Weekly Economic Review: Indications of Slower Economic Growth

Posted by Laine Smith on 10/18/15 11:58 AM

Topics: Economy

In the past week, weaker than expected economic reports offset a higher than expected inflation reading, resulting in a small drop for mortgage rates.

Economic Update Slow

Retail sales, excluding auto sales, were revised downward for September and August. Though retail sales rose a seasonally adjusted 0.1% in September from August, economists had projected a 0.2% increase and the increase from August to September is mostly due to booming auto sales.

Retail sales account for about 70% of economic activity in the U.S. and are used as an indication of the nation's economic health. While a stagnant reading could indicate weakness in the third quarter for consumer spending, the core Consumer Price Index, an inflationary report, increased 0.2 percent.

According to the Job Openings and Labor Turnover Survey, job openings fell back in August to 5.37 million from 5.668 million in July. Though the August rate is down, July's reading was a recovery best for job openings.

Overall, job openings are good and demand-consistent, though the quit rate (an indicator of worker confidence) remains unchanged for the fifth consecutive month.

Last week in the economy:

  • Mortgage rates (the national average) fell 0.05% (5 basis points).
  • The S&P 500 ended the week at 2,033, an increase of 0.90%.
  • The enactment of new mortgage lending disclosure rules, TRID, caused mortgage applications to spike the week prior to its implementation. A week after, the purchase index of MBA
  • Mortgage Applications plunged 34 percent, following the prior week's 27 percent surge. The refinancing index fell 23 percent after a gain of 24 percent.
    Initial Jobless Claims are settling in at historic lows, falling 7,000 in the October 10 week to 255,000. This matches the 42-year low reported in July.
  • Consumer Sentiment is up nearly 5 points to the best reading since mid-August. The strongest sector of the report was "current conditions" which indicates consumer sentiment of the labor market. The current conditions component was up more than 5 points to 106.7.

What's on the economic calendar for the week of October 18, 2015:

Monday: Housing Market Index

Tuesday: Housing Starts

Wednesday: MBA Mortgage Applications

Thursday: Jobless Claims, Bloomberg Consumer Comfort Index, FHFA House Price Index & Existing Home Sales

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