WASHINGTON (12/5/13)--The national economy continued to expand at a modest to moderate pace from early October through mid-November, according to the Federal Reserve's Beige Book for October, released Wednesday.
Reports from seven of the 12 Federal Reserve Districts indicated the economy grew at a moderate pace. Four districts reported modest growth. One district, Boston, reported expanding economic activity.
Consumer spending increased at a modest to moderate pace in almost all districts, with retailers offering tempered optimism for the holiday season. Sales of new motor vehicles continued at a moderate to strong pace across most districts, while used-car sales were mixed. Reports on tourism varied, with some locations experiencing lower traffic due to the government shutdown.
Residential real estate activity improved across many districts, with moderate to strong growth in multifamily construction. Some slowing in single-family home sales was attributed to seasonal factors. Five districts reported historically low inventories of unsold homes. Activity in nonresidential real estate was stable or improved slightly across many districts.
In banking and finance, lower residential mortgage activity was reported in many districts. Some financial institutions attributed the decline in part to higher interest rates than earlier in the year. Several districts reported increased credit quality, as delinquencies have continued to decline and fewer problem loans have been reported. An increase in business-credit activity was seen in a number of districts.
In the Philadelphia, Richmond, Atlanta, Chicago, and San Francisco districts, some bankers eased lending standards in response to aggressive competition for quality loans," the book said. "Lending standards remained unchanged across loan categories in New York, Cleveland, St. Louis and Kansas City. Consumer borrowing weakened in a few districts, including New York, Richmond, and St. Louis. In Cleveland, Kansas City, and Dallas, demand for consumer loans was little changed, while it increased in Chicago."
A modest increase in hiring was reflected in the Philadelphia, Richmond, St. Louis, Minneapolis and Dallas districts, while hiring in the remaining districts was largely unchanged. Industries that reported moderate employment growth included construction, software and IT services, manufacturing, and healthcare.
To access the full report, use the link.
WASHINGTON (12/4/13)--The quantity of banking institutions has fallen to its lowest level since the Great Depression, according to a report published by the Federal Deposit Insurance Corp.
The number of federally insured financial institutions in the U.S. shrank to 6,891 in the third quarter, falling below 7,000 for the first time since the federal government started keeping track of the data in 1934.
Smaller institutions are bearing the brunt of the woes, with banks holding less than $100 million in assets constituting most of the industry's exits between 1984 and 2011. Mergers, consolidations and failures caused the closure of 10,000 banks, with about 17% of closures attributed to collapse, said the FDIC.
SNL Financial, a bank data-tracking firm, said that banks with less than $100 million in assets saw a median loan-growth of 2% for the year ending Sept. 30. Banks with higher assets up to $10 billion are seeing growth in that area between 3.4% and 7% (The Wall Street Journal Dec. 3).
FDIC researchers found in December 2012 that the decreasing difference between interest charged on loans and interest paid on deposits particularly hurt community banks, which are dependent on conventional forms of retail banking.
New banks aren't taking the place of the old ones either. A bank that opened in Bird-in-Hand, Pa. on Monday was the first bank start-up in the U.S. since December 2010, the FDIC said.
The federal regulatory body's data also showed the number of branches dropped by 3.2% between the end of 2009 and June 30 of this year, despite an upward trend in bank deposits and assets.
Bankers and industry consultants who spoke to The Wall Street Journal attributed the decline to meager profit margins and regulatory costs imposed after the 2008 financial crisis. The newspaper reported FDIC officials saying that the application has always been "rigorous," and that the agency expects the volume of applications to pick up in step with nationwide economic expansion.
NEW YORK and SAN JOSE, Calif. (12/4/13)--Online retail is diminishing crowds at malls and stores during the holiday season, according to two reports released Tuesday.
Black Friday weekend sales were higher than they were last year, but lower than they were the week before, according to an index compiled by the International Council of Shopping Centers and Goldman Sachs. The seasonally adjusted measure fell by 2.8% on the week ending Nov. 30, but rose by 2.5% on an annual basis (The Wall Street Journal Dec. 3).
