POCATELLO’S ELECTRONIC NEWSLETTER
May 1997
Volume 1 * Issue 5
WELCOME to the fifth edition of POCATELLO’S ELECTRONIC NEWSLETTER.
There is a new and interesting site that can provide you with additional information about Pocatello. The site is found at http://www.Mykro.com/pocatello . There you will find information about the city as well as (so I am told) a few new pages will be added with links to businesses and community pages where you can add your site. The site is not yet complete but you can send you inquiries to mailto:pocatello@mykro.com . Good luck!!
VISIT OUR WEBSITE AT http://www.mykro.com/news
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THE ECONOMY & FINANCE UPDATE
by Larry Bell with First Security Bank
Real Estate Production Center
Email:
Site Address:
Recently the Federal Reserve Bank increased short term interest rates. This increase was accomplished by raising the interbank discount rate by .25%. Immediately upon the Federal Reserve raising their discount rate most major banks raised their prime rate a .25% to match the increase in the discount rate. We have received many inquiries concerning the ramifications of this interest rate increase. Some of these inquiries are: Will the increase in short term interest rates cause long term mortgage rates to increase. What effect will the short term rate increase have on consumer borrowing and will the effect the availability of credit for consumer purposes.
The increase in the Federal Reserve discount rate will cause some increase in the cost of consumer borrowing. This increase will be manifested mainly on loans with rates tied to the prime interest rate. Much of the consumer debt outstanding is fixed rate and will not be affected by this move, however, new extensions of credit may be at a slightly higher rate as a result of the increase in the discount rate. Much of the credit card debt, which is a considerable portion of consumer debt, is tied to treasury bills or is on a fixed rate. This form of credit will have very little change due to the increase in the discount rate.
The announcement of the increase in the discount rate had an immediate effect on long term rates. The thirty year fixed rate mortgage increased by approximately 3/8 of 1% and as a reaction to this announcement, however, since the announcement short term rates have decreased from their previous high of 8.5% to the current levels of the low 8% range. The increase in the discount rate demonstrated the Federal Reserves resolved to fight inflation. Many economists think that there is not sufficient inflation to be concerned about. The inflationary factor is a large component of the interest rate formula for long term rates, therefore by lessening the concerns on inflation this may actually have a long term beneficial rate effect on mortgage rates.
The third question that we have received concerning the discount rate hike had been the availability of credit, the increase in the discount rate has not affected the availability of mortgage credit. There is still virtually a limitless supply of mortgage credit available due to the very sophisticated and well working national secondary market.
The increase in the discount rate on the surface appears to have a negative impact on mortgage rates, however in the long term it appears that the discount rate increase will actually stabilize or lower long term rates. As many investors in long term debt instruments such as mortgage loans and long term bonds feel that their investment will be safe as it will lose little of its value to inflation, they are more comfortable in investing large sums of money in these debt instruments. Hopefully we will see rates stabilize at their present level or decrease for the remainder of the year. This would be particularly beneficial to the Pocatello market as we anticipate a very good sales year for the remainder of 1997.
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PUBLIC SCHOOLS
by Chris Williams, Public Information Officer
School District #25
Email: mailto:williach@d25.k12.id.us
Site Address: http://www.d25.k12.id.us
(208)235-3257
Educational Leadership - Look at School District No. 25 for it.
One does not have to look far for leaders within School District No. 25.
Not only is the district privileged to have nearly 1,400 exceptional staff members within its ranks, but there are many who lead outside the boundaries of the district as well.
And the 1996-97 school year may be a historic one as far as leadership is concerned.
The following is an attempt to list the many leaders in School District No. 25, and in no way is a complete list.
• Dr. Carole McWilliam, the district’s director of secondary education, currently serves as president of the Idaho State Board of Education. McWilliam was appointed as a member of the board by Governor
Cecil Andrus.
• Superintendent Dr. David Peck serves this year as president of the Idaho School Superintendents Association. He also serves as secretary-treasurer of the Portland, Ore.-based Northwest Regional Educational Laboratory and is a member of the Pocatello Regional Medical Center Board of Directors.
