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Summit Mortgage Corporation, Evan Jansen NMLS #128384
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Retail sales enjoyed healthy growth, while housing starts and building permits saw mixed performance, and lay-offs increased.

Retail Sales

Retail sales for May performed solidly, with sales growing 0.5 percent to hit $455.6 billion, the Census Bureau reported last week. Compared annually, last month’s sales were 2.5 percent higher than May 2015, and sales for the March 2016 through May 2016 period were 2.4 percent higher than the same period from last year.

Gas stations posted the largest sales increase for May, growing 2.1 percent over April. Music store sales grew 1.3 percent, as did non-store retailers; food service and drinking establishment sales increased 0.8 percent; and health and personal care stores grew 0.6 percent. Some trouble spots included building and garden supply store sales, which dropped 1.8 percent; miscellaneous retailers, which fell 1.2 percent; and department stores, which shrank 0.9 percent.

If anything, many economists welcomed the report after the recent weak jobs report for May, as it showed that this key segment of the economy (consumer spending drives 70 percent of the U.S. economy) was growing.

“The strength of the May retail sales report should provide plenty of comfort to those concerned that the recent slump in payrolls would be followed by a downturn in activity,” Capital Economics’ U.S. Economist Steve Murphy told the New York Times.

Housing Starts

Home construction in May saw inconsistent performance. Construction starts on all types of housing during the month dropped 0.3 percent to an annual rate of 1.16 million, the Census Bureau’s reported last week.

The main contributor to the drop was the multi-family housing category, which is subject to greater swings. Starts on multi-family units dipped 1.2 percent to hit an annual rate of 400,000. Meanwhile, starts on single-family homes actually increased 0.3 percent to an annual rate of 764,000.

On the positive side, building permits issued in May for the construction of private housing grew 0.7 percent to an annual rate of 1.13 million. That said, the performance for permits was inverse to housing starts. Permits issued for single-family homes dropped 2 percent to a pace of 726,000, while permits for multi-family dwellings increased 5.9 percent to an annual rate of 412,000.

Initial Jobless Claims

Followers of the job market are riding a bit of a roller coaster, as lay-offs increased after dipping the previous week. First-time claims for unemployment benefits filed during the week ending June 11 shot up to 277,000, a sizable jump of 13,000 claims over the prior week’s total of 264,000, the Employment and Training Administration reported last week.

Why are job market analysts watching lay-offs so closely? The Department of Labor’s employment report from three weeks ago showed weaker than expected job creation. When that happens, experts worry that any subsequent near-term spikes in lay-offs could be an indicator of a recession.

Bearing that in mind, the Administration’s report was considerably higher than the anticipated 269,000 claims. However, HSBC Securities USA Economist Ryan Wang said job market watchers shouldn’t get worried quite yet.

“As long as the trend for jobless claims remains low, that suggests that businesses are still relatively confident about the economic outlook,” he told the Bloomberg news service. “We need to see claims above the 300,000 level before we would be concerned about a genuine deterioration in the labor market.”

To Wang’s point, the four-week moving average — considered a more stable measure of lay-off activity — actually notched down to 269,250, a dip of 250 claims from the preceding week’s average of 269,500 claims.

This week we can expect:
• Wednesday — Existing home sales for May from the National Association of Realtors.
• Thursday — Initial jobless claims for last week from the Employment and Training Administration; new home sales for May from the Census Bureau.
• Friday — Durable goods orders for May from the Census Bureau; consumer sentiment for June from the University of Michigan Survey of Consumers.

Evan Jansen,Branch Manager
Summit Mortgage Corporation - Lakewood, Colorado
NMLS: 128384

Office: (720) 200-9480 // Cell: (303) 885-9662

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Consumer credit for April performed well under market expectations....

Last Week's Economic News In Review - June 15th, 2016

Initial jobless claims enjoyed an unexpected drop, which reassured some economists about the job market, while consumer credit failed to impress and wholesale inventories grew.

Initial Jobless Claims

Job market watchers were breathing a sigh of relief when it came to layoffs last week. While the various experts and economists had expected layoffs to slightly increase, first-time claims for unemployment benefits filed during the week ending June 4 actually dipped to 264,000, a decline of 4,000 claims from the previous week's level total of 268,000, the Employment and Training Administration reported last week.

