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U.S. Economy Grew More In 2Q Than Estimated

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WASHINGTON (8/30/13)--The U.S. economy grew at a faster pace in the second quarter than previously estimated, with business investment and exports revised upward, resulting in a smaller trade deficit and inventory gains trumping the effects of federal budget cutbacks (The Wall Street Journal, Bloomberg.com and The New York Times Aug. 29).
 
The U.S. gross domestic product--the most comprehensive gauge of goods and services produced in the economy--increased at a 2.5% annualized rate in the second quarter, an upward revision from an initial 1.7% estimate last month, the Commerce Department said Thursday.
 
The economy's expansion is consonant with projections that the nation is withstanding the downward pull of higher taxes and federal budget cuts, and that the economy is set to pick up once those impediments dissipate, Bloomberg said. 
 
Consumer confidence is being bolstered by home-price and employment gains--and that indicates households will sustain consumer spending, which is the largest part of the U.S. economy, Bloomberg said.
 
The economy is performing well and will weather sequestration, resulting in accelerating growth in the second half of the year, Brian Jones, a senior U.S. Economist at Societe Generale in New York, told Bloomberg.

Jobless Claims In U.S. Fall Further Than Expected

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WASHINGTON (8/30/13)--Initial U.S. claims for unemployment benefits declined more than forecast for the week ended Aug. 24, signaling continued improvement in the U.S. labor market (Moody's Economy.com and Bloomberg.com Aug. 29).
 
Claims fell 6,000--to 331,000 from 337,000 the prior week, the Labor Department said Thursday. Economists had predicted a drop to 332,000, according to a Bloomberg survey. 
 
The four-week moving average of claims inched upward to 331,250 for the week ended Aug. 24 from 330,500 the previous week--which is not a substantial increase and is the first since early July, Moody's said. 
 
Continuing claims for unemployment benefits decreased 14,000--to 2.989 million for the week ended Aug. 17.
 
Employers are maintaining their work forces as they prepare for escalating demand and improved growth when the effects of federal budget cuts and higher taxes start to diminish, Bloomberg said.  
 
Although companies have been averse to cutting jobs, they have not been as successful in creating new jobs because they are preparing for political battles concerning new health care laws, the Federal Reserve's intention to reduce its stimulus and the national deficit, said Bloomberg.

Pending Home Sales Dip In July

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WASHINGTON (8/29/13)--Pending home sales in the U.S. were down in July, with higher mortgage interest rates slowing the market, according to the National Association of Realtors (NAR).
 
The Pending Home Sales Index--a forward-looking indicator based on contract signings-- declined 1.3%, to 109.5 in July from 110.9 in June, but is 6.7% above July 2012 when it was 102.6. The data reflect contracts but not closings. Pending sales have stayed above year-ago levels for the past 27 months. 
 
There is an uneven pattern around the country, said Lawrence Yun, NAR chief economist. "The modest decline in sales is not yet concerning, and contract activity remains elevated, with the South and Midwest showing no measurable slowdown," he explained.
 
"However, higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West," he said. "More homes clearly need to be built in the West to relieve price pressure, or the region could soon face pronounced affordability problems."
 
NAR projects existing-home sales to increase 10% for all of 2013, totaling about 5.1 million, and reach about 5.2 million next year.
 
To read the NAR release, use the link.

Mortgage Applications Drop 2.5% In Latest Report

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WASHINGTON (8/29/13)--U.S. mortgage applications decreased 2.5% for the week ending Aug. 23 from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

The Market Composite Index, a measure of mortgage loan application volume, declined 2.5% on a seasonally adjusted basis. Unadjusted, the index dropped 3%.

The Refinance Index fell 5%, said MBA. The Refinance Index has fallen 64.2% from its recent peak the week of May 3.

The seasonally adjusted Purchase Index increased 2% from one week earlier. The unadjusted Purchase Index rose 0.3% and was 6% higher than the same week one year ago.

The refinance share of mortgage activity decreased to 60% of total applications from 61% the previous week, which is the lowest share observed since April 2011. The adjustable-rate mortgage share of activity increased to 7% of total applications. The Home Affordable Refinance Program share of refinance applications rose to 35% from 34% the previous week.

To read the MBA survey, use the link.

August Consumer Confidence Up More Than Expected

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NEW YORK (8/28/13)--Consumer confidence among U.S. citizens unexpectedly rose in August while Americans' views on the economy became more positive (Bloomberg.com and Moody's Economy.com Aug. 27). 
 
Private New York-based research group The Conference Board said its index of sentiment rose to 81.5 from 81 in July. The median August forecast of economists was 79, according to a Bloomberg survey.
 
Increased wealth connected to higher stock portfolios and home values, and ongoing job growth are helping to maintain household spending, Bloomberg said.   
 
Consumers anticipate more income gains and employment opportunities in the next six months, the Conference Board's report indicated, said Bloomberg.
 
