Consumer Confidence Lifts in May May 27, 2010
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A key market indicator released Tuesday suggests Americans are feeling better about job prospects and getting ready to spend. Consumer confidence increased for the third-straight month in May, according to a Conference Board survey.
The group’s Consumer Confidence Index ticked up 5.6 points to 63.3 this month, despite national unemployment rising to 9.9 percent in April. Central Texas added 2,800 jobs last month as the jobless rate dropped to 7 percent from 7.1 percent.
“Consumer confidence posted its third consecutive monthly gain, and although still weak by historical levels, appears to be gaining some traction,” said Lynn Franco, director of the New York nonprofit’s Consumer Research Center.
Consumer spending accounts for 70 percent of the nation’s gross domestic product, making confidence important to the economy as whole. A healthy economy typically requires an index of at least 90.
The Present Situation Index, which measures current concerns about the business and labor markets, rose to 30.2, from 28.2 last month. The Expectations Index, indicating concerns about future conditions, rose to 85.3, from 77.4 last month.
“Consumers’ apprehension about current business conditions and the job market continues to slowly dissipate,” Franco said. “Consumers’ expectations, on the other hand, have increased sharply over the past three months, propelling the Expectations Index to pre-recession levels (August 2007, 89.2). The improvement has been fueled primarily by growing optimism about business and labor market conditions. Income expectations, however, remain downbeat.”
The Conference Board bases its index on a survey of 5,000 U.S. households.
Source: Austin Business Journal
Austin Ranks High on ‘Quality of Life’ May 25, 2010
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In Austin, it’s good to be young.
Locals are apparently living the ninth best quality of life in the U.S, according to a new study by Portfolio.com/bizjournals that cited the city’s youth as a major contributing factor. (Click here to open an interactive chart with all of the data used in the study). Austin’s strong population growth, 32 percent since 2000, also helped in overall ranking, as well as a comparatively high percent walking to work, 7.1 percent.
The study compared the performances of America’s 67 biggest metropolitan areas in 20 statistical categories. The highest scores went to well-rounded markets with healthy economies, moderate costs of living, impressive housing stocks and high-powered educational systems. Austin scored in many indicators, except people living in the same place for the more than year.
Austin ranked highest on the study’s job opportunities for young adults indicator, while Houston took No. 5, Dallas took the No. 7 and San Antonio was No. 14 on that listing. Dallas was ranked No. 29 overall for quality of life, followed by Houston at No. 47 and San Antonio at No. 53.
Bakersfield ranks last in six of the study’s 20 categories. It has the highest poverty rate of any major market, as well as the lightest concentration of management and professional jobs, weakest inventory of big houses, and smallest percentages in the three educational categories that track adults with high school diplomas, bachelor’s degrees and advanced degrees.
Also in the bottom five are New Orleans, Memphis and Riverside-San Bernardino, Calif.
Source: Austin Business Journal
Austin No. 3 Dog-Friendly City May 18, 2010
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Austin was ranked the 3rd most dog-friendly city, according to a DogFriendly.com listing of cities with pet-accommodating transportation, parks, attractions, stores and dining.
From Freddie’s Place to the endless number of courtyard coffee shops and cafes, Austin was listed for its overwhelming number of dog-friendly eateries. The dog lover’s blog and information site also recognized dog-friendly Zilker Botanical Gardens and 12 off-leash dog parks.
San Diego took the No. 1 spot, followed by Portland, Ore. Austin was the only Texas city on the top 10 list, though San Antonio was given an honorary mention.
Central Texas is home to many dog-supported businesses, including DogBoy’s Dog Ranch, recently-launched gourmet pet food maker Nulo Inc. and Shoo tag maker Energetic Solutions LLC.
Source: http://austin.bizjournals.com/austin/stories/2010/05/17/daily7.html
Austin Home Inventory Rises, Prices Fall May 12, 2010
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Austin reported the highest increase in residential real estate inventory between March and April, 8.6 percent, when compared with 26 U.S. metros, according to ZipRealty Inc. (Nasdaq: ZIPR).
A total 10,124 homes were for sale in Austin as of April 30 this year, compared to 10,076 listed a month before. The city reported a 4.7 decrease, however, from the same month last year when 8,881 houses were for sale. Homes reduced prices an average 1.81 percent.
The average inventory change across all cities included in the report was 2.59 percent increase between March and April and and negative 9.61 percent year-over-year.
The percent of homes for sale that reduced prices also increased from March to April, rising to 42.1 percent lowering price tags to 38.6 percent in March. About 42.6 percent of homes for sale lowered prices in April 2009.
Source: http://austin.bizjournals.com/austin/stories/2010/05/10/daily18.html?surround=lfn
Fannie Mae: Long-Term Financial Sustainability Uncertain May 10, 2010
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Fannie Mae has again asked taxpayers for more money after reporting a first-quarter loss of more than $13 billion, adding that it also expects the level of multifamily defaults and serious delinquencies to increase further during 2010.