But "Cyber Monday" sales set new records. Digital transactions on Monday clocked in at $2.29 billion--a 16% annual increase, according to the New Adobe Digital Index. IBM data gauged online sales Monday as being up by 19% from last year (Economy.com Dec. 3).
Moody's analysts said that this trends is good for consumers but "physical stores" will suffer as a result.
Driving online sales were transactions conducted from mobile devices, which increased by 80% on an annual basis to $419 million--18.3% of all Cyber Monday sales.
Social media referrals led to $148 million in sales between Thanksgiving and Cyber Monday--a 2% share that equaled last year's proportions. But Twitter's share of sales referrals ballooned to 9%, a 24% increase, while Pinterest saw its referral traffic grow by 17%. Facebook accounted for almost two-thirds of referrals--its share increased by 12% to 64% (CSA.com Dec. 3).
Moody's analysts said that inclement weather in the Northeast and South did not deter sales by much. They also pointed out that gas prices appeared to be little disincentive, with prices at the pump falling last week.
Since August, there has been a 0.06% weekly decline in sales at retail chain stores, according to the ICSC-Goldman survey, apart from the 2.6% weekly gain for the week ending Nov. 23.
WASHINGTON (12/3/13)--The Federal Housing Finance Agency is hoping that Fannie Mae and Freddie Mac will be able to follow a new harmonized set of rules in 2014.
The agency announced Monday that it and the government-sponsored enterprises have updated standard guidelines on loss mitigation, claims, assurance of coverage and information sharing.
Rule changes are subject to state insurance regulators' review and approval. The FHFA said that it expects the new rules to go into effect sometime next year.
The new rule alignment, which was advocated by the FHFA 2013 Conservatorship Scorecard, seeks to bridge gaps in existing master policy regulations, the agency said in a release.
The agency described the changes as resulting from the housing crisis. It says loss mitigation strategies were developed to help distressed homeowners during the wave of foreclosures that followed the 2008 financial collapse, and that claims-rules changes establish a schedule for processing--including requests for documentation.
The agency described assurance-of-coverage rule changes as clarifying when mortgage insurance can be withdrawn, and said that the new guidelines will promote communication between mortgage insurers, servicers, and Fannie and Freddie.
The FHFA said that the government-sponsored enterprises worked with the agency and the mortgage industry to formulate the rule changes.
CHICAGO, Ill. (12/3/13)--Data released on Saturday shows increased consumer holiday spending, in line with the results of a November holiday spending survey conducted by the Credit Union National Association and the Consumer Federation of America.
Sales on Thanksgiving and Black Friday totaled $12.3 billion, 2.3% higher than the total at the same time last year according to Chicago-based market researcher ShopperTrak LLC (WSJ.com Nov. 30). The CUNA-CFA survey, which was conducted between Nov. 7 and Nov. 10, found that 13% of 1,002 respondents planned on spending more this year--up from 12% last year--while 32% planned on spending less--down from 38% (News Now Dec. 2).
ShopperTrak found that foot traffic and sales were down on Black Friday itself--by 11% and 13.2% respectively--but that consumers spent more on Thanksgiving. A survey conducted by the National Retail Federation in early November had also found that 53.8% of shoppers had already started making holiday-related purchases (The New York Times Nov. 30)
Data from the ShopperTrak report showed strong Thanksgiving weekend consumer activity in the Western and Southern U.S., while unfavorable weather conditions in the Northeast may have discouraged some people from going on shopping excursions, according to the Wall Street Journal.
Over all, ShopperTrak predicted that holiday sales will increase by 2.4% this year--the smallest annual increase since 2009 (Bloomberg.com Nov. 30).
But Saturday's report did not include online shopping figures. The New York Times reported that online sales on Thanksgiving and Black Friday rose by 20% and 19% respectively, according to IBM Digital Analytics Benchmark--a monitor of 800 retail websites in the U.S. Target also said that its Thanksgiving morning online orders had doubled in volume from a year ago, according to Bloomberg.
According to the CUNA-CFA survey, the number of consumers who planned on spending more or the same amount has gradually increased since 2011, when only 8% said that they would spend more while 41% said they would spend less. The proportion of those who said that their financial situation was worse this year was 29%--the smallest number since CFA and CUNA began asking the question in 2009--while 24% said that their financial situation had improved in 2013.