Why was there relief over a relatively small drop in first-time claims? The Department of Labor’s employment report from two weeks ago showed weaker than expected job creation, which in turn caused various experts to advise paying closer attention to initial jobless claims, as a spike could indicate a recession.

“In the approach to several recessions, initial claims spiked in the months in which non-farm payrolls (NFP) fell sharply and that spike was followed by a subsequent spike in claims (we look at four-week averages),” Steven Englander, Citigroup Inc.’s Global Head of G10 FX Strategy, told Bloomberg. “In the approach to several recessions, initial claims spiked in the months in which NFP fell sharply and that spike was followed by a subsequent spike in claims.”

Similarly, the four-week moving average — considered a more stable measure of employment — dropped to 269,500, a decline of 7,500 claims from the preceding week’s average of 277,000. This too, allayed job market-related jitters.

Consumer Credit

Consumer credit for April performed well under market expectations. While consumer credit grew by a total of 4.5 percent for the month, according to figures released last week by the Federal Reserve, it was not as high as market watchers had expected. The market had expected a gain of $18.5 billion in April, the month actually only increased by $13.4 billion, putting total outstanding consumer credit at $3.6 trillion.

Revolving debt, such as credit cards, grew by 2.1 percent to hit a total of $951.5 billion. Non-revolving debt, such as car loans and student loans, increased by 5.4 percent in April to reach a total of $2.65 trillion.

J.P. Morgan Chase’s Daniel Silver told the Wall Street Journal that the slowing pace of growth could be related to “cooling in auto sales,” and added that “We see some moderation in the consumer credit data.”

Wholesale Inventories

Wholesale inventories, a good indicator of wholesalers anticipation of demand from their retailer customers, grew to $587.9 billion in April, marking a 0.6 percent increase over March level and were 0.9 percent higher than April 2015’s level, the Census Bureau reported last week.

Some notable growth areas were inventories of durable goods, which notched up 0.2 percent over March; inventories of lumber and other construction materials increased 1.3 percent; nondurable goods gained 1.3 percent; inventories of farm product raw materials were up 7.5 percent; and drugs and druggists' sundries grew 2.2 percent.

Sales for wholesalers saw middling performance, growing 1 percent in April to hit $434.2 billion, but that level was 2.6 percent below April 2015’s total. In any case April’s wholesale inventories-to-sales ratio was 1.35, compared to April 2015’s ratio of 1.31.

This week we can expect:
• Tuesday — Import and export prices for May from the Census Bureau and the Bureau of Economic Analysis; retail sales for May and business inventories for April from the Census Bureau.
• Wednesday — May producer price index from the Bureau of Labor Statistics; industrial production and capacity utilization for May from the Federal Reserve.
• Thursday — May consumer price index from the Bureau of Labor Statistics; initial jobless claims for last week from the Employment and Training Administration.
• Friday — Housing starts and building permits for May from the Census Bureau.
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Last Week's Economic News In Review
June 8th, 2016

Last week’s jobs report was lackluster, while layoffs fell, and construction spending was down.

Unemployment

The economy had its worst monthly jobs performance in six years, with the economy adding only 38,000 jobs in May, the Bureau of Labor Statistics reported last week. That said, the number of unemployed Americans dropped by 484,000 to 7.4 million people out of work, and the overall unemployment rate fell by 0.3 percent to reach 4.7 percent.

The reason for a decline in the unemployment rate in a month that saw weak job growth was because the labor force is shrinking. May’s labor force participation rate — the percentage of employable Americans who either have jobs or trying to get jobs — fell by 0.2 percent to 62.6 percent. This is part of a trend that has seen the rate fall by 0.4 percent over two months.

“This just does not square with all the other things we’re seeing in the economy,” PNC Financial Services Group Chief Economist Gus Faucher told the Washington Post. “This is no reason to panic, and I still think the fundamentals remain solid.”

The number of people unemployed for 27 weeks or longer fell by 178,000 to 1.9 million in May, accounting for 25.1 percent of the total unemployed population. The number of Americans involuntarily employed on a part-time basis for reasons such as only being able to find those hours or because their hours were cut grew by 468,000 to 6.4 million in May.

