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Economy in Brief

Small Business Optimism Dipped
by Tom Moeller February 11, 2004

The January Small Business Optimism Index published by the National Federation of Independent Business (NFIB) dipped 1.0% m/m but remained near a record level at 105.8.

The m/m decline reflected modest declines in the percent of small business owners planning to increase employment, inventories and capital spending but the level for each remained well off earlier lows.

During the last ten years there has been a 47% correlation between the level of the NFIB index and the y/y change in real GDP.

The percent of owners raising average selling prices remained up at 7% versus 3% for all of last year and 1% in 2002.

About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

Nat'l Federation of Independent Business Jan Dec Y/Y 2003 2002 2001
Small Business Optimism Index (1986=100) 105.8 106.9 6.7% 101.3 101.2 98.4
Mortgage Applications Drop
by Tom Moeller February 11, 2004

The index of mortgage applications compiled by the Mortgage Bankers Association dropped 6.8% last week. The index is off 12.9% during the last three weeks from the recent high.

Purchase applications fell 9.4% w/w (+22.3% y/y) and have fallen 19.8% during the last three weeks.

During the last ten years there has been a 55% correlation between the y/y change in purchase applications and the change in new plus existing home sales.

Applications to refinance fell 4.7% and are down 6.9% during the last three weeks.

The effective interest rate on a conventional 30-Year mortgage fell to 5.88% from 5.92% the prior week. The effective rate on a 15-year mortgage fell to 5.19%.

The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.

MBA Mortgage Applications (3/16/90=100) 2/6/04 1/30/04 2003 2002 2001
Total Market Index 797.8 855.7 1,067.9 799.7 625.6
  Purchase 402.2 444.0 395.1 354.7 304.9
  Refinancing 3,099.1 3,250.6 4,981.8 3,388.0 2,491.0
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