| Volume 16, Number 27 | Economic Highlights for the Week Ending July 30, 2010 |
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| MONDAY, July 26th |
 New home sales jumped 23.6% in June to an annual rate of 330k compared to market expectations for a somewhat smaller increase to a rate of 320k. However, the prior month was downwardly revised to a record low rate of 267k. So the unexpectedly large gain in June still leaves new home sales near their weakest level ever. The correction in new home sales in the last two months was expected as a result of the tax credit pulling sales forward into March and April. The outlook is for continued weakness in the new home market going forward until demand fundamentals return in the form of job and income growth. |
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| TUESDAY, July 27th |
| The S&P/Case-Shiller 20-city home price index increased 0.5% in May from April and 4.6% from May one year ago. This was the second monthly increase and the fourth year-over-year gain in home prices. 15 of the 20 metro areas tracked by this index showed monthly price gains while 13 of the 20 were up over last year. Las Vegas posted the largest decline at 6.4% with San Francisco showing the largest increase at 18.4%. Nationwide home prices are still 28.5% below their May 2006 peak, similar to price levels in October 2003. |
 Consumer confidence fell to 50.4% in July from a reading of 54.3% in June. Consumers remain concerned about their future now that economic growth has slowed and jobs remain scarce. With this month’s decline, confidence has dipped back down into the bottom of the range it has occupied since last year. Such low confidence levels do not bode well for consumer spending, the crux of the recovery, going forward. |
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| WEDNESDAY, July 28th |
 The MBA mortgage applications index fell 4.4% to 720.6% for the week ending July 23. The purchase index rose 2.0% to 172.3%, its second consecutive gain. Nevertheless, purchase applications are down more than 40% since the expiration of the homebuyers' tax credit at the end of April and remain at one of the lowest levels in the past 14 years. The refinance index tumbled 5.9% last week to 3918.1% but because of record low rates, has increased 85% since the end of April and is up 110.4% from its year ago level. Refinance activity accounts for nearly 80% of all new mortgage activity. |
| The Federal Reserve's summary of current economic conditions known as the beige book showed that activity continued to increase in June and early July in all banking districts except for two, Cleveland and Kansas City, where the level of activity generally held steady. Expansion remained modest however, and slowed in Atlanta and Chicago. The beige book is consistent with other economic data that indicates slowing in the economy recovery in recent months. Given a sputtering recovery and low inflation trends it is likely the Fed will maintain rates near zero at least through the balance of this year and into next year as well. |
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| THURSDAY, July 29th |
| Jobless claims fell 11k to 457k for the week ending July 24. So far this year, initial claims have averaged 462k a week, down 100k from the weekly average in 2009 but still elevated indicating somewhat improved but still weak labor market conditions. Jobless claims need to trend significantly lower to indicate a return to job creation and healthy economic growth. |
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| FRIDAY, July 30th |
| The advance estimate for Q2 GDP showed that the economy grew at a 2.4% annual rate during the quarter, about in line with expectations for growth of 2.5%. This was the fourth straight quarter that the economy expanded following declines in 5 of the previous 6 quarters. Inventory investment was a boon to growth again last quarter while the trade deficit was a large negative. The outlook is for softer growth in the second half of this year before the growth rate picks up again in 2011. |
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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 | 10465.94 | 10424.62 | +41.32 or +0.40% |
| NASDAQ | 2254.70 | 2269.47 | -14.77 or -0.65% |
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WEEK IN ADVANCE
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| The July employment report due out on Friday looms large in its ability to set expectations for the second half of the year. With more job losses expected to be reported, the road to recovery will likely be a bumpy one for the remainder of 2010. |
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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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