As interest rates stabilize, there may be fading concern about interest rates heading upward, and there is ongoing good news about jobs and wealth accumulation, Jonathan Basile, an economist at Credit Suisse in New York, told Bloomberg

Home Prices Rose 0.9% In June

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WASHINGTON (8/28/13)--U.S. home prices rose in June, although at a slower pace than in May, an indication that the rate of improvement in the housing market could be slowing (MarketWatch, The New York Times and Bloomberg.com Aug. 27).
 
The S&P/Case Shiller composite index of home prices in 20 metropolitan areas increased 0.9% on a seasonally adjusted basis. Prices gained 2.2% on a non-adjusted basis. 
 
On an annual basis, home prices in all 20 cities rose, topped by a 24.9% spike in Las Vegas, followed by a 24.5% increase in San Francisco.
 
However, only six cities saw prices increase in June at a faster pace than in May--when 10 cities saw prices rise, the Times said.
 
Escalating property values are bolstering household wealth, which helps fortify the consumer spending that comprises 70% of the U.S. economy, Bloomberg said.
 
However, a leap in mortgage rates suggests home sales and refinancing could be restrained--and that would make it harder for consumers to tap into home equity, Bloomberg added.

FDIC Reports Two Bank Failures Friday

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WASHINGTON (8/27/13)--Two banks closed Friday, which brings this year's total of failed U.S. banks to 20, the Federal Deposit Insurance Corp. announced Friday.

Sunrise Bank of Arizona, Phoenix, was closed and assumed by First Fidelity Bank N.A., Oklahoma City. Also, Community Bank, Parsons, Tenn., was closed and assumed by CB&S Bank Inc., Russellville, Ala.
 
As of June 30, the two banks had roughly $589.1. million in total assets and $574.6 million in total deposits.
 
The cost to the Deposit Insurance Fund will be $89.5 million, FDIC estimated. 
 
So far in 2013, the National Credit Union Administration has closed eight credit unions.

Orders For Durable Goods Decline 7.3% In July

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WASHINGTON (8/27/13)--Orders for U.S. durable goods declined sharply in July, with weak business spending and a declining demand for aircraft indicating growth in manufacturing will be slow and suggesting head winds for the economy in the third quarter (The Wall Street Journal, Bloomberg.com and The New York Times Aug. 26).
 
Orders for items manufactured to last three years or more fell 7.3% to a seasonally adjusted $226.6 billion--the most since August 2012--after a 3.9% gain in June, the Commerce Department said Monday.
 
Manufacturing--which constitutes roughly 12% of the U.S. economy--is being restrained by lingering federal government spending cuts and struggling markets abroad, Bloomberg said.
 
If demand for automobiles and housing can be sustained and labor-market improvement continues, manufacturing production is likely to pick up in the second half of 2013, Bloomberg added.
 
Based on data, the fiscal drag will continue and growth will remain moderate, Michael Gapen, senior U.S. economist at Barclays Plc in New York, told Bloomberg. He added that the current economic environment is highly uncertain. 

Sales Of New U.S. Homes Tumble In July

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WASHINGTON (8/26/13)--Sales of new U.S. homes declined steeply in July--to the lowest level in nine months--accentuating concerns that rising mortgage rates are slowing down the housing market recovery (The Wall Street Journal and Bloomberg.com Aug. 23).
 
Sales decreased 13.4% in July--to an annual rate of 394,000--from June, the Commerce Department said Friday. That constituted the sharpest drop in three years, placing sales at their lowest level since October.
 
Last week, the average rate on a 30-year mortgage climbed to 4.58%--up from 4.4% a week prior and more than a point higher than the level in May, said the Journal.
 
In attempts to bolster prices and revenue, builders are curbing construction amid limitations on available land and materials, Bloomberg said.   
 
However, builders' confidence is surging because pent-up demand and the increasing availability of jobs likely will maintain housing gains, with homebuyers hurrying to capitalize on historically low mortgage interest rates before they further escalate, Bloomberg added.
 
High builder confidence in the face of low sales volumes in the housing market is reason for optimism moving forward, Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York, told Bloomberg.

U.S. Jobless Claims Dip To Five-year Low

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WASHINGTON (8/23/13)--Initial claims for U.S. unemployment benefits rose last week, but fell to a five-year low for the month ended Aug. 17, the Labor Department said Thursday.
 
Initial claims, a proxy for layoffs, increased 13,000--to a seasonally adjusted 336,000--for the week ended Aug. 17. However, claims in the month ended Aug. 17 dropped to 330,500 a week on average--the lowest amount since November 2007, said the Labor Department (Bloomberg.com, The Wall Street Journal, The New York Times and Moody's Economy.com  Aug. 22).  
 
Job cuts are diminishing because employers are retaining employees to meet sales demand, which could be a forerunner to larger payroll gains once the effects of higher payroll taxes and federal budget cuts wane in the second half of the year, Bloomberg said.
 
