January 18, 2016
Last week’s news and reports related to housing included the Fed’s Beige Book report, Retail Sales, Consumer Sentiment, and January’s Empire State Index.
According to the Fed’s Beige Book report in January, we’ve seen strength in housing, but agriculture, energy and the manufacturing sectors aren’t doing as well. New York’s Empire State Manufacturing Index for January backed up the other reports with a sharp drop. New York manufacturing has hit its lowest level since the 2009 and mirrors the American manufacturing sector.
Earlier this month, we have learned the ISM manufacturing index fell to 48.2 in December, reflecting a nationwide recession in manufacturing, while The Empire State survey’s new orders index, which is an indicator of future activity, plunged 17 points to -23.5.
The reports point to a struggling American manufacturing sector, which has seen the demand for exports diminish, as the strong dollar sees slowing growth overseas. That doesn’t bode well for getting would-be home buyers off the fence, and shows us as we move into 2016, much work still needs to be done to see a full recovery on Main Street.
U.S. GDP expanded at a modest rate of 2.10 percent in the 3rd quarter. Though not stellar, but compared to other G9 economies (Europe’s at 1.60 percent, Japan’s at 1.60 percent and Canada’s at 1.20 percent), the U.S. is growing. In comparison, China’s post 2009 GDP peaked at 12 percent and is now at 6.9 percent, a 48 percent decline in 6 years.
As the U.S dollar continues to have positive tailwinds, the impact on other currencies is not so constructive, and will continue to make our goods and services even more costly and putting more pressure on manufacturing in 2016.
Over the past 19 months the Euro has declined 23 percent, the Yen is down 14 percent, the Australian dollar is off 25 percent, and the Canadian dollar has dropped by 29 percent, make their goods and services more attractive in price that American goods and services.
The price of Light crude oil, another casualty of the rising US Dollar, is off by a staggering 69 percent since mid-2014. That’s good for households, but not so much for energy jobs and households that are relying on that income.
Bottom line: Positive drivers continue to advance the U.S. Dollar verses other G9 currencies. Impressive employment gains and GDP numbers are just some of the markers that are pushing the US Dollar higher.
The USA is the first of the G9 economies that is feeling confident enough to begin raising its interest rates. And with solid fundamentals, the Fed will be under pressure to keep raising rates in the months to come.
In response, many world currencies and commodities will continue to feel strong headwinds in the months ahead.
In other news, retail sales posted a negative growth of -0.10 percent in December against an expected reading of -0.20 percent and November’s reading of +0.40 percent. December retail sales not including automotive also posted a reading of -0.10 percent as compared to expectations of +0.20 percent and November’s reading of 0.30 percent.
HOME OWNERSHIP TOOLS
Homes for Sale REO Short Sales FNMA HomePath Properties HUD Homes USDA Homes Non-Warrantable FNMA FHLMC FHA VA USDA Approved Condominiums Co-Ops Town Homes Manufactured Homes Modular Homes Mobile Homes Log Homes Second Homes Investment Property 2-4 Family Custom Home Builders Custom Built Homes Luxury Homes Real Estate Brokers & Agents Down Payment Assistance
A SIMPLE HOME SHOPPING INSPECTION TOOL
Organizing your home shopping experience affords a wise decision-making process. This simple home inspection tool makes your ultimate buying decision a smart one. To print this document, click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen, you will have the option to “Create A Printable PDF of the Presentation”.