Major economic news this week centered around the steady rise of mortgage rates, the anticipated Fed decision and retail sales.
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As expected, the Federal Reserve announced their decision on Wednesday to raise their benchmark interest rate by 0.25 percent to a range of 0.50 to 0.75 percent. The Fed also indicated that they plan to raise rates more quickly in 2017 to prevent the recovered economy from growing too quickly.
Fed Chairwoman Janet Yellen said in a press conference Wednesday, “My colleagues and I are recognizing the considerable progress the economy has made toward our duel objectives of maximum employment and price stability…We expect the economy to continue to perform well.”
Though November retail sales cooled in comparison to previous months, the sales index is up 3.8 percent from 2015. Overall sales were up a seasonally adjusted 0.1 percent in the month with the auto component seeing the biggest drop in sales in seven months. Excluding autos, retail sales rose 0.2 percent.
Inflation at the consumer level moderated in November with the Consumer Price Index increasing 0.2 percent from a month earlier, pushing the year-over-year rate up to 1.7 percent. Though small, the November increase marks the fourth consecutive month of gains. Excluding food and energy, the core CPI hit expectations by rising 0.2 percent from October.
This week in the economy:
- The 30-year fixed-rate averaged 4.16 percent with an average 0.5 points in the December 15 week, according to Freddie Mac.
- Increasing mortgage rates are continuing to downgrade mortgage application activity with purchasing applications falling a seasonally adjusted 3 percent in the December 9 week. Refinancing applications also fell by 4 percent.
- Jobless claims continued to run at very low levels in the December 10 week with initial claims falling by 4,000 to 254,000 with the 4-week average up by 5,250 to a level of 257,750.
- The Bloomberg Consumer Comfort Index remained stagnant at 45.1 in the December 11 week after a small bump the week prior.
- The National Association of Home Builder’s Housing Market Index jumped 7 points in November from 63 to 70 versus a forecast of an unchanged index.
- Housing starts are experiencing huge swings, dropping nearly 19 percent in November to a lower-than-expected 1.090 million annualized rate after October’s 27.4 percent gain.
What’s on economic calendar for the week of December 19, 2016:
- Wednesday – MBA Mortgage Applications, Existing Home Sales
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index, FHFA House Price Index, GDP
- Friday – New Home Sales, Consumer Sentiment
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