The company also said that there is uncertainty regarding future of business after conservatorship terminated and expect this uncertainty to continue.
The mortgage finance company, which was rescued by the government in September 2008, said it needs an additional $8.4 billion from the government to help cover mounting losses.
Fannie Mae [FNM 1.12 0.09 (+8.74%) ] says it lost $13.1 billion, or $2.29 per share, in the January-March period. That takes into account $1.5 billion in dividends paid to the Treasury Department. It compares with a loss of $23.2 billion, or $4.09 a share, in the year-ago period.
The rescue of Fannie Mae and sister company Freddie Mac [FRE 1.36 0.07 (+5.43%) ] is turning out to be one of the most expensive after effects of the financial meltdown. The new request for aid will bring Fannie Mae’s total to $83.6 billion. The total bill for the duo will now be nearly $145 billion.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.
Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That’s about half of all mortgages.
The two companies, however, loosened their lending standards for borrowers during the real estate boom and are reeling from the consequences.
With the housing market still on shaky ground, Obama administration officials say it is still too early to draft any proposals to reform the two companies or the broader housing finance system.
But Republicans argue the sweeping financial overhaul currently before Congress is incomplete without a plan for Fannie and Freddie. They propose transforming Fannie and Freddie into private companies with no government subsidies, or shutting them down completely.
The legislation “touches nearly every corner of the economy,” Alabama Sen. Richard Shelby said in the GOP weekly radio and Internet address over the weekend. “But these major contributors to the crisis are left unscathed,” he added, singling out Fannie Mae and Freddie Mac.
Source: CNBC
US Payrolls Jump by 290,000 But Jobless Rate Hits 9.9% May 7, 2010
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US employment grew at the fastest pace in four years in April as private sector businesses ramped up hiring, showing the labor market recovery picking up steam.
Employers added 290,000 jobs in April, the Labor Department said on Friday, far more than analysts had expected. The department also revised figures for February and March to show 121,000 more jobs were added than previously thought.
The unemployment rate, however, rose to 9.9 percent as discouraged workers re-entered the labor force to look for work.
Stubbornly high unemployment has been a political sore spot for President Barack Obama and his fellow Democrats, even though the job market is showing increased vigor.
Analysts polled by Reuters had expected nonfarm payrolls to rise 200,000 last month and the jobless rate to remain unchanged at 9.7 percent.
The median forecast from the 20 most accurate forecasters was for a payrolls increase of 188,000.
“I think we are moving into this very reassuring range of strong employment growth. It is consistent with the way the economy is going,” said Kurt Karl, chief U.S. economist at Swiss Re in New York.
U.S. stock index futures held gains after the report, while Treasury debt prices extended losses. The U.S. dollar trimmed losses versus the the euro and rose against the yen.
Private sector employment increased 231,000, also the largest gain since March 2006, after rising 174,000 in March. Private payrolls have now grown for four months. Census hiring contributed 66,000 jobs.
Analysts had expected private employment to rise between 50,000 and 100,000 in April.
Data ranging from manufacturing to consumer spending have pointed to a pick-up in the recovery from the U.S. economy’s longest and deepest downturn since the Great Depression.
“The trend is improving,” said Zach Pandl, an economist at Nomura Securities International in New York. “The economic recovery is gaining momentum.”
But public disenchantment over the economy, especially the labor market, is damaging Obama’s popularity. His fellow Democrats face a tough fight in congressional elections in November, with their majority status at stake.
Republicans say Obama’s policies—including a record economic stimulus package—have failed to deliver on their promise of reducing the jobless rate, which is expected to still be painfully high when elections rolls around.
About 8.2 million jobs were lost during the recession and economists warn it is likely to take years to regain that lost employment.
U.S. consumers have begun to participate in what has been a manufacturing-led recovery, but job growth is crucial to sustaining that trend.
Last month, manufacturing payrolls increased 44,000 after rising 19,000 in March. Construction employment gained 14,000, rising for a second month and defying expectations of a fall.
Payrolls in the service sector increased 166,000, advancing for a third month. Temporary help hiring increased 26,200, strengthening the jobs recovery theme. Temporary employment is seen as a precursor to full-time jobs.
Government payrolls rose 59,000, adding onto the prior month’s 56,000 increase. The average workweek rose to 34.1 hours from 34 hours in March.
Source: CNBC
US Home Loan Demand Up as Tax Credit Ends May 5, 2010
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Demand for loans to buy U.S. homes raced to a seven-month high last week in the final hurrah for federal homebuyer tax credits that ended April 30, Mortgage Bankers Association data showed on Wednesday.
Home purchase loan applications jumped 13 percent to the highest level since early October in the week ended April 30, overshadowing a 2.1 percent drop in refinancing demand.
Total mortgage applications rose by a seasonally adjusted 4 percent, the trade group reported. It was the third straight weekly increase in purchase applications, rising almost 24 percent in the month.