Employment growth combined with escalating incomes will help bolster consumer confidence and spending--which comprises roughly 70% of the U.S. economy, Bloomberg added.
 
Meanwhile, continuing claims for unemployment benefits rose 29,000--to three million in the week ended Aug. 10.

Home Resales Increase 6.5%

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WASHINGTON (8/22/13)--U.S. existing-home sales rose strongly in July, with the median price maintaining double-digit year-over-year increases, according to the National Association of Realtors (NAR).
 
Total existing-home sales--which are completed transactions that include single-family homes, townhomes, condominiums and co-ops--increased 6.5% to a seasonally adjusted annual rate of 5.39 million in July from a downwardly revised 5.06 million in June. July's sales are 17.2% above the 4.60 million-unit pace in July 2012. Sales have remained above year-ago levels for 25 months.
 
Lawrence Yun, NAR chief economist, said changes in affordability are impacting the market. "Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines," he said. "The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers."  
 
Despite higher mortgage interest rates, Yun identified compensating factors that can sustain a continued recovery. "Although housing affordability conditions will become less attractive, jobs are being added to the economy, and mortgage underwriting standards should normalize over time from current stringent conditions as default rates fall," he explained.
 
To read the NAR release, use the link.

FOMC Minutes: Fed Officials Back Start Of QE3 Wind-down By Year-end

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WASHINGTON (8/22/13)--Nearly all members of the Federal Reserve's monetary policymaking body confirmed they were "broadly comfortable" with Fed Chairman Ben Bernanke's plan to start winding down its bond-buying program later this year if the economy improves, said the minutes of the Federal Open Market Committee's (FOMC) July 30-31 meeting.
 
The minutes, released Wednesday afternoon, left unclear exactly when the reduction of the quantitative easing program would start. The FOMC does not have an August or a November meeting, which means the committee would have three chances--in September, October, or December--to start the wind-down of the $85 billion per month bond buying program during this calendar year.
 
Of 48 economists surveyed by Bloomberg.com, 65% believe the FOMC will probably start the reduction in September. The median estimate calls for the program to be reduced to $75 billion a month (Bloomberg.com  Aug. 21).
 
While a range of views were expressed at the FOMC's meeting, "almost all committee members agreed that a change in the purchase program was not yet appropriate."  A few members "emphasized the importance of being patient and evaluating additional information on the economy before deciding on any changes to the pace of asset purchases," said the minutes.
 
Committee members agreed "with the characterization of the contingent outlook for asset purchases that was presented" in June and July, in which the committee would moderate the pace of its securities purchases later this year.  "If economic conditions continued to develop broadly as anticipated, the committee would reduce the pace of purchases in measurer steps and conclude the purchase program around the middle of 2014," said the minutes.
 
The committee discussed when to include additional information about its contingent outlook for asset purchases.  Most saw the new information as "potentially useful; however, many also saw possible difficulties," while several "saw other forms of communication as better suited for this purpose."
 
FOMC members also addressed whether to change current numerical thresholds in forward guidance for interest rates. Some believed that lowering the unemployment threshold could potentially lead the public to view that the threshold could be moved both down and up, which would undermine their effectiveness, the minutes said.

The committee also considered a new tool for managing interest rates--a fixed-rate, full-allotment overnight reverse purchase agreement facility as an additional tool for managing money market interest rates.  Use the link to access the full FOMC Minutes.

U.S. Household Debt Falls $13.5B In July

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WEST CHESTER, Pa. (8/21/13)--Outstanding U.S. household debt declined $13.5 billion in July from June, according to CreditForecast.com.
 
The drop, down to $10.96 trillion last month, was caused by decreases in first-mortgage balances, said CreditForcast.com, a company that provides history and forecasts for a wide range of household credit, economic and demographic variables at a detailed level of geography (Equifax and Moody's Analytics Aug. 20).
 
Despite month-to-month fluctuations, outstanding debt has remained basically unchanged during the past year, increasing 0.4% since July 2012.
 
Also, the national delinquency rate climbed to 4.64% in July from 4.55% in June because of deterioration in auto loans, bankcard, mortgage and student-loan portfolios.
 
However, despite the deterioration, mortgage portfolios continue healing, said CreditForecast.com. The percentage of mortgages that were either delinquent by at least 120 days or in foreclosure dropped to 3.6%--the lowest level since October 2008, CreditForecast.com said.
 
The primary threat to a recovery in the consumer credit markets would be a rapid increase in interest rates, the company said.

July Home Sales Expected To Rise To Three-year High

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WASHINGTON (8/20/13)--U.S. home sales likely rose in July to the highest level in more than three years, according to economists' forecasts in a Bloomberg survey. 
 
