Economic Update - Last Week in the News

New home sales fell 2.2% in December to a seasonally adjusted annual rate of 307,000 units from a revised rate of 314,000 units in November. Compared to a year ago, new home sales are down 7.3%. On a year over year basis, pending home sales are up 5.6% and pending home sales, a forward-looking indicator based on signed contracts, fell 3.5% in December after a 7.3% increase in November. On a year-over-year basis, pending home sales are up 5.6%.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending January 20 fell 5%. Refinancing applications decreased 5.2%. Purchase volume fell 5.4%.

Orders for durable goods, which are items expected to last three or more yearss, rose $6.2 billion or 3% to $214.5 billion in December. This increase surpassed the 2.2% economists had anticipated and follows a 4.3% surge in November. Excluding volatile transportation-related goods, orders posted a monthly increase of 2.1%.

According to ICSC-Goldman Sachs index, retail sales fell 1.4% for the week ending January 21. Retailers saw sales increase 2.8% on a year-over-year basis.

The Commerce Department announced that gross domestic product, the total output of goods and services produced in the U.S., increased at an annual rate of 2.8% in the fourth quarter of 2011. This follows a 1.8% pace of growth in the third quarter of 2011. For all of 2011, initial reports indicate the economy expanded 1.7%.

Initial claims for unemployment benefits rose by 21,000 to 377,000 for the week ending January 21. Continuing claims for the week ending January 14 rose by 88,000 to 3.554 million.

Upcoming on the economic calendar are reports on the housing price index on January 31, construction spending on February 1 and factory orders on February 3.