This week's economic and mortgage analysis is aided by excerpt's of John Mauldin's statistic-laden Weekly E-Letter.

The 3-pronged attack on the economy comes from the following forces on the U.S. Economy A) new jobs B) the credit crisis and C) retail service business.

The jobs report put out by the Bureau of Labor Statistics can be misleading both when the economy is coming out of a recession and when it is going into one. It tends to underestimate the number of jobs as the economy is recovering and overestimate the number when the economy is slowing down. That's because the data is basically trend-following... continuing claims are up by 10%, which based on the past would suggest we are in a recession.

Credit Crisis Getting Worse - Good Effect on Rates

Goldman Sachs CFO David Viniar warned yesterday that some key mortgage bond insurers could collapse. Viniar, speaking at a CSFB conference, said credit markets are trading as if we are in a "worst recession"; and there is a "total disconnect between the equities market and the credit market." (The Bill King Report)

Notice that the graph of the last year shows a fairly stable index. This index represents roughly 70% of the economy. It is retail stores, restaurants, and all manner of services. This suggests that business expectations are being drastically reduced.

What this means for us on Main Street is that more pain in the markets has yet to be uncovered, reducing the cost of money, both short and long term rates.  

Excellent news for anyone looking to take advantage of leveraged assets, such as real estate.

Andrew Schmidt- Nations Home Funding, Inc.

ACSchmidt4@aol.com

BK0905991