THE JOB MARKET
Weekly Jobless claims were down 6,000 from the previous week. A good drop in numbers but with 365,000 NEW claims filed in a week we are still a long way from recovery. The 4 week average is up 72,250 from a year ago. With Companies like Ford Motors looking to lay off more employees, chief U.S. economist Ian Shepherdson is predicting the numbers to climb to 400,000. The new Fed forecast is predicting unemployment to rise to 5.7% by year's end. Utah is still holding its own with unemployment still at an anemic 3.1%. Remember, there can be too much of a good thing.
BOND MARKET
Remember when bonds go down rates go up
With oil still making the news, bonds have been trying to keep gains made earlier on in the week. With the Core Producer Price Index (PPI) double what economists were expecting, the sound of inflation is becoming louder. This was echoed by the Federal Reserve who is predicting higher inflation and lower economic growth. In short, don't look for anymore rate cuts soon. Even with a weakness in the stock market, bonds are still having hard times making gains as the mortgage debacle has weakened confidence in the market. Let's hope the latest bailout package gets approved and consumers become more confident in the housing industry.
HOUSING MARKET
Housing starts jumped last month, however with the increase coming from multi-family housing i.e. apartments, most investors looked at it as bad rather than good news for the housing market. Existing home sales fell a full percentage point for April. This put housing inventories to a 20 year high of a 10.7 months' supply. Median sales prices also dropped 8% last month. Utah is still in good company with the Office of Federal Housing Enterprise Oversight putting us at # 2 in appreciation with a 5.6% appreciation rate from the 1st quarter 2007 and 2008. It may not be big, but I'll take it.
Karl Menzer
Cell: (435) 849-0212
E-mail:karl@karlmenzer.com
