POCATELLO’S ELECTRONIC NEWSLETTER

October 1997

Volume 1 * Issue 10

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WELCOME to the tenth edition of POCATELLO’S ELECTRONIC NEWSLETTER.

This FREE newsletter is provided to you FREE by

Michael James Johnston, the editor.

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POCATELLO'S ELECTRONIC NEWSLETTER will soon be made available to Pointcast users. Pointcast is a program that can keep you up to date with weather information, late breaking news stories, sports scores and more. Pointcast 2.0 is available for FREE at http://www.pointcast.com and our channel will be made available for FREE by the end of the year. Watch for updates to be announced here soon!

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Please contact us if you have any ideas on how we can expand our newsletter. We would like to expand by providing you information on heath related issues and tips. Please contact the editor if you know someone that would qualify to participate with our newsletter. mailto:editor@mykro.com

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OUR CONTRIBUTORS:

Chamber of Commerce- Sam Nettinga

Economic Summary (Investments, Stocks & Bonds)- Lynn Baldwin

Weather History- Steve Cannon

Real Estate- Jim Johnston

Public Schools (School District #25)- Chris Williams

Economy & Finance Update- Larry Bell

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THE ECONOMY & FINANCE UPDATE

by Larry R. Bell with Citizens Community Bank

Senior Vice President, Manager Mortgage Lending

Phone: (208)232-5373

Email:

Site Address:

WHY PREQUALIFY?

One of the first steps in the house purchase process is to select a lender. Once a lender is selected many buyers make an appointment to be pre-qualified for a real estate loan. I will address the advantages of being pre-qualified and the process the lender completes for the pre-qualification.

Often a buyer does not have a good idea of the maximum loan they will qualify for. By completing the pre-qualifying process the borrower can see how large of a loan they can qualify to obtain. This will assist the buyer and the Realtor in establishing a price range to find a home in and save time by not looking at houses they cannot afford. It is a very disheartening experience to make an offer on a house a person cannot qualify to purchase.

A pre-qualified buyer has more bargaining power than a non-pre-qualified buyer. The seller will give more consideration to an offer from a buyer that has been pre-qualified. The seller is assured that if they accept an offer and take their house off the market based on an offer from a pre-qualified buyer the chances are much better the sale will close. Sellers are reluctant to take their house off the market based on an offer from a buyer that is not pre-qualified.

A pre-qualified buyer will be able to close sooner than a buyer that has not visited with a lender. This will aide in the negotiations with the seller as they are assured they can reach their goal of closing the sale of their house sooner and not waste their time on an offer from a buyer that may not qualify.

The loan officer can review your financial situation and make suggestions to help you qualify for a larger loan or give you ideas that may help you restructure you financial situation. During the pre-qualification meeting the loan officer will review loan programs the help you determine the loan that best suits your needs.

You may ask how do I get pre-qualified? All you need to do is make an appointment with a lender. This process takes about forty-five minutes. The lender will gather the information to process a loan application. Should the buyer decide to have the lender order a mortgage credit report the lender will collect the credit report cost from the buyer. That is the only cost for the pre-qualification. The lender will process the borrower portion of the real estate loan while the buyer is looking for a house so this process is completed quickly.

Do you want to get pre-qualified? If so, call Citizens Community Bank and ask to speak to a real estate loan officer to be pre-qualified. The process will take less than one hour and will not cost any money. Call (208) 232-5373 to make that appointment.

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PUBLIC SCHOOLS

by Chris Williams, Public Information Officer

School District #25

Phone: (208)235-3257

Email: mailto:williach@d25.k12.id.us

Site Address: http://www.d25.k12.id.us

The Senior Citizen Partnership Program

A new program in School District No. 25 designed to give senior citizens an opportunity to share their expertise with students and staff while also helping to meet their property tax obligations has been met with nothing but success.

The program is the Senior Citizen Partnership Program, a concept brought to the district by Trustee Dr. Bill Wilson and organized by Volunteer Services Coordinator Elaine Smith.

Wilson learned about the idea during a National School Board Association meeting and thought it could be a positive program for School District No. 25.

The response to the program has been good, Smith said, adding 34 senior citizens were trained in the program during last year’s Spring semester, 21 actually participated.

Superintendent Dr. David Peck said, "The underlying purpose of this, of course, is to help people who are struggling with taxes so that they can be supportive of the elections and the property tax measures that we go through as a school district.