The share of loan refinancing fell to 51.9 percent of all applications, the lowest since early July 2009, the MBA said.
Average 30-year mortgage rates dipped 0.06 percentage point to 5.02 percent, the lowest rate since mid-March.
Eligible borrowers seeking to take advantage of federal tax credits of $8,000 for first-time buyers and $6,500 for existing homeowners were required to sign contracts by last Friday and must close on their loans by June 30.
The big question now is whether the U.S. housing market has enough traction to continue recovering without government help.
“The need for further stimulus is not so obvious any more, we don’t think it’s needed because we’ve gotten through the thick of it and we’re at the point where markets will take care of themselves,” said Mike Schenk, senior economist for the Credit Union National Association in Madison, Wisconsin.
In addition to the tax credit, the Federal Reserve bought more than $1.4 trillion mortgage-related securities aiming to keep mortgage rates down to revive the housing market. That program ended on March 31.
“All the data that we’ve seen recently point to the fact that consumers are in a better place today than they were six months ago, and because of that they will likely be more active in the housing market,” Schenk said.
The difficult labor market, however, will keep the housing recovery slow, he added.
Housing demand is likely to drop off after the recent flurry of sales ahead of the tax credit expiration, but then mount a slow upturn, most industry experts expect.
Sales of new homes jumped almost 27 percent in March, and sales of existing home increased by 6.8 percent.
The number of previously owned homes in contract to be sold, known as pending home sales, rose 5.3 percent to a five-month high in March.
“The pending home sales index, based on initial contracts, will likely be boosted again in April, with some payback thereafter,” UBS economists wrote. “However, we believe the combination of low prices, still relatively low mortgage rates and the nascent recovery in employment will support home sales later in the year.”
The latest unemployment figures will be reported on Friday. April’s rate is seen holding at 9.7 percent for a fourth straight month, based on a Reuters poll, after touching a more than 26-year peak over 10 percent last year.
Homeowners have increasingly turned to the government for their mortgages, including low down-payment products from the Federal Housing Administration.
More than half of all purchase applications last week were for government loans, the highest share in two decades, the Mortgage Bankers Association said.
Source: http://www.cnbc.com/id/36957645
Consumer Spending Advances Sharply But Incomes Lag May 3, 2010
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WASHINGTON — Consumer spending rose in March by the largest amount in five months but the gains were financed out of savings, which fell to the lowest level in 18 months. A slight rise in incomes added to concerns that the recovery could weaken unless income growth increases more rapidly.
The Commerce Department said consumer spending rose 0.6 percent in March, matching economists’ expectations. Personal incomes edged up just 0.3 percent, raising new worries about lackluster income growth.
The March surge in spending was propelled by savings, which drove the personal savings rate down to 2.7 percent of after-tax incomes, the lowest level since September 2008.
The fear is that income growth will remain weak, reflecting severely high unemployment, as the job market continues to show the effects of the nation’s worst recession since the Great Depression.
Unless businesses boost hiring, households will not have the incomes needed to support consumer spending, which accounts for 70 percent of economic activity. That would put the economic recovery in jeopardy.
The government reported Friday that the broadest measure of economic activity, the gross domestic product, grew at an annual rate of 3.2 percent in the January-March period. That marked the third quarterly increase since last summer. Most economists believe the recession, which began in December 2007, probably ended in either June or July or last year.
The healthy first quarter GDP gain was driven by a big rebound in consumer spending, which powered ahead at an annual rate of 3.6 percent, the best showing in three years. But economists said spending gains of that size cannot be maintained without greater income growth.
The 0.3 percent rise in incomes in March followed a tiny 0.1 percent increase in February and a 0.4 percent advance in January.
The 0.6 percent rise in consumer spending, which matched last October’s gain, followed a 0.5 percent rise in February and a 0.3 percent January increase.
Disposable, or after-tax incomes, rose by 0.3 percent in March. The combination of a rapid rise in spending and a smaller gain in incomes left the personal savings rate at 2.7 percent in March, down from 3 percent in February and the smallest showing since the savings rate stood at 2.2 percent in September 2008.
During the housing boom of the last decade, the annual savings rate had fallen as low as 1.7 percent in 2007. Consumers felt more wealthy as their home values soared and therefore felt less of a need to save. However, after housing sales and prices collapsed, helping to send the country into a deep recession, Americans began saving more. The savings rate rose to 4.3 percent in 2009, the highest level in a decade.
In a new AP Economy Survey, two-thirds of the 44 economists surveyed said they believed the last recession had created a “new frugality” among consumers that will outlive the recession. A desire to save more could also act as a drag on spending going forward.
An inflation gauge tied to consumer spending showed a slight 0.1 percent rise in March and the same 0.1 percent increase excluding food and energy. Over the past 12 months, prices excluding food and energy are up by just 1.3 percent, well within the Federal Reserve’s comfort zone.
Source: Forbes
