Economic Indicators: Weekly Update for July 15, 2011

Every week the Research staff analyzes key data releases and explain what they mean for you and your business. In this update, we give the highlights of the most important data releases for the week of July 12-July 15, 2011, along with graphs that show the latest movement and overall trends.

At a glance, this table shows the forecast for some of the most pertinent weekly data for REALTORS® to keep in mind. This changes from week to week as new data becomes available. The directional shift notes the trend from last week’s numbers. For the full forecast from the latest Pending Home Sales release, click here (PDF).

Highlights for Tuesday, July 12, 2011:

• In a surprise, the trade deficit rose more than expected in May to $50.2 billion from $43.6 billion a month earlier.
• Headline exports weakened, but exports of capital goods as well as automotive vehicles, parts and engines continued to climb.
• The balance will likely shrink as we move into summer since gas prices have fallen.  However, the strength of U.S. exports reflects steady foreign demand for the goods that they need to expand production abroad.  This strength means jobs retained in the U.S. and growing economies abroad that will help drive the long-term U.S. economic expansion.  The weakness of the dollar due to the trade deficit will help the U.S. in the near term to export and to create jobs.

Highlights for Wednesday, July 13, 2011:

• The Purchase index decreased 2.6 percent from the previous week, indicating continued weakness in the housing markets.
• Refinancing activity declined 6.2 percent from the prior week.  Mortgage rates on a 30-year fixed mortgage decreased from 4.69 percent to 4.55 percent during the week.
• The index does not account for cash purchases, which made up about a third of all sales in recent months.

  

Highlights for Thursday, July 14, 2011:

• Retail sales inched up a tepid 0.1% in June, erasing a 0.1% decline in May.
• Sales on furnishings as well as appliances and electronics continue to be muted in 2011; down 0.8% and 0.2% for the month, respectively.
• The producer price index (PPI) fell 0.4% in June for the first decline since June of last year.   However,  producer prices are still up by a large seven percent from one year ago, suggesting broader consumer inflation could still be around the corner.
• Jobless claims for the week ending July 9^th eased 22,000 to 405,000, the second consecutive decline.  The weekly decline brought the 4-week moving average down to 423,250.
• Weak employment figures and high gas prices have weighed on consumers in recent months.  Moderation in gas prices in June gave consumers some breathing room aiding sales of goods and services.  Employment was weak in June, but this week’s measure of claims suggests that the employment outlook may be stronger when it is reported at the end of the month.

Friday, July 15, 2011:

• Consumer prices fell slightly in the past month but are still much higher compared to 12 months ago.  The fall in gasoline prices helped in June, but consumers are facing 3.4 percent higher prices now compared to one year ago.
• Excluding the volatile food and energy prices, the core prices rose by 1.6 percent.  That figure is not a concern.  However, the core inflation rate has been accelerating with each passing month.  The core inflation rate was less than 1 percent for most of last year, and is expected to rise by 2 percent later this year.
• The housing rent component rose by 1.4 percent from one year ago.  This measurement is lower than many private commercial data vendors, such as REIS, which has implied a higher rent rises.  If the government measure on rent begins to catch up with the rises in private data, then consumer prices could rise close to 5 percent before the year end.
• At the current trend, the cost-of-living-adjustment for social security checks will rise by 3 to 4 percent in 2012.  That is good for seniors in terms of being protected from inflation, but it will make the budget deficit situation harder to solve.  For people with the COLA protection, the rise in inflation is like a hidden tax on consumers from excessive printing of the money.