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Economic News Week: November 18, 2012
Wednesday, November 21, 2012 • Posted November 23, 2012

U.S. stocks closed higher on Friday for the first day out of the last four after leaders in Congress reported progress in talks with President Obama about cutting the government’s budget deficit. The Dow closed at 12,588.31 for the week. One headline read, “Obama, top lawmakers meet, express optimism.” The article by the New York Times reported that Democrat and Republican leaders of Congress emerged from their first budget meeting with the President at the White House on Friday and jointly expressed confidence that the two parties will reach an agreement before the end of the year to avert economy-rattling tax increases and across the board spending cuts. Dem. Harry Reid did state in another interview that he would not bend on cutting Medicaid and Social Security. That, be that as it may, is not the end of it for Republicans. The positive is that both sides are reporting a meeting of the minds.

Superstorm Sandy is still causing havoc as U.S. factory output of machinery and equipment fell because of temporary disruptions caused by the storm. The Federal Reserve reported that factory output, the most important component of industrial production, fell 0.9 percent in October from September. It would have been unchanged without the storm. So, you see? Sometimes there is a logical side to a particular downturn without all the negative comments that we sometimes have to listen to from negative mongers. Retail Sales dipped as well for the same reason in October, but down by only 0.3 percent. U.S. businesses increased their stockpiles by 0.7 percent in September, further evidence that economic growth was stronger over the summer than first thought. Cisco Systems said U.S. companies are starting to spend again, helping its earnings rise 18 percent to $2.1 billion in the latest quarter. Home Depot reported a net income of $947 million in the third quarter, as glimmers of a recovery in the housing market and storm preparations added to sales. Wholesale inflation fell 0.2 percent in October as a big drop in gasoline and other energy prices offset the price of food. Travelers this Thanksgiving week get to benefit from falling gasoline prices sending a little extra spending cash in their pockets, and maybe a little extra at Christmas time. I expect to see even better seasonal numbers for the economy. Wal-Mart seems to be as excited as a child waiting to see Santa after it announced earlier shopper hours on Thanksgiving evening. An 8 pm special opening of the store is expected to add to Black Friday numbers. I am all for supporting retail sales; however, after a day of feeding on that particular day, I expect to be laying on the couch finishing up that extra piece of pecan pie, my contribution to the economy in short order.

Real Estate, Mortgage Industry, and Other Economic News

In a report in the S.A. Express News last week, five South Texas Cities led by San Antonio have formed an alliance to seek foreign investments in the region and promote exports. The alliance is comprised of San Antonio, San Marcos, Corpus Christi, Brownsville, and Edinburg. They will start with a China trade mission in early 2013. Another S.A. trade group headed by San Antonio Mayor Julian Castro left for London on Sunday, focusing on energy and technology. Maybe that’s why San Antonio is a leader in economic growth for the state. If you do nothing, expect nothing. San Antonio and area leaders are all about action. Just take a look at the hike and bike trails in Boerne, and now under construction, Kerrville. I absolutely love to see cities take pride in their communities. As a state, Texas outshines the rest of the nation for our economic growth and stability during one of the worst economic downturns we have seen in our lifetime. It takes good leadership and action. The next big issue facing all of us is funding for Texas education. Please take the time to contact your Legislator and find out what he/she plans on doing about it. In my opinion, staying with the status quo will not work either. Education was cut to the bone last session. Any armchair economist will agree that educating our children is the only way to a better economy and quality of life.

Mortgage rates remain at historical lows, for the time being. The 30-year fixed rate index was at 3.5% last week. I believe you will see mortgage rates rise and drop in increments of 0.125% until the end of the year. After Congress reconvenes and the fiscal cliff has been avoided, then it is expected the Real Estate market will begin an even better turnaround for 2013. Better numbers have already been reported nationally and statewide.

Did you know that it is not as hard to get a mortgage as you might think, especially if you use someone who is knowledgeable and knows the area? Internet lenders are just too impersonal and do not offer a “consultative approach” to home financing, in my opinion. First, ask your lender/loan officer where they are from. Shouldn’t they know the area? Then ask if they are licensed. FYI… Some big banks do NOT require their bank Loan Officers to be licensed because they fall under a depository umbrella of sorts. Do you really want to use someone who does not have the training and/or background to offer you advice on financing your home? That would almost be like asking a stranger to give you medical advice without them being a licensed doctor or even offering any background information about themselves. Next, ask how long they have worked for the particular lender they are employed by now. Some loan officers jump from one lender to the next, thinking it may be greener on the other side of the fence without a concern for the clients they have served in the past, leaving them high and dry at their previous employer. I personally like to do business with the same person I have in the past, no matter what business it is. Honesty and trust are big issues with me too. I trust someone who is a stayer and not a player, if you get my meaning. You cannot build a business and keep past clients if you move around. Also, ask for at least three current references; If they cannot or will not honor this simple request, walk away. Finally, trust your instincts. If you think someone is selling you a bill of goods, then chances are they are. I offer you this advice only because the Real Estate and Mortgage businesses are going to start doing considerably better in coming months. When it does, expect to see some folks coming back into the mortgage business to try and make a quick dollar. Real Estate and Mortgage is a “people” business. That is why successful loan officers try and stay at one lender and serve their clients in the manner they want to be served. For those of you who have allowed me to serve you and your clients, I want to thank you and wish you a very Happy Thanksgiving!

(This article is for informational use only. Do not use it as financial advice. Information for this article obtained from but, not limited to The S. A. Express News, Wall Street Journal, Boerne’s Hill Country Weekly, and S. A. Business Journal. For questions/comments call Tony Stevenson at 1.800.460.6990 or email:

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