Last week in the News – Economic Update!

Compliments of American Home Mortgage Investment Corp.

After falling or remaining flat from September to November, consumer prices climbed 0.5% in December, as gasoline prices staged a momentary rebound, the Labor Department reported January 18. For 2006 as a whole, consumer prices rose by 2.5%, the lowest increase in three years.

Wholesale prices, the cost of goods before they reach the consumer, increased 0.9% in December, down sharply from a 2% jump in November, the Labor Department said January 17. Total 2006 wholesale prices were up just 1.1%, a dramatic improvement over the 5.4% surge in 2005.

The preliminary reading on U.S. consumer sentiment by the Reuters/University of Michigan Surveys of Consumers rose to 98.0 in January from 91.7 at the end of December. The reading — the best in three years — was propelled by falling gasoline prices and a favorable view of personal finances and the economy.

The number of Americans filing new claims for jobless benefits dropped by a surprisingly large 8,000 last week to 290,000, the lowest level in 11 months, the Labor Department reported January 18. Analysts had expected new claims to reach 315,000.

Meanwhile, rates on 30-year mortgages hit a nine-week high, as financial markets reacted to these and other positive economic reports, lowering chances that the Federal Reserve will move any time soon to cut interest rates.

This week look for updates on existing home sales on January 25 and new home sales on January 26.