The expected increase was buoyed by growing demand for residential real estate. Combined purchases of new and existing homes probably increased to a 5.64 million annualized pace--the fastest since November 2009, according to the forecasts.
 
Home values and builder confidence is being bolstered by improving sales--even in the face of higher borrowing costs--and a limited supply of homes, lots and building materials (Bloomberg.com Aug. 18).
 
In the second half of 2013, economic growth should be strengthened by the fading effects of across-the-board cuts in federal spending, along with gains in auto markets and housing, Bloomberg said.
 
A slowly improving economy should continue to support an ongoing housing recovery, Roberto Perli, a partner for Cornerstone Macro LP in Washington, D.C., told Bloomberg. Market fundamentals are robust enough to overcome higher mortgage interest rates, he added.

Housing Starts Rise 5.9%--Less Than Expected

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WASHINGTON (8/19/13)--Construction of new U.S. homes increased in July--buoyed by a rebound in multifamily (apartment) projects that trumped a slowdown in single-family properties. However, the increase was still less than expected (The New York Times, Bloomberg.com and The Wall Street Journal Aug. 16).

Housing starts rose 5.9% last month to a seasonally adjusted rate of 896,000 units, following an 846,000-unit pace in June, the Commerce Department said Friday. Economists had predicted a 900,000 pace for July, according to a Reuters poll.

Also, permits for future home construction climbed 2.7% to a 943,000-unit pace, the department added. Economists had forecast a 945,000 unit pace, the Reuters poll indicated.

Although there still is a high level of housing affordability and it has not changed significantly historically, fundamentals are not as promising to new buyers as they were in the past few months, Michael Hanson, senior economist with Bank of America Merrill Lynch in New York, told the Times.

A recent increase in mortgage rates has thwarted some of the momentum in the housing recovery--and that was not unexpected, Hanson added.

August Consumer Confidence Drops

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NEW YORK (8/19/13)--With Americans confronting escalating interest rates and slowing  economic growth, U.S. consumer confidence unexpectedly dropped in August from a six-year high, according to the Thomson Reuters/University of Michigan Confidence Index (The New York Times, Bloomberg.com and Moody's Economy.com Aug. 16).

The index fell to 80 from 85.1 in July--the highest reading since July 2007. Economists had forecast an August reading of 85.2, according to a Bloomberg survey.

Rising mortgage rates could take the steam out of housing-market momentum that has added to economic growth nationwide, Bloomberg said.

However, rising personal wealth connected to stock portfolios and home values are helping to mitigate the effects of federal government budget cuts and higher payroll taxes instituted earlier in 2013, said Bloomberg.

Although the slightly rising mortgage interest rates never help the housing market, there remains a backdrop of what appears to be an ongoing improvement in the housing market, Bloomberg added.

U.S. Jobless Claims Drop To Lowest Level Since 2007

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WASHINGTON (8/16/13)--Initial claims for U.S. unemployment benefits last week fell to their lowest level since October 2007--before the recession--highlighting gains in the labor market as it continues to heal (The Wall Street Journal, Bloomberg.com and The New York Times Aug. 15).
 
First-time claims--a proxy for layoffs--declined 15,000, to a seasonally adjusted 320,000, in the week ended Aug. 10, the Labor Department said Thursday.
 
Also, the four-week moving average of claims, which smooths out weekly volatility, declined 4,000--to 332,000--the lowest level since November 2007.
 
With good momentum built up for consumer spending heading into the third quarter, the labor market is improving, Brian Jones, a senior U.S. economist at Societe Generale in NewYork, told Bloomberg.   

Consumer Comfort In U.S. Recedes From Peak

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NEW YORK (8/16/13)--With Americans' outlooks on the economy, personal finances and spending on the retreat, U.S. consumer confidence receded last week from its highest level in more than five years, according to the Bloomberg Consumer Comfort Index (Bloomberg.com and Moody's Economy.com Aug. 15).
 
The index dropped to -26.6 for the week ended Aug. 11--its first decline in four weeks--from the prior week.
 
Nonetheless, last week's reading was the second-strongest since January 2008--behind the previous week's -23.5, Bloomberg said.
 
The decrease shows consumer confidence still is tenuous and could be negatively impacted by rising fuel costs and interest rates, Bloomberg said.   
 
However, at the same time, escalating stock prices and property values are enhancing consumers' personal wealth, lifting their spending, which constitutes 70% of the U.S. economy, Bloomberg said.

Mortgage Applications Dipped 4.7% Last Week

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WASHINGTON (8/15/13)--U.S. mortgage applications dipped 4.7%, seasonally adjusted, for the week ended Aug. 9 from one week earlier, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey.

The Market Composite Index is a measure of mortgage loan application volume. On an unadjusted basis, the index dropped 5%. The Refinance Index fell 4%. The seasonally adjusted Purchase Index decreased 5%, while the unadjusted Purchase Index fell 6% and was 4% higher than the same week one year ago.