Initial Jobless Claims

In more recent employment news, first time claims for unemployment benefits filed by the recently laid off during the week ending May 28 notched down to 267,000, a decline of 1,000 claims from the preceding week’s total of 268,000, the Employment and Training Administration reported last week. The four-week moving average, considered a more stable measure of layoffs, dipped to 276,750, a drop of 1,750 claims from the prior week’s unrevised average of 278,500.

For the 65th week in a row, first-time claims were below the 300,000-claim mark that economists consider an indication of a growing job market. This is the first time since 1973 that the job market has had such a streak.

Construction Spending

Construction spending in April saw its largest monthly drop since January 2011, with spending for the month declining 1.8 percent to hit an annual rate of $1.13 trillion, according to last week’s Census Bureau report. That said, compared annually, April’s spending was still 4.5 percent better than April 2015’s pace of $1.08 trillion.

The drop was felt across all segments of construction. Spending on private construction fell 1.5 percent to an annual rate of $843.1 billion, with residential construction also dropping 1.5 percent to an annual rate of $439.7 billion.

This week we can expect:
• Tuesday — First quarter productivity from the Bureau of Labor Statistics; consumer credit for April from the Federal Reserve.
• Thursday — Initial jobless claims for last week from the Employment and Training Administration; wholesale inventories for April from the Census Bureau.
• Friday — May budget from the Treasury Department.
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Last Week's Economic News In Review
May 18th, 2016
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Retail sales bounced back, while layoffs saw a surge, and wholesale inventories grew, but not at the pace the market had hoped.

Retail Sales

Retail and food services sales saw better than expected performance in April, growing 1.3 percent to hit $453.4 billion, the Census Bureau reported last week. April’s performance outpaced market expectations of 8 percent growth, and when compared annually, were 3 percent higher than April 2015’s sales.

“This is all part and parcel of the consumption numbers coming more in line with the income numbers we’ve been seeing,” RBC Capital Markets LLC Senior U.S. Economist Jacob Oubina told Reuters. “The breadth of this report was extremely constructive.”

Key drivers for April’s sales resurgence were motor vehicle and parts dealers, which grew 3.2 percent; gasoline stations, which were up 2.2 percent; non-store retailers, which gained 2.1 percent; miscellaneous retailers, which saw a 1.5 percent increase; and grocery stores, which gained 1.1 percent.

Initial Jobless Claims

First time claims for unemployment benefits filed by the recently laid off raised eyebrows last week, hitting a 14-month high after months of lows not seen for 40 years. Initial jobless claims filed during the week ending May 7 hit 294,000, a massive gain of 20,000 claims over the preceding week's total of 274,000, according to last week’s report form the Employment and Training Administration.

The four-week moving average – considered a more stable read of layoffs – grew to 268,250, a gain of 10,250 from the previous week’s average of 258,000.

The likely cause for the substantial increase in lay-offs was a combination of striking Verizon Communications workers in New York, as well as spring break. Economists were not ready to consider the report indicative of a trend.

“Outside of the isolated increase in New York, initial claims remain at historically low levels,” Barclays economist Jesse Hurwitz told MarketWatch.

Wholesale Inventories

Wholesale inventories, a key indicator because they show wholesalers’ expectations of their retail clients’ sales grew, but at a slower rate than expected. Total wholesale inventories for March were $583.6 billion, which was up 0.1 percent over February, according to last week’s report from the Census Bureau. The market had expected a 0.2 percent increase.

Total sales for wholesalers in March hit $430.7 billion, which as 0.7 percent over February’s sales, but were down 2 percent March 2015’s sales. The March inventories/sales ratio was 1.36, up slightly from the March 2015 ratio of 1.32.

This week we can expect:
• Tuesday — The April consumer price index from the Bureau of Labor Statistics; building permits and housing starts for April from the Census Bureau; and April industrial product and capacity utilization from the Federal Reserve.
• Thursday — Initial jobless claims for last week from the Employment and Training Administration; leading economic indicators for April from The Conference Board.
• Friday — Existing home sales for April from the National Association of Realtors.
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Last Week's Economic News In Review
May 11th, 2016

Construction spending got a shot in the arm, while unemployment was essentially flat, and layoffs stayed at historic lows.

