Retail Sales Healthy in February

The Census Bureau reported on Wednesday that U.S. retail and food services sales for February increased by 1.1 percent compared with January, and 4.6 percent compared with February 2012.

The Census Bureau reported on Wednesday that U.S. retail and food services sales for February increased by 1.1 percent compared with January, and 4.6 percent compared with February 2012. All together U.S. retail sales were $421.4 billion for the month, which the bureau adjusts for seasonal variations and holidays, but not for price changes.

Even so, it turns out that retail sales increases were strong in February, despite persistent upticks in the price of gas during the month. Remove gas from the equation and sales were up 0.6 percent for the month. Take out auto sales, and the increase was 1 percent.

The strong retail numbers came in spite of pre-March 1 hype about the sequester—which no one, in retrospect, seemed too worried about. Consumer spending was also up despite the increase in payroll taxes, which might mean that the perception of the increase wasn’t very much, or that higher-wage earners are spending more freely because of the wealth effect of a rising stock market and a housing market that seems to be recovering.

HARP refinances strong in 2012

The Federal Housing Finance Agency said on Wednesday in its December 2012 Refinance Report that, including the mortgages refinanced through the Home Affordable Refinance Program (HARP) in the fourth quarter, nearly 1.1 million HARP refinances were done in all of 2012. HARP is the program that allows borrowers with loans owned or guaranteed by the GSEs, and with high LTV ratios, to refinance at considerably lower rates.

All together, nearly 2.2 million refinances have been completed since HARP started during the worst of the recession in April 2009, defying early expectations for the program, which seem to have underestimated its popularity. But the program does seem to be working as intended: borrowers that have taken advantage of it have been less likely to default than those who have not.

Among borrowers who refinanced through the program in December, 25 percent of those loans had LTV ratios greater than 125 percent, according to the FHFA. Also in December, 18 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages, which build equity faster than traditional 30-year mortgages.

Wall Street has been setting record highs lately, but on Wednesday the Dow Jones Industrial Average did something it hasn’t done since 1996—gain for the ninth trading session in a row by rising 5.22 points, or a diminutive 0.04 percent. Still, up is up. The S&P 500 and the Nasdaq were up as well, by 0.13 percent and 0.09 percent, respectively.