NMP Market Barometer: September 2009 Part I
Provided exclusively to National Mortgage Professional Magazine by David Beadle, president of BestInfo, Inc., home of 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.
Rate Impact: 7
The focus will be on the ISM manufacturing survey at 10AM ET, although the sector only accounts for less than 20 percent of the U.S. economy. However, what most people don't realize is that the United States still is the top manufacturing country in the world (when measured in dollar volume), a fact which has become lost in the fascination with overseas output. The big question for economists is whether the recent improvement in factory capacity utilization (which is still way below average) signals the start of an economic recovery or merely an inventory adjustment boost caused by depleted inventories. Put another way, will the second half of this year see a resurgence which turns out to be temporary in nature or a sign of better times ahead?
Q2 Productivity (Revised)
Rate Impact: 5
When the April through June preliminary productivity and unit labor cost figures were released on Aug. 11, the emphasis indeed was on the word "preliminary." Approximately six hours after the data were published, the Bureau of Labor Statistics was forced to issue a notification that the labor cost numbers had been incorrectly calculated. This is not the first embarrassment for the agency. More than a year ago, the BLS experienced a complete breakdown in its unit responsible for publishing the monthly producer price index report, apparently due to a lack of budget resources. So, here's the question: can Wall Street and the general public rely upon the accuracy of the avalanche of monthly data released by the government? Even in the best of times, the so-called "benchmark revisions" to previously released statistics as important as the payroll jobs report result in what can be a significant reassessment of what had been perceived as true when the initial numbers were published. The old saying is probably true--you get what you pay for.
Rate Impact: 10
And speaking of the labor market, there will be close scrutiny given to the latest unemployment rate figures after the fiasco a month earlier when the government said the unemployment rate dipped to 9.4 percent from 9.5 percent when just about everyone was looking for an increase to 9.6 percent. This trick was the result of the statisticians noting a decline in the number of people actively looking for work, perhaps due to very tight labor market conditions. After awhile, being told "no" (or nothing at all) can result in even the most dedicated job seekers giving up for awhile. If the media were to stop focusing on the "massaged" unemployment rate and focus instead on the broader measure of the number of folks without a job, the result would be closer to the truth. We are experiencing double-digit unemployment, which explains why the national home foreclosure rate continues to rise despite the government's efforts to slow it down.
July Consumer Credit
Rate Impact: 3
The hard times for consumers brings us to the issue of new personal borrowing to make purchases. It turns out that consumer credit outlays have fallen for a record five-consecutive months. And the situation is unlikely to be reversed until hiring returns. But hiring is unlikely to return until the economy is stimulated, and the government has done a pathetic job of making it happen, since the vast majority of the so-called "stimulus" money appropriated by Congress earlier this year has yet to be spent due to a seemingly endless tangle of bureaucratic red tape. In Europe, several major countries decided to send checks directly to taxpayers and the result has been a speedier turnaround. In fact, the entire "cash for clunkers" idea began in Europe and eventually spread to the United States. But due to the power of entrenched special interests in Washington, Congress reportedly has been providing favors to the few rather than a boost to ordinary citizens who traditionally have made a 70 percent contribution to GDP by shopping until they dropped. Well, they finally did drop, and that's the root of our current problems.
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