Extended Unemployment: Initial, Continued and Extended Unemployment Claims April 28 2011

Today’s jobless claims report showed a notable decline to initial unemployment claims and an increase to continued unemployment claims as a rising trend continued to materialize for initial claims.

Seasonally adjusted “initial” unemployment increased by 25,000 to 429,000 claims from last week’s revised 404,000 claims while seasonally adjusted “continued” claims declined by 68,000 resulting in an “insured” unemployment rate of 2.9%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 4.16 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.89 million people that are currently counted as receiving traditional continued unemployment benefits, there are 8.05 million people on state and federal unemployment rolls.

Hey Big Spender: Discretionary Durable Goods Orders March 2011

Today’s Durable Goods Manufacturers’ Shipments, Inventories and Orders report indicated that total new orders increased 2.5% from February to $208,372 billion while excluding transportation, new orders increased 1.3% to $153,680 billion.

Stripping durable goods orders of defense orders AND non-defense aircraft orders yields an effective measure of orders coming as a direct result of typical discretionary consumer durable goods spending on items such as motor vehicles, furniture, consumer electronic devices and home appliances.

Looking at the latest data for February (less timely data), "discretionary" durable goods orders increased 0.93% since January climbing 11.39% above the level seen in February 2010.

Reading Rates: MBA Application Survey – April 27 2011

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage declined 3 basis points to 4.80% since last week while the purchase application volume plunged 13.6% and the refinance application volume declined 0.6% over the same period.

While rates have generally trending up for the last five months, it will take some time to determine if this trend will continue or if rates will begin to slide back down to the historically low levels seen in mid-2010.

Keep in mind that the Feds QE2 announcement marked the start of the latest uptrend in rates so that as we near the completion of the Feds latest action (scheduled to end in June) it will be interesting to see if there is a correlated impact on rates.

Further, there has been some chatter of either a premature end to QE2 as the Fed gears up to deal with untethered inflationary forces as well as some speculation to the contrary indicating that the Fed may need to engage in QE3 later this year should the recovery stall similarly to 2010.

Both outcomes could notably impact mortgage rates and in turn, seriously impact the trends in the nation's housing markets.

In any event, the purchase application volume remains near the lowest level seen in well over a decade while refinance activity continues to slow.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).