Friday Economic Snapshot: Unemployment revised downward
Uncertainty is in the air this Friday, days after the 12th anniversary of the September 11 attacks. This week has also brought a surprisingly healthy unemployment claims figure, which may be the result of a computer glitch, strong signs that the housing market is moderating and, of course, massive uncertainty due to the Syria-Russia-United States crisis that morphs by the hour.
While everything isn’t clear with this week’s data and current events, we’re seeing significant shifts in the patterns that have been entrenched throughout 2013. Where these changes will take us remains to be seen.
Let’s take a closer look.
The American labor market remains distressed post-recession, with anemic job gains, but the situation has been improving throughout 2013, especially in the last two months.
September’s data is even more fantastic; with the U.S. Department of Labor reporting that initial unemployment claims were 292,000 for the week ending September 7. This is a decrease of 31,000 from the previous week, and enough to move the 4-week moving average to 321,250, a decrease of 7,500 from the previous week’s revised average of 328,750.
That data looks good, but there’s a big caveat. MarketWatch reports that a Labor Department official has stated that changes to its computer systems could have delayed the reporting of some claims, throwing off the number. We’ll have to watch the revision on this data point. Here’s hoping it remains as healthy as the initial indications.
U.S. Budget Deficit
And now for something different… We don’t normally report on the federal government’s budget deficit, however it’s a figure often mentioned in the news when it’s bad, less so when things are on the mend, however slightly.
As reported by the Treasury Department, August’s budget deficit of $148 billion puts us at $755 billion for the first 11 months of fiscal 2012, 35 percent less than the $1.16 trillion we had racked up by this time last year.
According to the government, the deficit has been falling from higher revenues and lower government spending partially from the sequester that went into effect earlier this year. Overall government spending is down 4 percent YTD. Most economists have been saying our debt is still high, but not high enough to be a major concern to our economy.
So, maybe that sequester wasn’t so bad? We do still have people manning our air traffic control towers, right? Anybody?
Mortgage applications decreased 13.5 percent from the previous week, according to data from the Mortgage Bankers Association. Adjusted for Labor Day, its Refinance Index fell 20 percent from the previous week, and 71 percent from its peak in early May of this year. This dramatic shift signals the end of the mortgage refinance boom that has been fattening up banks during the last two year.
The report stated that, “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.80 percent from 4.73 percent, with points increasing from 0.46 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio loans.”
That’s a lot of heavy language, but experts say this could lead to bank layoffs and a cooling off of the housing market. While housing leads to growth in many sectors, many may breathe a sigh of relief that we’re not heading face-first into another hyper-inflated housing bubble. Or at least not as quickly.
We’ve had a major presidential war address, Russian president Vladimir Putin spoke directly to the American people in a New York Times op-ed published Thursday, interest rates are on the move, housing is cooling off, small business optimism is flat, consumer spending remains relatively soft and, yet, the stock market has risen gradually throughout the week with no obvious volatility.
Maybe monkeys really do run Wall Street. If so, they’re reacting more calmly than the humans, and maybe that’s a good thing.