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THE NORTHWEST ECONOMIC MAINLINE 05·11·2009
What to Watch This Week
- Following positive employment reports last week, this week's focus should remain on initial unemployment claims on Thursday. I am gaining confidence that we will continue to see declines, however small. Consumer sentiment figures on Friday also warrant attention, as do company earnings throughout the week.
- Focusing on local earnings announcements, I cringe at the idea of Citybank Lynnwood's earnings scheduled for Wednesday. The bank has been at the forefront of bankruptcy speculation after having lost a revised $60.8 million in 2008 and analyst expectation is pegged at losses of -0.77 per share for the first quarter.
- I plan to keep an ear to the street with respect to local homebuyer traffic and sales. I know I have said this in previous columns, but over the past week/week and a half I have sensed a major turnaround in many builder/developers' sentiment.
- It will be interesting to hear whether buyers, pushed by positive headlines over the past week, have become more serious and are starting to feel an increased sense of urgency. As always, I would love to hear anyone's take on the matter as well.
What I Saw Last Week
- The Commerce Department reported on Monday that construction spending had increased 0.3 percent in March, topping analyst expectation of -1.5 percent, and the largest increase seen since September 2008. That same morning, the National Association of Realtors (NAR) announced that its index of pending home sales increased 3.2 percent to 84.6 in March; both reports sparked a rally on Wall Street as investors welcomed the news.
- Locally, an internal e-mail from Microsoft CEO Steve Ballmer surfaced on Tuesday, indicating the second round of job cuts that had been announced in January would occur. This announcement was expected by the media; however, Ballmer left uncertainty as to the possibility of further cuts moving forward.
- Overshadowing news of Microsoft cuts, the NWMLS reported statistics for April on Wednesday. Statistics indicated declining inventory levels (this is the primary indicator I have been watching) and a sharp increase in pending home sales. As a result, headlines were favorable and definitely eye catching to those in the industry. Let's hope it leads to more in the coming months!
- Stress test results from the United States Treasury/Federal Reserve calmed the investment community, leaving many to question the methodology and usefulness of the tests in the first place. Whether it was simply a way to restore confidence in the financial sector, I certainly am thankful that the news came back as positive as it did.
- To finish out the week, Friday, the Commerce Department reported that wholesale inventories dropped -1.6 percent in March, significantly more positive that analyst expectation of -1.0 percent, while the Labor Department reported that layoffs slowed in April to 539,000, the fewest in six months. While seemingly positive, the announcement was cluttered with specifics, such as the unemployment rate climbed to 8.9 percent, and that government hiring for the Census buoyed job loss figures. I hope that the slowing in unemployment becomes a trend moving forward.
- Overall, sentiment for the week appeared to be very positive. With so many indicators finally starting to show improvement and the stock market continuing its aggressive rally, statistics have left many questioning the idea of a turnaround and a bottoming in the recession. From my personal perspective, and that of many of my economic associates across the country, we believe this to be the case. Let's hope that we are all correct!
Quote/Link of the Week
Having now been invited to join various social networking sites, received tweets of real-time information, and been asked to post on various blogs and forums, I find it incredibly interesting how rapidly the industry has begun to shift its attention to more technological avenues of information. I also wonder how these avenues will be utilized in the future, and what benefits will emerge from this immensely popular trend, be it for consumers or industry professionals. Below are two examples I have recently been steered towards that I thought readers might appreciate:
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