"Some senior citizens who are on a fixed income really do struggle," Peck said, "... so this was a way to try to help them. And it is a really good program just to associate with the schools."

Senior citizens who participate in the program can assist in the computer lab, media center, school office or classrooms by helping students with reading, writing or math. Training is also provided by school district staff and every effort is made to match the senior’s work preference with each school’s needs.

Seniors can also specify the days and hours they are available to work.

Their working hours are then coordinated with school schedules.

The program offers many benefits, such as:        

--Providing students and teachers with additional support that is a readily available resource in the community.

--Providing technology skills to seniors who may not otherwise have an opportunity to learn them.

--Providing seniors with a sincere feeling of being needed.

--And providing seniors with a method by which they can personally contribute to the School District No. 25 learning community while meeting their property tax obligation.

Anyone wishing to participate in the program can contact Smith by calling 208-232-3563.

 

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REAL ESTATE

by W. James "Jim" Johnston, Associate Broker, GRI, CRS, CRB, ABR

Coldwell Banker Landmark

Phone: (208)232-9010

Email: mailto:jimj@mykro.com

Site Address: http://www.HomeSpecialists.com

Here are some statistics that you might find interesting about single family homes in the Pocatello area as of September 19, 1997:

Currently there are 428 "active" homes on the market.

Within the past two weeks:

Average sales price for single family homes: $102,271

Average days a home is on the market: 100

The percentage of list price to sales price: 97.6%

Total sold volume: $1,431,800

Within the past month:

Average sales price for single family homes: $93,120

Average days a home is on the market: 94

The percentage of list price to sales price: 96.2%

Total sold volume: $19,089,550

Within the past year:

Average sales price for single family homes: $91,810

Average days a home is on the market: 99

The percentage of list price to sales price: 97.4%

Total sold volume: $56,830,635

 

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WEATHER & CLIMATE SUMMARY

by Steve Cannon, weatherman

KIDK TV 3

Phone: (208)522-5100

Email: mailto:kidktv3@msn.com

Site Address: http://www.srv.net/~kidktv3/homen.html

October signals the real beginning of fall. September may have the autumnal equinox, but the real change of the season begins with the crisp cool days of October. Temperatures fall from a September average high temperature of 75.7, to an October average high temperature of 62.8. Overnight, things cool from a September average low temperature of 42.7 to a chilly 33.3 average overnight low temperature in October. Precipitation gets a little more generous in its accumulation for the month of October, rising from a monthly average of .65'' in September to an October total of .92''. However, with all the talk of cooler weather, October can still feel like summer. The highest temperature recorded in October was a sizzling 88 on October 7th, 1979. But, the chill was in the air on October 29th, 1971, with the all-time coolest temperature for the month…. 10! The Pocatello weather station recorded a wet October in 1912, with a monthly total of 3.25'', and winter came early in 1920, with a monthly snowfall total of 18.1''!

Astronomically, October gives us one of the best views of the ringed planet Saturn. The planet rises at sunset… in the southern sky. While not quite as bright as its larger neighbor Jupiter, Saturn still puts on quite a show this month. Find a neighbor with a telescope, because the planet is tilted in its best position in 12 years! Venus continues to shine in the evening twilight… and Daylight Savings Time ends on October 26th, at 2am… remember to "fall back," and set your clocks BACK one hour before retiring on the night of the 25th.

October is the month when we celebrate the birth of two American presidents… Jimmy Carter, born October 1st, 1924, and Rutherford B. Hayes, born October 4th, 1822. Legendary First Lady Eleanor Roosevelt was born on October 11th, 1884, author Michael Crichton was born October 23rd, 1942… the day known as 'Black Monday,' October 29th, 1929, signaled the beginning of the great depression in the United States… that's the day of the great New York Stock Exchange crash!

For those interested in lunar lore, the full moon in October is called the Hunter's Moon, and Friday, October 31st, signals the special holiday All Hallows Eve, better known to our kids as Halloween! (Trick or treat!)

 

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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

Phone: (208) 234-5544

Email: f_baldwin@usbc.com

Site address: http://www1.usbank.com/personal/investing/

 

SUMMARY

 

· We continue to experience a "Goldilocks" economy, growing within the reasonable range of 2 1/2% and 3%, which the Federal Reserve considers not too fast and not too slow. More importantly, this growth has been commensurate with a very low inflation rate.

