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DS News Webcast: Friday 3/21/2014

In its latest Economic and Housing Market Outlook, Freddie Mac expects home sales to grow along with wages this year, despite a still-tough job market in most sectors. Freddie projects a 3 percent rise in home sales and a 20 percent rise in new home construction in 2014. Compared to 2007, most job sectors, particularly manufacturing and construction, are still down. In February, construction employment was 5.9 million, 1.5 million less than December of 2007.

The labor market remains below its potential, with unemployment hanging on at 6.7 percent. While it may look bad that the employment-to-population ratio dropped from 62.7 percent to 58.8 percent in February, annual wages measured that same month grew by 2.5 percent - well above consumer price inflation. Economists at Freddie Mac noted that with more jobs, wage growth should continue to accelerate, giving households needed income to sustain the emerging purchase market.

A recent small-bank survey, published by the Mercatus Center, found small banks are facing rising compliance costs, and finding it harder to serve customers due to the new regulations from the Dodd-Frank Wall Street Reform Act. 95 percent of polled banks compared the Dodd-Frank's regulatory burden as the same as the existing Bank Secrecy Act—widely perceived as compliance-intensive. Regulations are even pushing banks out of the residential mortgage arena, with 6 percent of small banks discontinuing residential mortgages, and an additional 10 percent expected to follow suit.

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