The refinance share of mortgage activity remained unchanged at 63%. Adjustable-rate activity increased to 6% of total applications. The government share of purchase applications was 29%--well below the long-term series average of 38%. The Home Affordable Refinance Program share of refinance applications dipped to 35% from 36% the week prior.

To read the MBA report, use the link.

Producer Prices Indicate Little Inflationary Pressure

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WASHINGTON (8/15/13)--U.S. producer (wholesale) prices remained flat in July, indicating  minimal inflationary pressure and reflecting the largest decline in auto costs in four years (The New York Times, The Wall Street Journal and Bloomberg.com Aug. 14).
 
The producer-price index--which shows what companies pay for the full range of products from produce to heavy machinery--was unchanged last month after increasing 0.8% in June, the Labor Department said Wednesday. Core prices--which exclude volatile food and energy costs--climbed 0.1% in July after increasing 0.2% in June.
 
While slower growth abroad holds back demand, the lower prices of raw materials are reflected on cost pressures at the production stage for goods, Bloomberg said.
 
Although inflation will slowly gather steam, it will remain relatively low, Scott Brown, chief economist for Raymond James & Associates Inc. in St. Petersburg, Fla., told Bloomberg. There still is substantial slack in the economy, he noted.

FHFA Analyzes Impact Of Distressed Sales On Pricing

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WASHINGTON (8/14/13)--The Federal Housing Finance Agency Tuesday released a paper that evaluates the impact of distressed sales--sales of bank-owned properties and short sales--on the FHFA house price index.
 
The study details recent and historical price discounts associated with distressed sales and provides statistical evidence supporting the validity of the approach FHFA has used to form its "distress-free" house price indexes, said FHFA. Such indexes, which were first released in the summer of 2012, show price trends free of the direct effects of distressed sales.
 
"Working Paper 13-01: Distressed Sales and the FHFA House Price Index" was authored by FHFA's Principal Economist Andrew Leventis and Economist Will Doerner in the agency's department of Housing Finance Research and Analysis.
 
FHFA working papers are preliminary products circulated to stimulate discussion and critical comment. The analysis and conclusions are those of the authors and do not imply concurrence by other staff at FHFA or its director, the agency said.
 
To access the paper, use the link.

July Retail Sales' Gains Most Since December

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WASHINGTON (8/14/13)--U.S. consumer spending in the retail sector during July increased at its fastest pace in seven months, indicating quicker economic growth and that the U.S economy is surmounting the effects of federal budget cuts and higher taxes (The New York Times and Bloomberg.com Aug. 13).
 
Retail sales rose 0.02%--the fourth consecutive monthly gain--following a 0.6% gain in June, the Commerce Department said Tuesday. Excluding building materials, cars and gasoline, retail sales climbed 0.5% in July.
 
Recent employment gains may be prompting households to spend somewhat more freely, Paul Dales, an economist at Capital Economics in London, told the Times.
 
Retail sales are a crucial component of the department's gauge of consumer spending--which contributes 70% of the output of the U.S. economy and is the economy's biggest driver, the Times said.

Moody's Survey: Business Confidence 'Stable'

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WEST CHESTER, Pa. (8/13/13)--U.S. business confidence has been consistently stable since early in 2013, according to Moody's Analytics Survey of Business Confidence for the period ending Aug. 9.
 
Businesses are more positive about the economy than the weak real gross domestic product growth would suggest, Moody's weekly report said (Moody's Economy.com Aug. 12).   
 
Pricing, sales and investment in equipment and software are robust, Moody's added.
 
Also, because expectations about future business conditions are upbeat, the survey suggests stronger economic growth later this year, Moody's said.
 
Credit is as available as it was before the recession, and the drawing down of inventories seen in the spring seems to be diminishing, the economic research firm said.
 
Negatives in the survey are the ongoing weak hiring and low demand for office space.

Nicolet National Bank Assumes Deposits Of Bank Of Wausau

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WASHINGTON  (8/13/13)--One bank closed Friday, which brings this year's total of failed U.S banks to 18, the Federal Deposit Insurance Corp. announced Friday.
 
Bank of Wausau (Wis.) was closed and assumed by Nicolet National Bank, Green Bay, Wis. The cost to the Deposit Insurance Fund will be $13.5 million, FDIC estimated.  
 
As of June 30, Bank of Wausau had roughly $43.6 million in total assets and $40.7 million in total deposits.   
 
So far in 2013, the National Credit Union Administration has closed eight credit unions.

U.S. Consumer Comfort Rises To Five-year High

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WASHINGTON (8/12/13)--Buoyed by improved views on the economy, personal finances and spending, U.S. consumer confidence rose for the week ended Aug. 4 to the highest level in more than five years, according to the Bloomberg Consumer Comfort Index.
 
