Economic Indicator September 8, 2010

1. ICSC-Goldman Store Sales

                                            Prior     Actual

Store Sales - W/W change    0.1 %  -0.4 %

Store Sales - Y/Y                 2.8 %    1.8 %

• The ICSC-Goldman Store Sales index fell 0.4 percent in the September 4 week to pull down the year-on-year rate to plus 1.8 percent for the lowest reading since May.
• Weather effects was cited to have curbed demand for buy-and-wear fall apparel.
• The year-on-year rate is expected to plus 3.0 percent for the full month of September in what would be a continuation of trend

2. Beige Book

• "Continued growth" but "with widespread signs of a deceleration."
• Growth is described as "at a modest pace." Still, there is no talk of a double dip.
• "Consumer spending appeared to increase on balance despite continued consumer caution that limited nonessential purchases."
• "Reports on manufacturing activity pointed to further expansion, although the pace of growth eased according to several Districts."
• Within manufacturing, weakness was largely related to construction while strength was in auto-related production, including production of steel. Some Districts reported that export demand was an important contributor to healthy manufacturing conditions.
• No inflationary pressure on most final goods and services despite some upward pressure on grain and selected industrial materials

3.  MBA application

                                                              Prior    Actual

Purchase Index - W/W Change              1.8 %    6.3 %

Refinance Index - W/W Change             2.8 %   -3.1 %

Composite Index - W/W Change           2.7 %   -1.5 %

• The MBA Purchase Applications index jumped 6.3 percent in the September 3 week and is at its highest level since May.
• still well below levels prior to the April expiration of second-round housing stimulus and is still down nearly 40 percent year-on-year.
• month-to-month change and the latest gain, the third in a row for this index, together with last week's jump in the pending home sales index, will raise hopes that the housing sector is now beginning to climb out of its post-stimulus valley.
• The Refinance Index did slip 3.1 percent for its first decline in six weeks but it's still very strong as low rates draw in borrowers. The refinancing share of mortgage activity is at 82 percent of total applications. The average 30-year mortgage rate rose 7 basis points in the week to 4.50 percent.

4. Consumer Credit

• Consumer borrowing fell again in July as households cut back on their credit card use for a 23rd consecutive month
• Increase in auto loan is more than offset by declining other forms of consumer loans including credit card loans
• The latest drop in overall borrowing was slightly higher than economists' expectations and followed a $1.02 billion decline in June, which was revised from an initial estimate that total credit had dropped by $1.3 billion that month.
• Borrowing in the category that includes auto loans rose 0.6 percent in July after gains of 3.2 percent in June and 1.2 percent in May. The three monthly increases reflected a revival of auto sales this summer after automakers endured slumping sales during the recession.
• Borrowing on credit cards fell by 6.3 percent in July after a bigger 7.5 percent June decline. This category has now fallen for a record 23 consecutive months as Americans have struggled to repair their household finances after the worst recession since the 1930s.