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Economy in Brief

U.S. Trade Deficit Set New Record
by Tom Moeller March 10, 2004

The U.S. foreign trade deficit set a new record in January. It deepened sharply to $43.1B versus December's deficit of $42.7B which was little revised. Consensus expectations had been for a deficit of $41.5B.

Exports fell a sharp 1.2% (+8.5% y/y) following a 0.6% December decline which was revised slightly. Lower exports of foods, feeds & beverages paced the January decline and fell 7.9% following a 4.6% December drop.

Exports of capital goods fell 0.8% (+12.6% y/y) after the 4.5% December plunge. Non-auto consumer goods exports also fell for the second month, off 2.1% (+5.8% y/y).

Imports fell 0.5% and it was broad based. Capital goods imports dropped for the second consecutive month (+12.6% y/y). Imports of non-auto consumer goods again fell hard versus the November peak (+5.8% y/y).

Non-petroleum imports fell 1.5% (+7.5% y/y). The value of petroleum imports rose another 6.1% (+13.1% y/y) as crude oil prices rose (+3.0% y/y).

By country, the US trade deficit with China deepened to $11.5B ($123.9B in 2003). The US trade deficit with Japan improved m/m to $5.3B ($66.0B in 2003) and the deficit with the European Union fell to a low $5.9B ($94.3B in 2003) as imports plummeted 20.1% m/m.

Exchange rate analysis from the Federal Reserve Bank of New York is available here.

Foreign Trade Jan Dec Y/Y 2003 2002 2001
Trade Deficit $43.1B $42.7B $40.0B(1/03) $489.9 $418.0B $357.8B
  Exports - Goods & Services -1.2% -0.6% 8.5% 4.6% -3.3% -5.8%
  Imports - Goods & Services -0.5% 3.1% 8.2% 8.4% 2.0% -5.5%
Mortgage Applications Spurred by Lower Rates
by Tom Moeller March 10, 2004

The index of mortgage applications compiled by the Mortgage Bankers Association rose 1.2% last week for the fourth consecutive weekly gain.

The effective interest rate on a conventional 30-Year mortgage dropped to 5.61% from 5.75%, the lowest level since last June. The effective rate on a 15-year mortgage fell to 4.92%.

Purchase applications rose 1.4% w/w (+24.2% y/y) and started the month 3.1% ahead of the February average.

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 rose 1.0% (-60.0% y/y) for the fourth consecutive weekly gain.

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) 03/05/04 02/27/04 2003 2002 2001
Total Market Index 889.1 878.7 1,067.9 799.7 625.6
  Purchase 428.6 422.6 395.1 354.7 304.9
  Refinancing 3,567.6 3,532.2 4,981.8 3,388.0 2,491.0
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