Economic update for the week ending March 21, 2015
Economic update for the week ending March 21, 2015
Stock markets rise following Fed remarks - After 3 weeks of loses mainly over fears of higher interest rates, a strong dollar and falling oil prices, the markets reversed course. The rally began Wednesday after Federal Reserve Chairwoman, Janet Yellen's statement on interest rates, which made investors feel thatrate increases were not coming as soon as previously feared. Once the statement was released the Dow rose 300 points within minutes and closed up 227 points for the day, Wednesday. Her statement included that even though we have seen a more robust labor market, inflation has remained below the target level, and there is some evidence of risk, which could slow the pace of economic growth. The Fed slightly lowered its forecast of 2015 and 2016 gross domestic product (GDP), the broadest measure of economic growth. It also lowered its inflation forecasts. It predicted that unemployment would fall faster and farther than it's previous prediction. This caused stocks to surge and interest rates to fall. It also caused the dollar to fall in value. The strong dollar, which has gained strength on fears of a rate hike, was also quoted as a risk to the economy in the Fed statement, as it makes U.S. goods more expensive overseas. This makes imported goods less expensive at home, and exported goods more expensive overseas, which could affect manufacturing. It could also affect tourism and foreign investments. The Dow Jones Industrial Average closed the week18,127.65. It was at 17,749.31 last Friday. The S&P 500 closed at 2,108.1, up from 2,053.40, last week. The NASDAQ closed at 5,026.42, the highest level in 15 years! It was 4,871.76 last week.
Treasury Bond yields fall sharply following Fed Statement - The 10 year Treasury bond closed the week at 1.93%, down from 2.13% last week. The 30 year treasury yield ended the week at 2.50%, down from 2.70% last Friday.
Mortgage Rates drop over 1/8% this week – The 30 year fixed rates are around 3.75% for loans up to $417,000 and about 4.0% for loans over $417,000. 15 year fixed loans are about3% for loans up to $417,000 and about 3.25% for higher loan amounts. The Freddie Mac Primary Mortgage Survey which comes out early in the week reported that the 30 year fixed mortgage rate average for the week was 3.78% which was lower than last week's 3.86%. The 15 year fixed was 3.06% which was slightly lower than last week's 3.10%. The 5 year ARM was 2.97% and the 1 year ARM was 2.46%.
California jobless rate falls to 6.7% - California employers added 29,400 workers in February dropping the state's unemployment rate to 6.7%, the lowest level in 7 years. One year ago the unemployment rate in California was 8%. Over the last year the state has outpaced the nation in both job growth and wage growth.
February's California home sales up from January but 18.7% below February's average - Data Quickreported that an estimated 25,585 new and existing houses and condominiums sold in February. This was up 1% month over monthfrom 25,325 sales in January and down .4% year over year from last February's 25,680 sales. February home sales have varied from a low of 20,513 in 2008 to a high of 48,409 sales in February 2004. TheFebruary 2015 home sales were the second lowest in February ranking only above 2008. Home sales were 18.7% below the February average of 31,454 sales since 1988 when Data Quick began tracking sales. Foreclosures made up 6.8% of the sales, well below 8% of sales last February. Foreclosure sales numbers have beentrending down since reaching their peak of 58.8% of all home sales in February 2009. Short salesaccounted for 6.2% of the sales in February, down from 9% last February.
Home prices continue to rise - Data Quick reported that the median price paid for a home in California in February was $378,000, up 0,5% from January's$376,000. Year over year the median price was up 6.5% from $355,000 in February 2014. February marked the 36th consecutive month that the state's median price increases on a year over year basis.