By Fred Arnold
The good news reported this week about the economy and housing was ___________. With that said, I want to wish you a great day.
Ok, this past week has been tough from the standpoint of economic news. Let me just give you the headlines, and then I will do my best to end this week's newsletter on a positive inspiring note.
o Case-Shiller Home Value Index confirmed that values are at the lowest point since the recession started.
o Consumer Confidence has been classified as "pessimistic" and that the sentiment is deepening.
o Mortgage Purchase Applications have remained flat and refinance applications dropped 5.7% despite mortgage rates dropping.
o Manufacturing slowed significantly.
o First Time Jobless Claims remain above 400,000 for the 8th week in a row.
o Factory Orders drop 1.2%
o And to top it off, the economy only added 58,000 jobs, when experts were expecting a 170,000 increase. The National Unemployment Rate rose to 9.1% from 9.0%
Negative news is beginning to take on a life of its own, just like it did in 2008.
Many believe the government really does not have much left in its bag of tricks considering that two stimulus packages have done little to revive the economy (Spending money and increasing its balance sheet). I believe differently because next year is a presidential election year. The administration and congressional officials do not stand a chance of getting re-elected if the economy is not significantly better, regardless of whether it is artificially stimulated or not. Most, not all, elected officials are more concerned about re-election more than the good of the people or actually fixing Americas financial and social systems.
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Here is why the Fed will look at additional monetary easing in the near future to prevent the economy from dipping into another recession per Scott Minard of Guggenheim Investments: 1. The need to boost employment, 2. The need for the government to tighten spending, 3. The expiration of the 2011 tax cuts, 4. In the next two years we will likely see the end of the expansionary part of our current business cycle. For these reasons Mr. Minard believes the government will continue additional Monetary easing over the next few years! (Market Perspectives, May 19, 2011)
Housing? Most likely not a new stimulus as Americans are tired of bailouts and will perceive this as one? The tax credit in 09-10 boosted home sales significantly. Since loan delinquencies and foreclosures have dropped, a new housing stimulus could very well be the ticket to getting people to purchase homes and stabilize the real estate market. If nothing else, a housing stimulus can assist in absorbing the excessive housing inventory which in turn may stabilize housing and other areas of the economy. Additionally, mortgage rates are plummeting and are approaching 4%. When you combine tax incentive with low rates, with low prices, the stage can be set for a much needed boost to housing. If you feel good about your home equity you feel good about your future wealth and you spend a few extra bucks. That’s not the case as of now.
Just my thoughts and information I that I thought you should know as a consumer, business person and American! Where else can you live and make what you want of your life. If you are poor, there are programs to help you. If you are uneducated there are scholarships to assist you. No matter what your religious believes you are free to warship peacefully. If you strive for success you will reach it. If you want a better tomorrow for your children you can guide them and help them! We live in a great country! (Just miss led at time but the ones we trust to lead.)
American Warriors are putting their lives on the line so we can all be Free and not get free things from the government! Work Hard, appreciate Freedom and lend a hand to those who want to help themselves! Pray for our Warriors!- Fred Arnold
Please see a special message from my friend Tom DiPrima:
Hi Fred, I was hoping you could send this out to your group for me? We are asking everyone to say a little prayer for "Dark horse" 3rd Battalion 5th Marines and their families. They are fighting it out right now in Afghanistan & they have lost 12 marines in 4 days last week. IT WOULD BE NICE TO SEE the message spread out and catch on. God Bless America and God Bless the United States Marine Corps... Semper Fi, Often Tested, Always Faithful, Brothers Forever
Justin Allen, 23, Brett Linley, 29, Matthew Weikert, 29, Justus Bartett, 27, Dave Santos, 21, Chase Stanley, 21, Jesse Reed, 26, Matthew Johnson, 21, Zachary Fisher, 24, Brandon King, 23, Christopher Goeke, 23, Sheldon Tate, 27, Please Pass this on for all are Soldiers that gave their lives for YOU this week!
Thank you, Tom DiPrima, Executive Vice President, KB Home - Southern California Division
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