The index climbed to -23.5 for the week--the best reading since January 2008. It was -27 the prior week (Bloomberg.com and Moody's Economy.com Aug. 8). 
 
Consumer sentiment was strongest in the Northeast and West regions.  
 
Nearly all income groups saw gains--with the largest increases from the lower end of the of the salary spectrum, Bloomberg said. Confidence among people making less than $15,000 annually jumped 11.4 points, Moody's said.
 
That broadening of the increases to include consumers with the lowest incomes indicated the labor market is improving for a larger percentage of households--which will help place consumer spending on more solid ground, Bloomberg said.
 
However, even quicker income and job growth are necessary to prompt more purchases by consumers, following a second-quarter slowdown, Bloomberg said.

Jobless Claims Up, But Fewer Than Expected

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WASHINGTON (8/9/13)--Initial claims for U.S. unemployment benefits inched up last week--although less than expected--from a near five-year low. That still indicates, however, a slowly improving labor market (The Wall Street Journal and Moody's Economy.com Aug. 8). 
 
Initial claims--a proxy for layoffs--rose 5,000--to a seasonally adjusted 333,000--for the week ended Aug. 3, the Labor Department said Thursday. Economists had forecast a filing of 335,000 claims last week, according to a Dow Jones Newswires survey.
 
The four-week moving average of claims--which smooths out weekly volatility--declined to 335,500 from 341,750 the prior week. 
 
Continuing claims for unemployment benefits rose 67,000--to 3.018 million for the week ended July 27.
 
If claims levels stay consistently low, companies will be less worried about trimming labor costs and likely will be more willing to raise workers' wages, Jonathan Basile, director of U.S. economics at Credit Suisse, told the Journal.

Mortgage Delinquencies Drop, Home Prices Up

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WASHINGTON (8/9/13)--Seriously delinquent U.S. mortgages fell to a five-year low in the second quarter, while U.S. home prices rose in most metropolitan areas during the quarter.
 
The percentage of home loans more than 90 days delinquent or in foreclosure dropped to 5.88% in the second quarter--the lowest level since third quarter 2008, when it was 5.17%. It was 7.31% a year earlier, the Mortgage Bankers Association reported Thursday (Bloomberg.com and Moody's Economy.com Aug. 8).
 
The recovery in the housing market has provided delinquent borrowers an opportunity to seek loan modifications or become current on payments, while home prices rise at the quickest pace since 2006, Bloomberg said.
 
With home values surging in severely impacted real estate markets, the percentage of  homeowners who owe more than their properties are worth dropped to less than 20% in the first quarter, said CoreLogic Inc., a provider of consumer, financial and property information, analytics and services to business and government.
 
Meanwhile, median home prices continued to rise in most metropolitan areas during second quarter, with the national year-over-year price showing the strongest gain in seven-and-a-half years, according to the latest quarterly report by the National Association of Realtors (NAR). 
 
The median existing single-family home price increased in 87% of measured markets, with 142 out of 163 metropolitan statistical areas showing gains based on closings in the second quarter, compared with the second quarter of 2012. Fifty areas, or 31%, had double-digit gains; one was unchanged and 20 had price declines, NAR said.

The national median existing single-family home price was $203,500 in the second quarter, up 12.2% from $181,300 in the second quarter of 2012, which is the strongest year-over-year increase since the fourth quarter of 2005 when it jumped 13.6%. In the first quarter, the median price rose 11.3% from a year earlier.

Consumer Credit Climbs 6%, CUs Also See Increase

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WASHINGTON (8/8/13)--Consumer credit rose a seasonally adjusted 6% or $13.8 billion in June, for a total of $2.8 trillion borrowed during the month, said the Federal Reserve's Consumer Credit report. Money borrowed from credit unions totaled $251.5 billion.
 
The Fed released the report Wednesday.
 
The overall credit increase is less than the $15 billion expected by economists polled by Reuters (Aug. 7). Consumers took out loans for items such as cars and education, but used their credit cards more frugally.
 
At credit unions, borrowing increased by $2.6 billion from the $248.8 billion borrowed in May. That compares with $231.2 billion in second quarter last year, said the report.
 
Revolving credit, which includes credit card spending, decreased in June by 3.8% or $2.7 billion to $853.6 billion. That compares with $856.3 billion in May and $844.3 billion during second quarter of 2012.
 
Credit unions' revolving credit increased slightly to $40.1 billion, from $39.8 billion in May and $37.4 billion in second quarter 2012.
 
Nonrevolving credit--such as loans for cars, mobile homes and college tuition--rose 7.5% or $16.5 billion to $1.99 trillion in June. That compares with $1.98 trillion in May and $1.85 trillion during second quarter of last year.
 
Credit unions loaned out $211.4 billion in nonrevolving loans in June, an increase over $209.2 billion in May and $193.8 billion in second quarter 2012.

