Government

Personal income jumped a staggering 2.6 percent in December, almost four times the 0.7 increase economists forecast, the Bureau of Economic Analysis (BEA) reported Thursday. Personal consumption spending rose 0.2 percent, slightly below the expected 0.3 percent increase. The sharp December gain came from special dividends paid by many companies in anticipation of changes in individual income tax rates, which were tied into negotiations to avoid the ""fiscal cliff.""

First-time claims for unemployment insurance jumped 38,000 to 368,000 for the week ending January 26, the Labor Department reported Thursday. Economists expected a smaller increase to 350,000 from the prior week's 330,000 initial claims. The weekly jump in initial claims was the first in three weeks. It reflected, in part, a drop in the seasonal adjustment factor the Labor Department applies to the raw data, which includes holiday workers whose jobs were eliminated. For the third straight week, the originally reported claims figure was unrevised.

Keeping her promise to Senator Bob Corker (R-Tennessee), Federal Housing Administration commissioner Carol Galante announced a series of changes that will allow the agency to better manage risk and strengthen its anemic Mutual Mortgage Insurance (MMI) Fund. The first major change will be the consolidation of FHA's Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options. In addition, the agency plans to increase its annual mortgage insurance premium (MIP) by 0.10 percent for most new mortgages and by 0.05 percent for jumbo loans.

In a report, a taxpayer watchdog agency accused Treasury of lacking a concrete plan to help Ally pay back taxpayers and move toward financial stability. ""Four years after its first Government bailout, Ally still owes taxpayers $14.6 billion,"" SIGTARP stated in the report.

With a nod to the report the nation’s economy had contracted in the fourth quarter, the Federal Open Market Committee (FOMC) voted Wednesday to continue its program of purchasing $40 million a month of mortgage-backed securities (MBS) and to maintain the target Fed Funds rate at 0 to 0.25 percent.

A former managing director and senior trader at Jefferies & Co. was charged for allegedly defrauding investors when selling residential mortgage-backed securities (RMBS), the Securities and Exchange Commission (SEC) announced in a release.

Lincoln, Nebraska recorded a best-in-the-nation 3.4 percent unemployment rate in December as unemployment rates dropped in 290 of the 372 metropolitan areas in the county, the Bureau of Labor Statistics (BLS) reported Wednesday. Three other metro areas reported unemployment rates of 4.0 percent or below: Lafayette and Lake Charles, Louisiana, at 3.7 percent each, and Sioux Falls, South Dakota, at 4.0 percent. The highest unemployment rates in the country, according to the BLS report, were in Yuma, Arizona, and El Centro, California, at 27.3 percent and 25.5 percent, respectively.

Battered by storms and droughts, real gross domestic product (GDP) fell 0.1 percent in the fourth quarter, the Bureau of Economic Analysis reported Wednesday. The decrease marks the first ""negative growth"" since the end of the Great Recession in mid-2009. Economists had expected a weak 1.0 percent growth compared with the 3.1 percent annualized growth rate in the third quarter. The GDP downturn does not automatically signal a return to recession, which is loosely defined as two consecutive quarters of negative growth.

Conditions in the housing sector may have finally improved enough to bring life back to the securitization market, Comptroller of the Currency Thomas Curry said in remarks at the American Securitization Forum. Curry noted that the credit market has shifted dramatically in its efforts to prevent the practices that paved the way for the financial meltdown but has gone too far--an expected reaction, he said. However, as the market stabilizes, it will become important for lenders to adjust appropriately and find a balance.

The nation's homeownership rate (seasonally adjusted) dipped to 65.4 percent in the fourth quarter from 65.5 percent in the third quarter, the Census Bureau reported Tuesday. At 65.4 percent--the same level as the first quarter--the homeownership rate is at its lowest level since the first quarter of 1997 when the rate was also 65.4 percent. The homeownership rate peaked at 69.2 percent in Q2 2004. The Census Bureau also reported the homeowner vacancy rate remained at 1.9 percent in the fourth quarter.