· The year-over-year CPI increased only 2.2% despite a significant jump in energy prices. Even though wages are rising faster than the inflation rate, most analysts believe that the Federal Reserve will postpone increasing short-term interest rates due primarily to the mild CPI growth.

· The 30-year Treasury bond rose more than 2 points ($21.55 for each $1,000 face amount) in one day, causing the yield to decline from 6.6% to 6.4%.

· The current level of equity holdings (including common stock, equity mutual funds and pension funds) represents 39.3% of households’ financial assets. This is at or near record levels and an 86% increase over the 21.1% allocation to equities in 1980.

 

ECONOMY

 

We believe that Gross Domestic Product (GDP) will grow at a rate of approximately 3% for the third quarter and through the fourth quarter. We continue to experience a "Goldilocks" economy, growing within the reasonable range of 2 1/2% and 3%, which the Federal Reserve considers not too fast and not too slow. More importantly, this growth has been commensurate with a very low inflation rate. Leading economic indicators rose in July, factory orders were higher in August with stronger than expected durable goods, but retail sales were softer than expected in August, up only 0.4%.

We are experiencing the best real-wage growth in years, which has contributed to rising consumer confidence. Some of this recent growth, however, has been a result of inventory build-up, which may wind down in the months ahead. Consumer credit is stronger than forecasts, with large increases in car loans as well as revolving credit. Banks have been more willing to lend, while many analysts believe that consumer credit problems may have peaked.

The news which recently propelled the stock and bond markets higher was the release of the August Consumer Price Index (CPI), showing a lower than expected month-over-month increase of only 0.2%. The year-over-year CPI increased only 2.2% despite a significant jump in energy prices. Even though wages are rising faster than the inflation rate, most analysts believe that the Federal Reserve will postpone increasing short-term interest rates due primarily to the mild CPI growth. Nonetheless, the economy is sufficiently healthy that it could easily surprise the financial markets by growing faster than analysts currently expect. Therefore, we are somewhat cautious going forward.

 

FIXED INCOME

 

Both the CPI and Producer Price Index (PPI) numbers were well received by the capital markets. The 30-year Treasury bond rose more than 2 points ($21.55 for each $1,000 face amount) in one day, causing the yield to decline from 6.6% to 6.4%. This was one of the biggest price gains that we have seen in the bond market in some time. However, we are still above the yield reached in late July, when the long bond yield plunged to 6.3%. We are curious to see if the current bond market rally will have much follow-through and whether it can move much beyond the very tight trading range of 6.5% to 6.7% that had persisted for the past several weeks.

Except for Japan, interest rates in all the major developed countries have tended to rise and fall in similar patterns with US rates during the past four years. Japan’s interest rates are significantly lower than the rest of the major capital markets because their economy continues to struggle, and also due to their somewhat unique mix of monetary and fiscal policies. Other major countries including Britain, Canada, France, Germany, and the United States have long term interest rates that trade in a fairly narrow range.

In a world of global capital markets and expanding trade, changes in relative currency values become a mechanism to redistribute growth and inflation. Likewise, changes in relative interest rates become the mechanism that reallocates capital between major financial markets. This has important implications. As long as the US is a net debtor and must attract capital from the rest of the world, there is a limit to how low our interest rates can go relative to rates in other major capital markets. As the world’s largest debtor, US rates tend to be slightly higher than those of other capital markets. In fact, US interest rates have traded sideways over the last year while rates in most of the other major capital markets have actually trended downward.

 

EQUITIES

 

The current level of equity holdings (including common stock, equity mutual funds and pension funds) represents 39.3% of households’ financial assets. This is at or near record levels and an 86% increase over the 21.1% allocation to equities in 1980.

There appear to be two factors that have increased the demand for ownership of equities during this time period. Besides the natural flow of new funds from personal income, pension payments, and corporations, we find that there is a major asset allocation shift that has contributed to the demand for equities. Pension funds have increased their equity weightings from 35% in 1980 to 55% in 1997, while during this same period, insurance companies have increased their equity allocation from 12% to 19%.

We continue to ask ourselves if this high level of equity ownership is likely to be sustained if equity values decline for any sustained period of time. Of course, no one knows the answer to this question, but this is an obvious concern to ourselves and all investors with the stock market at unprecedented valuation levels.

 

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