NMP’s Market Barometer: July 2009 Part II
Provided exclusively to National Mortgage Professional Magazine by David Beadle, president of BestInfo Inc., the BestRates cell, pager and e-mail rate alert service for mortgage industry subscribers.
A reading of "1" has the lowest impact on rates, while "10" has the highest. Although carefully verified, data are not guaranteed as to accuracy or completeness. BestInfo Inc. cannot be held responsible for any direct or incidental loss or liability incurred by applying any of the information or opinions in this feature.
June Existing Home Sales
Rate Impact: 6
Home sales statistics are caught between a rock and a hard place. If sales begin to rise, there is a strong likelihood that prospective sellers who have delayed placing their homes on the market due to weak demand will rush to post a "for sale" sign on their lawn. The result will be another addition to already bulging inventories, swelled by the number of foreclosed homes. Meanwhile, a continuing cutback on consumer credit could put an additional squeeze on household budgets, resulting in additional foreclosure activity as the unemployment rate rises. And that sets the stage for a double-dip recession. The June new home sales report will be released on July 27.
July Consumer Confidence
Rate Impact: 5
It's no secret that consumer attitudes about the economy have been one step away from depressed. Even if respondents to surveys claim they are feeling a bit better about the outlook, all it takes is a surge in gasoline prices or a drop in the stock market to trigger another tale of woe. And at the end of the day, it doesn't matter what people say, but rather, what they do with their money. Right now, most consumers are sticking to the basics. So long as this trend persists, the economy will be unable to expand at anything close to its previous pace. That's because consumer outlays account for over two-thirds of U.S. gross domestic product. And the government cannot perpetually spend enough money to approximate that $9 trillion per year.
Weekly Jobless Claims
Rate Impact: 8
The layoff figures showed a glimmer of hope in the third week of June when the number of continuing claims for weekly jobless benefits fell for the first time since early January. But hopes that it would be the start of a trend were dashed a week later, when continuing claims moved back up again. And the "new claims" figure never made it below 600,000, falling to 605,000 on June 6 before rising back up to May levels as the fallout from the automobile industry's extended summertime plant shutdowns spread to related industries. If consumers decide to keep their older vehicles either because they cannot afford new ones or because they cannot obtain low-rate financing, the manufacturing malaise may continue.
Rate Impact: 10
The initial reading on second-quarter Gross Domestic Product will be released on this date, and will be viewed in light of the 5.5 percent decline for the first quarter and the 6.3 percent decline in last year's fourth quarter. There's great hope on Wall Street that the expected negative Q2 results will put the worst of the long-running recession behind us, with positive GDP numbers from the third quarter onward. But if geopolitical turmoil flares, the H1N1 influenza pandemic returns with a vengeance or the tightening consumer credit noose escalates, the chances for a deepening recession will rise and it could be a long slog before the economy returns to any semblance of normalcy.
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