Meyers Report: Economic Notes

There wasn’t much in the way of significant economic news last week. What little there was turned out better than expected.

Retail sales were reported to be up at almost a 7% annual rate in May. The gain helped to offset some previously very weak numbers. After the latest increase, retail sales are up at roughly a 3½% annual rate from the average in the first quarter of the year. This is close to the 4% pace of overall spending for the past few years. However, auto sales were a major driver and could be the result of market improvement or it could be that really older autos need to be replaced, which would not be good news for the rest of retail sales.

Initial unemployment claims for the first week of June were down to 334,000. While one week doesn’t mean much, it’s still an improvement from the 350,000 vicinity of recent months.

Home Builder Index, a measure of the nation’s homebuilders, improved to 52, up from 44 in May. While this is significant, a reading above 50 is good.

Forecast: The economy will advance slowly.

Japanese Beginning To Look Like US? We are not the only ones being hit by an outflow of jobs. Japan and its economy also are facing an outflow of industrial production, as cheaper labor markets are drawing Japanese factories and jobs to Southeast Asia, particularly Viet Nam, Thailand and Indonesia.

Besides losing jobs to cheap labor, Japan also is losing jobs to places that have raw materials, because Japan has none, which adds to production costs. All of the raw materials for factories have to be imported, as does their oil and petroleum products.

According to the Japanese trade ministry, since 2002, Japanese foreign factories nearly doubled their foreign employment to approximately 15 million people. That same trade ministry is projecting that already 33% of Japanese products are being manufactured abroad.

The US is fortunate, because we have our own raw materials and we are becoming energy independent, we can change our job trends. Japan cannot.


10-year Swap Rate. Despite four straight days of decline, the trend is up, 0.48%-age points since April 8.

Multi-family Mortgages. Fannie Mae rates again went higher this past week. Rates for the 10-year held steady at 5.59%, the 7-year at 4.67% was up 0.11%-age points, while the 7-year at 4.09% was up 0.02%-age points. HUD rates rose slightly this week, 0.01%-age points with the HUD 223(f) and 221(d)4 now at 3.89% and 4.54%, respectively.

Learn more about Commercial Corp Finance or read past reports.

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