Construction Spending

Construction spending during March rose 0.3 percent to hit an annual rate of $1.13 trillion, the Census Bureau reported last week. This marked the highest rate since 2007, and when compared annually, March’s rate was 8 percent higher than March 2015’s rate.

Spending on private construction and home building were big contributors to March’s construction gains. Private construction as a whole grew 1.1 percent to an annual rate of $842.3 billion. Residential construction in particular saw solid performance, growing 1.6 percent in March to hit an annual rate of $435.5 billion in March.

The continued push for more housing inventory should help to keep prices in check, which should in turn help bolster sales volume.

Unemployment

The economy added just 160,000 jobs during April, keeping the unemployment rate unchanged at 5 percent and the number of out-of-work Americans at 7.9 million, the Bureau of Labor Statistic reported last week. Key areas of job growth were professional and business services, health care, and financial activities.

The number of long-term unemployed those out of work for 27 weeks or longer — dropped by 150,000 in April to 2.1 million people. The number of Americans involuntarily employed on a part-time basis for reasons such as their hours being cut or that being the only work they could find was essentially unchanged in April at 6 million.

“It’s a soft report but it doesn’t portend a turn in the labor market,” Chief U.S. Economist at Barclays Michael Gapen told the New York Times. “I’d be more concerned if there were weakness across the board, but there wasn’t.”

Initial Jobless Claims

In more recent employment news, first-time claims for unemployment benefits filed by the newly unemployed during the week ending April 30 hit 274,000, a gain of 17,000 from the preceding week’s total of 257,000, according to last week report from the Employment and Training Administration.

This marked the 61st straight week of initial claims below 300,000, a threshold that economists consider indicative of a growing job market — the longest such streak since 1973.

The four-week moving average — considered a more stable read on layoff activity — notched up to 258,000 claims, a 2,000-claim gain from the prior week's average of 256,000.

This week we can expect:
• Tuesday — Wholesale inventories for March from the Census Bureau.
• Wednesday — Budget for April from the Treasury Department.
• Thursday — Initial jobless claims for last week from the Employment and Training Administration; import and export prices for April from the Census Bureau and the Bureau of Economic Analysis.
• Friday — April producer price index from the Bureau of Labor Statistics; April retail sales and March business inventories from the Census Bureau.
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Last Week's Economic News In Review
May 4th, 2016

New home sales continued to turn in disappointing performance, while lay-offs were at historic lows, and incomes were on the rise.

New Home Sales

New home sales took a plunge in March, with completed transactions of new, single-family homes dropping 1.5 percent to an annual rate of 511,000, according to a joint report from the Census Bureau and the Department of Housing and Urban Development. That said, compared annually, March’s new home sales marked a 5.4 percent increase over March 2015’s rate of 485,000.

Looking at price and supply, the median sales price of new homes sold in March was $288,000, and the average sales price was $356,200. The estimated number of new homes for sale at the end of March totaled 246,000, which represented a 5.8-month supply of homes at March’s sales rate.

The big hope was that seasonal sales increases will help turn around new home sales’ recent disappointments.

“While new home sales have lost some luster in recent months, we believe they will reaccelerate as we head into [the] spring season,” noted Gregory Daco, head of U.S. macroeconomics at Oxford Economics, in a public statement.

Initial Jobless Claims

Lay-offs ticked up, but remained at lows not seen since the 1970s. First-time claims for unemployment benefits filed by the newly unemployed during the week ending April 23 hit 257,000, a gain of 9,000 claims over the preceding week’s level of 248,000, the Employment and Training Administration reported. This marked the 60th straight week of initial claims below 300,000 — a level that economists associate with a growing job market — which is the longest streak at that level since 1973.

The four-week moving average — which is regarded as a more reliable measure of job losses — dropped to 256,000, a decline of 4,750 claims from the previous week's average of 260,750 claims.

“We’re seeing things in the labor market hold up well,” Wells Fargo Securities LLC Economist Sarah House told Bloomberg. “Businesses are feeling pretty comfortable with where the economy is going, so they don’t feel like they have to make those cuts.”