Mortgage Applications Inch Up 0.2%

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WASHINGTON (8/8/13)--U.S. mortgage applications inched up 0.2% last week from one week earlier, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

The Market Composite Index--a measure of mortgage loan application volume--increased 0.2% for the week ending Aug. 2 on a seasonally adjusted basis. On an unadjusted basis, the index was essentially unchanged.

The Refinance Index was unchanged. The seasonally adjusted Purchase Index rose 1%, while the unadjusted Purchase Index increased 1% and was 8% higher than the same week one year ago.

The refinance share of mortgage activity was unchanged at 63% of total applications. The adjustable-rate mortgage share of activity remained constant at 6%. Home Affordable Refinance Program refinancing applications decreased to 36% from 37%.

The average contract interest rate for 30-year, fixed-rate mortgages with conforming loan balances ($417,500 or less) rose to 4.61% from 4.58%. Points increased to 0.42 from 0.38-including--the origination fee--for 80% loan-to-value ratio loans.

U.S. Trade Gap Narrows On Strength Of Exports

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WASHINGTON (8/7/13)--Buoyed by surging exports, the U.S. trade deficit narrowed sharply in June, the Commerce Department said Tuesday.
 
Exports in June increased to the highest monthly level on record and the most since September 2012, indicating stronger demand in the worldwide economy, which likely will have bolstered second-quarter U.S. growth (The Wall Street Journal and MarketWatch Aug. 6).
 
Exports gained 2.2% in June from May, climbing to a seasonally adjusted $191.17 billion--the highest level ever recorded when adjusted for inflation. 
 
Imports shrank 2.5%--to $225.4 billion--indicating that U.S. demand for goods and services still is tenuous, the Journal said.
 
The overall result was the U.S. trade gap narrowed 22.4% to $34.22 billion in June.
 
Stronger global demand for U.S. consumer goods, capital goods, and industrial supplies and materials mostly prompted the surge in exports, the Journal said.

U.S. Service Industries Gain At Fastest Pace In 5 Months

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WASHINGTON (8/6/13)--Signaling improvement in the world's largest economy after three quarters of slowdowns, U.S. service industries expanded in July at the fastest pace in five months, according to the Institute for Supply Management (ISM).
 
ISM's non-manufacturing index rose to 56 from a more-than-three-year low of 53.2 in June, Tempe, Ariz.-based ISM said in a report released Monday (Bloomberg.com and Moody's Economy.com Aug. 5).
 
July's number suggests moderate growth in service industries, which is mostly what has been seen primarily on the spending and hiring sides, Julia Coronado, chief economist for North America at BNP Paribas in New York, told Bloomberg.   
 
The second half of the year should be even stronger, she added.
 
The index has averaged 53.7 since the end of the recession in June 2009, Bloomberg said.

162,000 Jobs Added In July, Fewer Than Expected

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WASHINGTON (8/5/13)--U.S. employers added 162,000 jobs in July--fewer than anticipated--with gains fronted by lower-wage positions, the Labor Department said Friday (The Wall Street Journal and The New York Times Aug. 2).  
 
Job additions were mostly in food services, financial activities, retail and wholesale trade, the department reported. While the manufacturing sector added 6,000 jobs, government job growth remained flat.   
 
Although July was the 34th consecutive month of job creation, the most recent employment gains are not on pace to mitigate a glut of unemployed workers anytime soon, the Times said.
 
It would take more than seven years to close the "jobs gap" from the recession, based on the average job-growth rate thus far this year, according to the Hamilton Project at the Brookings Institution, the Times added.
 
Once Congress's most recent across-the-board budget cuts have filtered through the economy by the end of the fiscal year on Sept. 30, the pace of hiring should increase, some economists said.

N.Y. Probes Big Banks On Denial Of Checking And Savings Accounts

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ALBANY, N.Y. (8/5/13)--New York Attorney General Eric T. Schneiderman's office is probing six large banks about their use of credit-reporting databases that disqualify people seeking to open a checking or savings account (The New York Times DealBook Aug. 1).
 
Schneiderman sent letters to banks including Bank of America and JPMorgan Chase, said the Times. The letters request information about their use of little-known private databases and how lenders decide whether to accept a customer.
 
With the ranks of the unbanked increasing--roughly 10 million U.S. households are unbanked-- many people are blacklisted from the mainstream financial system for years for making a small overdraft or bouncing a check, said the Times (July 30).
 
The banks said the databases help them unearth fraud, and that a single mark from a database such as consumer credit reporting firm ChexSystems would not keep someone from obtaining an account.

Americans Less Pessimistic About Economy

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WASHINGTON (8/2/13)--Americans became less pessimistic about the economy, with U.S. consumer confidence rising last week to the highest level in more than five years, according to the Bloomberg Consumer Comfort Index.
 
The index climbed to -27 for the week ended July 28--the best reading since January 2008. It was -27.3 a week earlier (Bloomberg.com and Moody's Economy.com Aug. 1).    
 