• Franklin Junior High School Principal Bill Watkins serves this year as president of the Idaho Secondary School Principals Association.
• Tendoy Elementary School Principal Judy Thomas heads the Idaho Elementary School Principals Association this year as its president.
• Assistant Superintendent Dr. Robert Myers serves this year as president of the First Security Games of Idaho.
• Sandy Guyon, the district’s director of business, serves as a member of the Bannock Regional Medical Center Board of Directors and is a past president of Zonta.
• District Controller Bart Reed is the Region Five Director of the Idaho School Business Officials Association and is president of the Pocatello Kiwanis Club.
• District Volunteer Services Coordinator Elaine Smith is president of the YWCA of Eastern Idaho Board of Directors and president-elect of the Soroptimists International of Pocatello.
• Pocatello High School Dean of Students Barbara Croshaw is president of the Delta Kappa Gamma Beta Chapter.
• District Director of Curriculum Fred Hughes serves as rule interpreter for wrestling in Idaho and wrestling commissioner for Southeast Idaho.
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REAL ESTATE
by W. James "Jim" Johnston, Associate Broker
Coldwell Banker Landmark
Email: mailto:jimj@mykro.com
Site Address: http://www.HomeSpecialists.com
This week I was reviewing where interest rates have been over the last 25 years. The following table gives average annual interest rates on 30-year fixed rate mortgages. It is interesting to note that rates hit a peak in 1981- over twice the current rate.
Year Rate (Average annual interest rates on 30-year fixed rate mortgages)
1972 7.38
1973 8.04
1974 9.19
1975 9.05
1976 8.87
1977 8.85
1978 9.64
1979 11.20
1980 13.74
1981 16.63
1982 16.04
1983 13.24
1984 13.88
1985 12.43
1986 10.19
1987 10.21
1988 10.34
1989 10.32
1990 10.13
1991 9.25
1992 8.39
1993 7.31
1994 8.38
1995 7.93
1996 7.84
SOURCE: Freddie Mac Primary Mortgage Market Survey
We have great rates and a nice supply of homes in the Pocatello area to choose from. Some job transfers at Union Pacific Rail Road have added some homes to our inventory, but other companies are hiring so right now supply and demand is holding steady.
For a preview of homes that are available right now visit our web site at http://www.HomeSpecialist.com
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WEATHER HISTORY
by Steve Cannon, weatherman
KIDK TV 3
Email: mailto:kidktv3@msn.com
Site Address: http://www.srv.net/~kidktv3/homen.html
If April showers bring May flowers, we should be up to our eyes in flowers, because April was abnormally wet in eastern Idaho. May, statistically speaking, is the wettest month of the year, with an average of 1.2’’ of precipitation. May marks the beginning of the warm weather as well, as the sun’s angle finally gets higher in the sky. In fact, the sun’s angle in the sky is steeper in May than in August, making May sunshine more intense that the August sun!
High temperatures in May average 67.7, up over 10 degrees from the April average high temperature of 56.8. Overnight lows in May average 40.3, compared to an April average of just above freezing… 32.3. Record high temperatures for May break into the 90s, with the warmest May temperature of 94, recorded on May 28th, 1919. It can still be cool in May, as evidenced by the record low temperature… 20 on May 1st, 1972. The Pocatello weather station recorded a record amount of precipitation for May back in 1908, when 3.96’’ fell. Heavy snow is possible in May… in 1903, 12.8’’ fell in May.
This month marks the end of the Hale-Bopp show, as the comet becomes increasingly difficult to see, leaving the western horizon by May 8th. However, as if to compensate for the comet’s loss, Mother Nature has provided an alternative… the Sun is beginning an upswing in it’s 11 year sunspot cycle; meaning there should be an increase in the possibility of viewing the aurora borialis… the northern lights! If you see an unusual amount of light in the sky, leave the city and head for a dark, high place to best view the display of light!
For sports fans, May 6th marks the anniversary of Babe Ruth’s first home run, in 1915. The British liner Lusitania was torpedoed and sunk off the Irish coast the next day, May 7th, 1915. Harry Truman was born on May 8th, 1884, the Golden Spike, which completed the transcontinental railroad was driven into place at Prometory Point, Utah on May 10th, 1869, and Amelia Earhart became the first wman to fly solo across the Atlantic ocean on May 20th, 1932!