Incomes and Spending

Personal incomes saw welcome news in March: a 0.4 percent increase to $57.4 billion for the month, with disposable personal income (DPI; income after taxes) also growing 0.4 percent to $50.4 billion, according to last week’s report from the Bureau of Economic Analysis.

Personal consumption expenditures (PCE) grew 0.1 percent to hit $12.8 billion. Personal outlays — which combine PCE, personal interest payments, and personal current transfer payments — grew $11.2 billion in March.

Wages and salaries rose to $29.2 billion in March, with private wages and salaries growing $26.3 billion. Supplements to wages and salaries grew by $5.4 billion in March.

Personal saving — which is DPI less personal outlays — grew to $735.5 billion in March, with the personal saving rate — which describes personal saving as a percentage of DPI — increased to 5.4 percent. This week we can expect:
• Monday — Construction spending for March from the Census Bureau.
• Tuesday — Car and truck sales for April from the auto makers.
• Wednesday — First quarter productivity from the Bureau of Labor Statistics; March factory orders from the Census Bureau.
• Thursday — Initial jobless claims for last week from the Employment and Training Administration.
• Friday — March consumer credit from the Federal Reserve; April payrolls, unemployment, average workweek and hourly earnings from the Bureau of Labor Statistics.
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Last Week's Economic News In Review 
April 13, 2016 
Consumer credit continued a trend of healthy growth, while wholesale inventories fell, and lay-offs dropped. 

Consumer Credit 

Consumer credit grew by 5.8 percent in February to hit a total of $3.56 trillion, the Federal Reserve reported last week. At this point, consumer credit has demonstrated reliable growth over the past year, posting gains of at least 5 percent each month, according to MarketWatch. 

The big driver for February’s growth was non-revolving debt, such as student and car loans, which increased 6.6 percent to hit $2.62 trillion for the month. Meanwhile revolving debt, such as credit cards, grew 3.7 percent to reach $940.6 billion. 

Revolving debt will continue to be the closest watched component of consumer borrowing as credit card use indicates consumers’ willingness to spend, which is important given that consumer spending drives roughly 70 percent of the U.S. economy. 

Wholesale Inventories 

If wholesale inventories are any indicator of future consumer spending, the U.S. economy might be in for some bumps. Wholesale inventories fell 0.5 percent to $583.3 billion in February, the Census Bureau reported last week. This was the farthest drop since May 2013. That said, compared annually, February’s inventories were 0.6 higher than February 2015’s totals. 

Wholesale inventories are important to track, as they indicate wholesalers’ outlook on how much they think their retailer customers will purchase from them, which in turn points to anticipated consumer spending. In February’s case, analysts had expected a 0.2 percent drop, so the unexpected tumble could be reason for worry. 

In terms of sales, February saw sales for wholesalers drop 0.2 percent to $427.6 billion. Compared annually, this was down 3.1 percent from February 2015. February’s inventories-to-sales ratio for merchant wholesalers was 1.36, which was up from the February 2015 ratio of 1.31. 

Initial Jobless Claims 

First-time claims for unemployment benefits filed by the recently laid off during the week ending April 2 dropped to 267,000, a decline of 9,000 claims from the previous week’s total of 276,000, according to last week’s report from the Employment and Training Administration. This marked the 57th consecutive week of initial claims below the 300,000-claim mark that economists consider a healthy job market; the longest streak since 1973. 

“The persistently low level of claims should provide some reassurance that the economy is growing,” Jim Baird, chief investment officer for Plante Moran Financial Advisors, told the New York Times. 

The four-week moving average — considered a more stable measure of lay-offs — grew to 266,750 claims, an increase of 3,500 claims from the preceding week’s average of 263,250. This week we can expect:
Tuesday — Import and export prices for March from the Census Bureau.
Wednesday — March budget from the Treasury Department; producer price index for March from the Bureau of Labor Statistics; March retail sales from the Census Bureau.
Thursday — March consumer price index from the Bureau of Labor Statistics; initial jobless claims for last week from the Employment and Training Administration.
Friday — Industrial production and capacity utilization for March from the Federal Reserve; April consumer sentiment from the University of Michigan and Thomson-Reuters survey of consumers.
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WELCOME SPRING!

