Economic Indicators: Weekly Update for May 13, 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 May 9-May 13, 2011, along with graphs that show the latest movement and overall trends.

Highlights for Monday, May 9, 2011:

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  The average annual inflation expectation in the U.S. over the next ten years has declined by 13 bps from mid-April to 2.48%.
• The decline in long term interest rates is primarily attributable to stronger growth prospects. Although, rates have declined of late, stronger inflation should put upward pressure on long term interest rates to increase.
• NAR is forecasting interest rates to increase to 5.6% by the end of 2011.

Highlights for Tuesday, May 10, 2011:

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  Prices for imports rose for the 10^th consecutive month with a strong 2.2% gain after last month’s 2.6% gain.  While down from a month ago, price growth remains robust and resulted in a strong 11.1% gain relative to April of 2010.
• Rising gas prices hurt consumers and increase costs for REALTORS®.  The continuation of this trend will weigh on consumer and business confidence. Weak confidence might cause businesses to put off plans to hire a pattern that could hamper household formation and future home sales.

Highlights for Wednesday, May 11, 2011:

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  Mortgage applications rose 8.2 percent for the week ending May 6.
• The Purchase index gained 6.7 from the previous week, but was 25.8 percent lower compared with a year ago. Refinancing activity advanced 9.0 percent from the prior week.  Mortgage rates on a 30-year fixed mortgage declined from 4.76 percent to 4.67 percent during the week.

Friday, May 13, 2011:

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  Today’s consumer price index data indicate continued challenges for consumers.  Gas prices are up 3.3 percent in the month and 33 percent from a year ago and have driven the overall price index up 0.4 percent in April and 3.2 percent from a year ago.
• Food prices, prices for medical care commodities, used cars and trucks, and transportation services have all increased more than 3 percent from a year ago.  The Housing index was up one percent from a year ago.  The index for shelter and has steadily increase at about 0.1 percent per month for the last 8 months while rents are increasing at an increasing rate.
• Excluding food and energy and focusing on what’s known as the “core,” prices are up 1.3 percent from one year ago, within a range that would not raise concern at the Federal Reserve for inflation so rates are likely to remain unchanged, but consumers still feel the pressure in their budgets.
• The Consumer Sentiment index edged up a bit in April from March but remains below its April 2010 reading.  The rise was driven by a gain of 6.4 percent in the Expectations index while the Current Conditions index was unchanged.  The survey report showed that consumers expect that the worst of the gas price increases have passed, but higher prices have caused strain on consumer finances.  Only 11 percent of households expect inflation-adjusted income growth in the year ahead.