INFLATION REPORT

WASHINGTON, Mar 01, 2006

-- U.S. personal incomes rose 0.7% in January, but higher inflation eroded most of the gains, the Commerce Department reported Wednesday.

Consumer inflation increased 0.5% in January on higher energy costs. Core inflation, which strips out food and energy costs to give a better view of underlying inflation pressures, increased 0.2%.

Core inflation has risen 1.8% in the past 12 months, down from 1.9% in December and just below the 2% lid the Federal Reserve would like to keep on inflation. It's the lowest year-over-year core inflation since March 2004.

Real disposable incomes - after inflation and after taxes - increased 0.1% in January, the weakest gain since August. Real disposable incomes are up 2.2% in the past 12 months. Real consumer spending - adjusted for inflation - increased 0.4% in January, the weakest since October. In nominal terms -- that is, not adjusted for price changes -- consumer spending rose 0.9%, the biggest gain since July.
The personal savings rate fell to negative 0.7%, the lowest since August. Savings have been negative for eight of the past 10 months.

The divergent inflation numbers - with headline inflation soaring 0.5% but year-over-year core inflation moderating - puts the Fed's dilemma in stark terms. While the Fed focuses on core inflation as its policy target, it cannot afford to unleash inflationary forces.

The Federal Open Market Committee is expected to boost its overnight lending rate to 4.75% in four weeks, and will likely add another rate hike in May or June, analysts say. In the report, the government also revised third-quarter income figures higher by about $20 billion annualized. If past years are any gauge, fourth-quarter incomes could be boosted much higher in later revisions, as year-end bonus incomes are reported. Income from wages and salaries increased 0.7% in January, the biggest increase since July. Real spending on durable goods increased 1.3%. Real spending on nondurable goods also rose 1.3%. Real spending on services fell 0.3%, largely reflecting lower heating bills.

Who We Are

"Let's make 2006 YOUR best year!"
L. D. Walls, C.L.O. CalPERS, Mortgage Broker,
Planner & Trusted Advisor

We are “Mortgage Planners” and “Trusted Advisors” to our clients. We help our clients successfully manage their home equity to increase liquidity, safety, rate of return, and tax deductions. We are not traditional loan officers or commoditized application takers. Our role is to help our clients integrate the loan that they choose into their over-all long and short term financial and investment plan to help minimize taxes, improve cash flow and minimize interest expense.

We understand that the largest asset on a family’s balance sheet is their home. We’ve discovered many people mismanage the equity in their home. They have goals to try and pay off their home the smartest, quickest way possible, but may go about it the wrong way. Most people devote the largest portion of their incomes to housing. Consequently, how you handle the purchase of your home will have far-reaching implications on virtually every facet of your financial life, including your ability to save, pay for college and plan for retirement.

Too often, people buy homes in a vacuum, without considering how that purchase is going to affect other aspects of their lives. This can be a big mistake, and therefore you must recognize that owning a home holds very important implications for the rest of your financial plan. Although a fine goal, owning a home is not the ultimate financial planning goal, and in fact how you handle issues of home ownership may well determine whether you achieve financial success.

One of the top 100 Financial Planners in the country, Bert Whitehead, CFP, wrote in his book, Facing Financial Dysfunction, “Use your mortgage to convert wealth to capital. Your mortgage provides positive leverage, good debt that promotes long term financial freedom. It is actually much more risky from an asset allocation standpoint to have a home paid off and few other assets, than to have a mortgage and a more balanced investment portfolio.”

Steven Drozdeck and Lyn Fisher in their book, Wealth Management Teams says, “If you want to get rich, don’t look at the guy at your own level, look at the wealthy and ask, ‘What are they doing differently....and why?’” They go on to say, “For middle class America, properly managing their home’s equity over time can be the difference between being able to retire when they want to, versus not being able to retire at all.”

Take a look at what professional mortgage planning can do for you. Give us a call and see how our advice makes the difference. Help us understand what’s important about a home loan to you.


GO 2 MY WEBSITE !

Use the link at the very bottom of this page, on the left, to go to my website. Once there, please refer to the Loan Application button in the header above and fill out a full application or use the short form.

Additionally, you may be simply looking to ask a question about buying or selling a home in which case please use one of the buttons in the right hand column (Got A Question?, Home Status Report, Looking to Buy?, Looking to Sell?) and we will get back with you quickly with the answers you are looking for.

Use our calculators to check your scenarios but keep in mind, while the tools we supply here at The Mortgage Pro! are amazing, they are no substitute for a one on one consultation with a qualified mortgage planning professional.

Best Regards,

L.D. Walls, The Mortgage Pro!