| Volume 18, Number 5 | Economic Highlights for the Week Ending February 3, 2012 |
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| MONDAY, January 30th |
 Personal income rose 0.5% in December and is now 3.8% above its year ago level. Both wages and salaries and transfer payments like rents and dividend income provided the boost to total income growth last month. Consumer spending was unchanged on the month. Instead it appears as though consumers tucked extra income away because the savings rate increased to 4.0% last month from 3.5% in November. |
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| TUESDAY, January 31st |
 The S&P/Case-Shiller 20-city home prices index fell 0.7% in November. Home prices are now 3.7% below their year ago level. On a year-over-year basis, home prices were down in18 of the 20 of the metro areas tracked. Atlanta had the largest yearly decline at 11.7% while Detroit had the largest yearly increase at 3.8%. Nationwide home prices are down 33.4% from their April 2006 peak similar to pricing last seen in February 2003. |
| The consumer confidence index dropped 3.7 points in January to a level of 61.1%. The decline is a result of downgraded assessments of the present situation though consumers also lowered expectations somewhat as well. After sizable gains in November and December consumers turned cautious once again, probably wanting more evidence of improvement in jobs, housing and the economy. |
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| WEDNESDAY, February 1st |
 The MBA mortgage applications index fell 2.9% to 753.3% for the week ending January 27. The purchase index declined 1.7% on the week as the refinance index tumbled 3.6%. Purchase activity remains weak and range bound while refinancing activity has been on a rising trend over the past 9 months amid historically low interest rates. Indeed, contract rate fell again last week with the 30-year fixed down 2 bps to 4.09%. |
| Motor vehicle sales jumped 4.6% in January to an annual rate of 14.2 million units. This was the fastest sales pace since May 2008. Sales are receiving a lift from pent-up demand and end of year incentives to make room for new models. Vehicle sales are now 11.7% above their year ago level and have been steadily improving over the past two years. A big increase in auto sales led the January gain; light truck sales slipped on the month. |
| The ISM manufacturing index increased to 54.1% in January from a reading of 53.1% in December. The level of the index indicates that activity in the manufacturing sector continues to grow at a moderate pace. Some sluggishness remains as manufacturers wrap up the last inventory cycle. However, a bump in new orders last month bodes well for ongoing, modest expansion. |
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| THURSDAY, February 2nd |
| Jobless claims fell 12k to 367 k for the week ending January 28. Initial claims have been below 400k for 11 of the last 13 weeks indicating clearly that the pace of layoffs has slowed. The 4-week moving average has settled into a new lower range as well suggesting that labor market conditions continue to improve, albeit very slowly. |
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| FRIDAY, February 3rd |
| Payroll employment increased by 243k in January compared with market expectation for job gains of 150k. Stronger than expected job growth last month followed upward revisions in the previous two months for a net increase of 60k more jobs. Moreover, benchmark revisions for all of 2011 showed stronger job growth than previously reported. The post-holiday let down in jobs that was expected never materialized. Instead the employment situation was far better than even the most optimistic forecasts. Additionally, employment gains last month came from most all industry categories, though the government continued to shed jobs. Separately, the unemployment rate dropped to 8.3% of the workforce from 8.5% in December. |
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Stock Market Close for the Week
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Index
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Latest
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A Week Ago
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Change
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| DJIA | 12862.23 | 12660.46 | +201.77 or +1.59% |
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WEEK IN ADVANCE
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| After seeing some of the January period data this week, it looks as though the anticipated Q1 slowdown is unlikely. If job growth continues in this fashion the FOMC may have to reconsider their last policy promise of maintaining rates near zero well into 2014. The upside surprise in the January employment report will probably continue to influence the markets in the coming week especially since there is little else to go on in the form of economic events or data. |
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 Upward pressure on interest rates
Downward pressure on interest rates
No pressure to change interest rates
News worthy
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