First time jobless claims for the week dropped slightly however the drop is not considered significant. Continuing jobless claims continues to be a significant concern in the job market in that the quest to reenter the workforce by many of the unemployed continues to be a major challenge.
The bright side on the economic front is that the FOMC reported that overall growth of the economy seems to be continuing. The speed of the recovery is expected to remain slow, but steady. The FOMC did not change monetary policy and have voted to keep interest rates the same. The FOMC also indicated that they expect to keep interest rates low for some time into the future.
Economic data to be released next week:
• Tuesday March 23rd - Existing Home Sales
• Wednesday March 24th - New Home Sales
• Thursday March 25th - Weekly Jobless Claims
• Friday March 26th - GDP and Consumer Sentiment
Have A Great Weekend!
JJ Mack
Mortgage Consultant
916-517-1800 x300
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