Consumers' sentiment has improved because of sustained labor market progress and escalating residential property values. That could trigger more consumer spending in the second half of the year, Bloomberg said. 
 
As economic growth continues and gasoline prices recede from four-month highs, households are looking beyond rising borrowing costs, the index shows, said Bloomberg.      
 
Increased hiring and improved wages--which have been a substantial challenge in the current business cycle--are the keys to ongoing improvement in the labor market and economy, said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.

Jobless Claims Suggest Improving Labor Market

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WASHINGTON (8/2/13)--Initial claims for U.S. unemployment benefits unexpectedly fell last week to the lowest level in five-and-a-half years, indicating a modestly but steadily improving labor market (The New York Times and The Wall Street Journal Aug. 1).
 
Claims decreased 19,000--to a seasonally adjusted 326,000 for the week ended July 17. That is the lowest level since January 2008, the Labor Department said Thursday.
 
First-time claims were forecast to rise to 345,000 last week, according to economists surveyed in a Reuters poll.
 
The four-week moving-average of claims, which smooths out week-to-week volatility, declined 4,500--to 341,250.
 
Because businesses have been waiting for signs of a sustained boost in consumer demand, they have been operating with minimal work forces (Bloomberg.com Aug. 1).
 
A slowing of job cuts could indicate employers are more upbeat about the economic recovery and will make plans to expand their work forces. That, in turn, would stimulate household spending, which constitutes the largest part of the U.S. economy, Bloomberg added.

Fed Policy Means Reduced Margin Compression For CUs

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WASHINGTON (8/1/13)--The Federal Open Market Committee (FOMC) announced Wednesday it would stay the course on monetary policy, and that means credit unions will see a slightly steeper yield curve, which should reduce margin compression for them, said a Credit Union National Association senior economist.
 
The FOMC, as the monetary policymaking body of the Federal Reserve, met Tuesday and Wednesday.  It made no change in the targeted funds interest rate and no mention of when it will start winding down its $85 billion a month bond assets purchase quantitative easing (QE3) program and changed its economic-expansion outlook to a "modest" pace from June's "moderate" pace.
 
"Better-than-anticipated economic growth in the second quarter and a July [payroll processer] ADP employment increase that beat expectations were announced hours before the fed policy statement was released," said Mike Schenk, CUNA's vice president of economics and statistics. "In combination, these developments raised the expectation among many observers that the Fed FOMC statement might hint at--if not specifically state--something about the timing of QE3 calibration.
 
"In the end, those expecting more clarity on timing were disappointed," he said. "And those anticipating (based on previous Fed statements) a September pull-back in the Central Bank's bond-buying program likely are rethinking that prospect.   
 
"Fed decision makers did note downside risks to the economy have diminished since last fall, that the economy is growing at a 'modest' pace, and that labor and housing markets continue to strengthen," he said.

"But they further noted that the unemployment rate remains high, fiscal policy is restraining growth and mortgage rates have increased recently. As a consequence--in an effort to 'support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate,'" the committee decided to continue purchasing Treasuries and agency mortgage-backed securities at the current pace," Schenk said.
 
That means "the effect will be to keep longer-term Treasury yields (and hence mortgage interest rates) stable and near current levels, thus helping to support the housing recovery and broader financial conditions," said Schenk, adding that investors' demand for longer-term bonds has been declining recently and pushing up interest rates.
 
"After reaching a low of 1.66% on May 1, the 10-year Treasury interest rate rose by more than a percentage point in little over two months to reach 2.73% by July 5 and subsequently drifted down to the 2.50%-to-2.60% range in the following weeks. The 10-year Treasury interest rate held relatively steady after the Fed's announcement--in the hour and a half after the announcement it inched down from 2.61% to 2.59%," Schenk explained.

So where are long-term interest rates headed?

"We continue to expect the 10-year Treasury interest rate to stay in the 2.3%-to-2.7% range for the near future, settling at about 2.4% by year-end and 2.7% by the end of 2014 as real interest rates rise faster than expected inflation falls," he said.

"The slightly steeper yield curve should reduce margin compression financial institutions have been experiencing over the last several years, but shouldn't negatively affect the housing market recovery in a significant way.  The Fed is fully cognizant of the fact that continued economic recovery is highly dependent on continued improvement in the housing arena."
 
"Importantly--and as expected--the committee reiterated its intention to keep the federal funds target rate in the range of 0% to .25% and re-stated that it anticipates this exceptionally low range will be appropriate until the unemployment rate falls below 6.5%, the one- to two-year inflation outlook is projected to be no more than one-half point above the 2% long-run goal and longer-term inflation expectations remain well-anchored," Schenk noted.

"Given the Fed's current language, it appears that the federal funds rate target will not be lifted until sometime late in 2014 or early in 2015," he added.
 
To access the FOMC's full statement, use the link.