Spring is here…or almost here…or was here a month ago depending on where you live. Whether you’re cruising in flip flops or still a little bundled up, this month’s newsletter has something for everyone.

Featured articles:
Getting Away: Storybook Beaches of Chincoteague Island, VA
Best and Worst Locks for Your Home
A “How-To” for Artichoke Lovers and Newbies
8 Items You Should Never Put in Your Microwave
Find more posts on all things “home” at www.summitmortgageblog.com

Evan Jansen, Summit Mortgage Corporation NMLS#128384
Call Evan at: 720-200-9480

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Last Week's Economic News In Review 
March 30, 2016

Real estate saw mixed results, with existing home sales down and sales of new homes increasing, while layoffs experienced slight growth but remained in encouraging territory. 

Existing Home Sales 

After hitting a six-month high in January, February’s existing home sales suffered a drop. Sales of single-family homes, townhomes, condominiums and co-ops, fell 7.1 percent in February to an annual rate of 5.08 million, the National Association of Realtors reported last week. That said, when compared annually, February’s sales are still 2.2 percent higher than February 2015’s performance. 

“The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February's lack of closings,” noted NAR Chief Economist Lawrence Yun. “However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.” 

And where affordability was concerned, prices were still on the rise. February’s median existing-home price for all types of existing homes grew to $210,800, which was 4.4 percent higher than February 2015’s $201,900. This marked the 48th consecutive monthly year-over-year price increase. 

Looking at the supply of homes, the inventory of existing homes for sale at the end of February grew 3.3 percent to hit 1.88 million units, representing a 4.4-month supply at February’s sales pace. This was up from January’s 4-month supply but was still 1.1 percent lower than February 2015’s 1.9 million-unit supply. 

New Home Sales 

Sales of new, single-family homes grew 2 percent in February to hit an annual rate of 512,000, according to last week’s report from the Census Bureau. This beat market expectations for a rate of 511,000, but when compared annually, was down 6.1 percent from February 2015’s pace of 545,000. Still, the upward movement was generally considered a positive sign after January’s 9.2 percent drop. 

“This reflects a slow but steady increase in demand from homebuyers as well as increasing confidence of homebuilders,” Ralph McLaughlin, chief economist for real estate website Trulia, told the Wall Street Journal. “It is also a positive sign for the U.S. economy headed into 2016, as new-home sales lead to new construction and consumer demand for housing-related goods and services.” 

Looking at price and supply of new homes, the median price for new homes sold in February hit $301,400 and the average price was $348,900. Reassuringly, the inventory of new homes was on the rise, with the number of new homes for sale hitting 240,000 units at the end of February, which represented a 5.6-month supply. This is just shy of a 6-month supply, which economists consider a balanced market. 

Initial Jobless Claims 

Layoffs were up, but well below market expectations. First-time claims for unemployment benefits filed by the newly unemployed during the week ending March 19 grew to 265,000, a gain of 6,000 claims from the preceding week’s total of 259,000, the Employment and Training Administration reported last week. This was under market expectations of 268,000 claims, and still well below the 300,000-claim mark that economists consider representative of a growing job market. 

“There’s a cautious optimism,” David Sloan, senior economist at 4Cast Inc., told the Bloomberg news service in regard to sentiment among hiring managers. “Things may slow a little as the year goes, but we’ve got a pretty healthy picture in the labor market.” 

The four-week moving average — considered a more stable measure of lay-off activity — was slightly notched up to 259,750, an increase of just 250 claims from the prior week’s average of 259,500. 

This week we can expect:
Monday — Personal incomes and spending for February from the Bureau of Economic Analysis.
Tuesday — Consumer confidence for March from The Conference Board.
Thursday — Initial jobless claims for last week from the Employment and Training Administration.
Friday — March unemployment, payrolls, average workweek and hourly earnings from the Bureau of Labor Statistics; car and truck sales for March from the auto manufacturers; consumer sentiment for March from the University of Michigan and Thomson-Reuters Survey of Consumers; construction spending for February from the Census Bureau.
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