WASHINGTON (12/2/13)--The home finance market was slightly less active for the week ending Nov. 22, a mortgage trade association reported Wednesday.
The Mortgage Bankers Association's Market Composite Index receded by 0.3% on a seasonally adjusted basis, following a 2.3% decline for the week ending Nov. 15.
The measure's refinance index component increased by 0.1%, ending a three-week slide, while its seasonally adjusted purchase index, reflecting initial mortgage applications, fell--for the fourth week in a row--by 0.2%.
A four-week moving average of the refinance index fell by 2.6% over the past month, and is approximately 55.7% below what it was last year. A four-week moving average of the purchase index rose by 2.6% over the past month, but is 3.7% below its level at the same time last year (Economy.com Nov. 27).
Refinance applications accounted for 65.5% of all market activity for the week ending Nov. 22.
Moody's analysts said that consumer demand is weak among traditional homebuyers, who are dependent on credit and not expecting interest rates to fall anytime soon. They added that purchase application activity could pick up next year, with rising home values making ownership more lucrative.
ANN ARBOR, Mich., and NEW YORK (11/27/13)--Three different indexes of consumer confidence revealed mixed feelings about the U.S. economy on the day before Thanksgiving.
The University of Michigan Consumer Confidence Index and Bloomberg Consumer Comfort Index both revealed that consumers have a rosier outlook. The University of Michigan measure increased by 1.9 points in November to 75.1, while the Bloomberg gauge rose by 0.9 points to -33.7 for the week ending Nov. 24.
Meanwhile, the Confidence Index released by the Conference Board, a New York-based research firm, unexpectedly fell in November to a seven-month low of 70.4, down from 72.4. Economists surveyed by Bloomberg forecast an overall reading of 72.6 (Bloomberg.com Nov. 27) while economists polled by Dow Jones Newswires predicted the measure to rise to 73 (WSJ.com Nov. 27).
The reports reveal clashing views on expectations. The expectation index boosted the overall University of Michigan numbers. It rose by 4.3 points in November to 66.8, while the university's present conditions reading fell 1.9 points to 88. The Conference Board found survey respondents to be more pessimistic, however, with its expectations monitor falling to 69.3 from 72.2. Its gauge of present conditions fell only slightly--to 72.0 from 72.6 in October.
The University of Michigan indicated that consumers are buoyed by a steady labor market, rising home values, and fading memories of October's partial government shutdown (Economy.com Nov. 27), but the measure's overall confidence levels are still well below what they were in the summer, when they ranged from 82.1 to 85.1 between June and August.
The Bloomberg report indicates that consumers are feeling most confident about the state of their own personal finances, which gained 2.2 points, with real income rising due to holiday sales (Economy.com Nov. 27). Underpinning this was the fact that, broken down into income brackets, people making between $40,000 and $50,000 saw their confidence increase the most--by 6.9 points. A measure of the overall state of the economy also increased by 1.2 points to -62.5, while the buying climate component of the index fell by 0.5 points to -38.7.
Underlying the Conference Board survey's pessimism were low expectations for the labor market. The number of Americans who said jobs would be more abundant in the next half-year declined by 3.3 percentage points to 12.7%--the lowest that the number has been since November 2011. The proportion of respondents who expected a raise in their incomes in the next six months declined to 14.9% from 15.7%, reaching an eight-month low.
The report did reveal, however, that Americans are feeling more confident about the current state of the labor market--11.8% of respondents said jobs are plentiful, an increase of 0.2 percentage points, while 34% of respondents said jobs are harder to find, a decrease of 0.9 percentage points.
Bloomberg analysts said that more employment opportunities and wage gains would boost the Conference Board's confidence measures, given that household purchases make up 70% of the U.S. economy (Bloomberg.com Nov. 27). Moody's analysts, assessing the report, also pointed out that there are nearly three unemployed workers for every vacancy, leaving employers with little incentive to boost consumer spending through wage increases (Economy.com Nov. 27).