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ECONOMIC SUMMARY- STOCKS & BONDS- INVESTMENTS
by Lynn Baldwin
Manager & Regional Trust Officer
U.S. Bank of Idaho
120 N. Arthur
Pocatello, Idaho 83204
email: f_baldwin@usbc.com
phone: (208) 234-5544
Economy:
At their March 25th meeting, the Federal Reserve raised the targeted Fed Funds interest rate from 5.25% to 5.50%.
The cost of borrowing will increase as a result of the Fed action. Banks have increased their prime lending rate from 8.25 to 8.50%.
We expect that the Federal Reserve’s action will slow the growth rate of the economy to less than 3% by the latter half of this year. However, this slower economic growth rate should produce less inflationary threat. The markets should perceive the Fed’s increase in short-term rates as creditable defense against inflation.
Equities Markets:
The market averages were decidedly negative in March. Large- to medium-cap stocks as measured by the Russell 1000 and S&P 500 indexes were down 4.5% and 4.2%, respectively. Small cap issues were down slightly more as the Russell 2000 Index fell 4.7%. Value stocks provide some protection, but still lost value as the Russell 1000 Value Index dropped 3.6%.
Although stocks have provided double digit returns during the past two years, both the economy and corporate earnings are likely to slow as the expansion matures and interest rates increase, which they tend to do late in the economic cycle. These trends, in turn, will probably lead to lower equity market returns.
Going forward, we expect returns for equities to moderate to their long-term historical range of 7% to 12%.
Fixed Income Markets:
As interest rates rise and bond yields increase, bonds become more competitive with other investment alternatives. Long-term treasuries now yield slightly over 7%.
The bond market will likely be very sensitive to strong advances in the stock market, or any signs of continued economic strength--particularly in employment growth.
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CHAMBER OF COMMERCE
by Sam Nettinga, General Manager
Greater Pocatello Chamber of Commerce
Email: mailto:pocchamber@sisna.com
Site Address: http://www.sisna.com/idaho/pocycoc
Calendar of Events:
Ongoing- Ross Park Zoo, Fort Hall Replica and Bannock County Historical Museum- All at Pocatello's Ross Park.
Ongoing- Simulcast Racing- Bannock County Fairgrounds, call 237-1340 or 238-1721 for more info
Ongoing- Mystery Theatre Nights- Every Friday and Saturday at "Back O' Beyond Bed & Breakfast. Call 232-3825 for more info
Ongoing- "Animals as Architects" Museum Exhibit- Idaho State Museum of Natural History, thru July 13, call 236-3397 for more info
2- ISU Spring Choral Concert- Goranson Hall at Idaho State University, call 236-3636 for more info
7-9 Idaho Governor's Conference on Recreation and Tourism- Industry professionals, students, and supporters gather for dynamic speakers, workshops, networking, and more. Call 334-2470 for more info
7- "Arts & Entertainment" in Oldtown- Historic Oldtown tour to kick off National Historic Preservation Week. Call 232-7545 for more info.
15-31- Annual Iris Bloom Tour- Self guided tour, call Lori at 236-7230 for more info.
17-31- Flat Track Horse Racing- Bannock County Fairgrounds, call 237-1340 or 238-1721 for more info.
23-25- State Championship Trap Shooting Event- At Pocatello Trap Club, adjacent to Pocatello Municipal Airport, call Rudy at 233-3424 for more info
30-1- Massacre Rocks Rendezvous & Black Powder Shoot- Call 548-2672 for more info.
31-1- Pocatello Field Archers "Archery Shoot"- Two-day event at Pebble Creek
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THE LAST WORDS
POCATELLO’S ELECTRONIC NEWSLETTER is published monthly by Michael James Johnston. Any questions, concerns, ideas or criticisms are to be directed to him via Email at mailto:editor@mykro.com
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Copyrighted 1997 by Mykro Computer Company. All Rights Reserved. No part of this material may be used or reproduced in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher except in the case of brief quotations embodied in critical articles and / or review.