Economic Focus

WHAT WILL IT TAKE?

Much is being said about the debt crisis as being the cause of most of the economic woes and that the counter-balance is to raise revenues be whatever means. On the other side of this argument is the view that spending is the big culprit and that position has considerable merit. You just cant sustain spending more then you make for an extended time, at some point you will be declared insolvent, and we all have seen the consequences of this in history. While there is truth in both views they do not identify the root to the financial crisis or the cure: Slow Economic Growth. Fannie Maes Economic and Mortgage Market analysis for July describes Q2 data received so far as discouraging, and forecasts growth will likely end up at about the same anemic pace as in the Q1, an annualized rate of 1.9 percent. Others have lowered that estimate to just above 1.0%. Many, including Fannie Mae have attributed the anemic economic growth to higher gasoline prices and the supply chain disruptions following the Japan earthquake and, of course a tepid housing recovery. Truth is that the volatility in gasoline prices has been with us for decades, the Japan earthquake was an act of god. However, naming the slow recovery of housing is right on target. Not only did the housing market collapse contribute to the recession, it has also become a victim. - Here are some of the policies that contributed to the housing crisis: - Tweaking with underwriting standards including credit, income and income/debt ratios; - Inflated and wishful appraisal values; - Dishonest camouflaging of mortgage pool quality and rating on the secondary market; - Special programs sponsored by Fanny Mae & Freddie (blessed with government guarantees); - Low interest rates held down by the Fed;
RELEASE DATE Mon 08/15 1:00 pm et Tue 08/16 8:30 am et Tue 08/16 8:30 am et Tue 08/16 9:15 am et Wed 08/17 7:00 am et Wed 08/17 8:30 am et Thu 08/18 8:30 am et Thu 08/18 10:00 am et Thu 08/18 10:00 am et Thu 08/18 10:00 am et Thu 08/18 10:00 am et
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for the week of August 15, 2011 Volume 15, Issue 32

Key Economic Reports Released This Week
ECONOMIC INDICATORS RELEASED BY National Association of Home Builders Bureau of the Census Dept. of Commerce Bur. of Labor Statistics Department of Labor Federal Reserve Board Mortgage Bankers Association of America Bur. of Labor Statistics Department of Labor Bur. of Labor Statistics Department of Labor Bur. of Labor Statistics Department of Labor Bur. of Econ. Analysis Dept. of Commerce National Association of Realtors Federal Reserve Bank of Philadelphia CONSENSUS SURVEY1 15 600k ImPrice -0.1% IP 0.6% CU 77.1% N/A 0.1% core 0.2% 400k 0.2% core 0.2% 0.2% 4.95M 5.0% Wt. * *** ** *** * *** * *** ** ** ** INFLUENCE ON INTEREST RATES Undetermined

NAHB Housing Index for August 11 Housing Starts / Bldg Permits for July 11 Import & Export Prices for July 11 Ind Production / Cap Utilization for July 11 MBA Mtg Apps Survey for week ending 08/12 Producer Price Index for July 11 Jobless Claims for week ending 08/13 Consumer Price Index for July 11 Leading Economic Indicators for July 11 Existing Home Sales for July 11 Philadelphia Fed Survey for August 11

If above consensus If below consensus If above consensus If below consensus If above consensus If below consensus
Undetermined

If above consensus If below consensus If above consensus If below consensus If above consensus If below consensus If above consensus If below consensus If above consensus If below consensus
Undetermined

Survey courtesy of Insight Economics, LLC

* Low Importance ** Moderate Importance *** Important **** Very Important

- An all-to-willing consumer eager to pull out all of the declared equity in their homes. Now, here we are after all the energy has been sucked out of housing to fuel an overheated economy. Fannie Mae acknowledged this in their report, During the two years of the current economic expansion, residential investment has yet to make a contribution to economic growth, the Analysis states. A full economic recovery will necessarily include a concerted effort for private sector job creation, absorption of the shadow inventory left in the wake, and a resurgence of homeownership. Government spending and taxing discipline alone will not cure the economy. A true recovery will take the resurgence of the American Spirit that originally made this country great.

Jessica Lombardo Loan Officer Hi-Tech Mortgage 2184 McCulloch Boulevard, # A Lake Havasu City, AZ 86403 jessica@hi-techmortgage.com Office: 866.768.5626 Cell: 916.548.8533 Fax: 916.372.2518