POCATELLO’S ELECTRONIC NEWSLETTER

September 1997

Volume 1 * Issue 9

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

This FREE newsletter is provided to you FREE by

Michael James Johnston, Associate Broker, ABR, CRS, GRI, CIPS (candidate)

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Don't forget about THE SITE dedicated to POCATELLO…

The site is found at http://www.Mykro.com/pocatello . There you will find information about the city as well as (in the near future) a few new pages will be added with links to businesses and community pages where you can add your own personal and business sites. The site is not yet complete but you can send you inquiries to mailto:pocatello@mykro.com . Good luck!!

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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:

TO LOCK OR NOT TO LOCK?

A Shakespeare quotation? No a dilemma faced by mortgage loan applicants every day. Each loan applicant is given the option to lock in a rate or let the rate float until some time in the future. Nearly each applicant will ask the loan originator if he/she thinks rates are going up or down. If the originator could answer that question they would be working on Wall Street not originating mortgage loans.

One item that makes these questions difficult is the fact that rates can change at any time. We occasionally see rates change in the middle of the day. This does not happen often, but when it does happen it is a sign that the market is moving rapidly and rates are increasing. It is extremely difficult to tell if a slight rate movement is a trend or a blip in the market.

Many people ask what makes the rates move. Long term rates will move upward when it appears that the economy may be growing too fast or that inflation may increasing in the near future. When inflation increases it lowers the value of long term fixed rate investments such as mortgage loans. The other side of the coin is when the economy appears to growing at a steady to moderate rate or not growing the value of long term fixed rate investments appear to be safe and rates will remain stable. Wall Street traders watch the statistical releases of the Federal Government to try to gain insight as to the direction of the economy. This is one case when good news can be bad news. A lot of double talk but guessing the direction of long term rates is not easy.

What is a stake for mortgage loan applicants if they do not lock? The average loan in the Pocatello market is $80,000.00 and the difference in payments for the average loan with a 1/8 of one- percent change in the rate will result in a payment difference of $6.90. This is not enough money to make anybody rich or put him or her in the poor house.

Mortgage lenders expect the borrower to honor a lock as the borrower expects the lender to honor their locks. So if you lock in a rate do not expect the lender to give you a lower as you would not expect the lender to tell you rates have increased and they could get a higher return if the loaned your loan proceeds to another borrower. Honor is the key on both sides of the loan process. Lenders go into the secondary market and buy a commitment when a borrower tells them to lock a loan. The lender is left at financial risk if the borrower does not honor their lock.

Again the question is to lock or not to lock. I tell applicants if they feel good about current rates they should lock a rate and not worry about rates. This is the safe way to proceed. Regardless what you decide to do honor your word.

Should you have any questions on this or any other newsletter item you can call me at 208 232 5373.

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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

Dispelling Myths about Public Education

Schools are better than are portrayed by media.

Is the public perception of schools accurate? Or have too many people watched too many negative reports on television?

A report prepared by the Center on National Education Policy, The Good — and the Not-So-Good — News About American Schools, indicates the latter may be true.

"In contrast to the generally negative stories that seem to garner the most media attention, the evidence shows that American public schools, while they have a long way to go before we can say that our children are learning what they need to know to be productive and knowledgeable citizens in tomorrow’s world, are better than they are given credit for being — and are getting even better in several aspects," the report contends.

The booklet looks at successes and areas for improvement in five categories: academic course work, school completion and dropout rates, years of schooling, commitment of resources and student achievement.

The good news:

1-Students are taking tougher courses.

2-The dropout rate is down.

3-Achievement is up, and

4-More resources are going to schools.

Among the data in the report:

1- Students are pursuing tougher classes now than a decade ago, and more high school graduates have taken four years of English and three of mathematics, science and social studies.

2-The percentage of African-Americans ages 25 to 29 who did not have a high school diploma or equivalency certificate declined from 22.4 percent in 1980 to 15 percent in 1994.

3-The educational attainment of the U.S. population is high compared to that of other large industrialized nations. In 1992, the United States did better than Japan, Germany, the United Kingdom, France, Italy and Canada in the percentage of 25- to 64-year-olds who had completed secondary school and the percentage who had completed college.

Copies may be ordered through Phi Delta Kappa, 1-800-766-1156. One to nine copies are $1 each; 10 or more copies are 50 cents each.

Source: It Starts on the Frontline, The National School Public Relations Association.

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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

Here are some statistics that you might find interesting about single family homes in the Pocatello area:

Currently there are 435 "active" homes on the market.

Within the past two weeks:

Average sales price for single family homes: $106,050

Average days a home is on the market: 96

The percentage of list price to sales price: 96.4%

Total sold volume: $2,227,050

Within the past month:

Average sales price for single family homes: $92,881

Average days a home is on the market: 92

The percentage of list price to sales price: 96.0%

Total sold volume: $12,446,050

Within the past year:

Average sales price for single family homes: $91,387

Average days a home is on the market: 98

The percentage of list price to sales price: 97.5%

Total sold volume: $49,988,635

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WEATHER HISTORY

by Steve Cannon, weatherman

KIDK TV 3

Phone: (208)522-5100

Email: mailto:kidktv3@msn.com

September signals the beginning of the end for summer. Although the official start of fall isn't until September 22^nd, at 3:58pm MDT, the temperatures start falling off rapidly, and frost is usually expected anytime after the 15^th of the month. Normal high temperatures for September start off at 81 for September 1^st, but fall to 70 by September 30^th. The daily average high temperature for September is 75.7. Things cool off overnight as well, falling ten degrees from the 1^st (48) to a cool 38 on the 30^th. The average daily minimum temperature for September is 42.7. Despite the cooler weather, precipitation doesn't pick up dramatically for September. The average monthly precipitation total for August is .60''… the monthly total for September rises only .05'' to .65''.

September, however, is a month of historical contrasts where weather is concerned. The highest temperature for September in Pocatello is a very warm 98… occurring on September 5^th, 1976. But, things do cool off in September… the record low temperature for the month is a chilly 18… on September 25^th, 1926. The highest monthly precipitation total for September came back in 1940, with 3.8'' recorded… a monthly total of 2'' of snow was recorded in September, 1965.

But, the coming of the cooler weather makes an ideal time for star and planet gazing! Jupiter, the largest of the planets, sits low in the southeastern sky. It is by far the brightest object in the sky, as well, with a magnitude of -2.5! September's full moon falls on the 16^th.

Cold weather and snow are not unusual September happenings, but two September events bear special mention, regardless of the fact they occurred literally a world away from each other. The first took place on September 10^th, 1981, when snow was recorded in Johannesburg, South Africa! The second event, a lot closer to home, was a temperature of -9 at Yellowstone Park headquarters in Mammoth, Wyoming. Widespread crop damage was reported from this event throughout the western United States and Canada… occurring on September 24^th, 1926!

Famous people who share a September birthday include George Gershwin, on September 26^th, 1898, and T. S. Eliot, on the same day, in 1888. Greta Garbo was born on September 18^th, 1905, and tennis great Jimmy Conners celebrates his birthday on September 2^nd. He was born in 1952. Among the notorious, Jesse James was born on September 5^th, 1847. On September 23^rd, 1806, Lewis and Clark returned to St. Lewis from their historic '' Voyage of Discovery! ''

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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

SUMMARY

· We estimate the economy will continue to expand at a reasonable pace of 3% during the third quarter. The economy has strengthened in the last month with retail sales and inventory growth stronger than expected.

· Inflation numbers are still very good. There are many factors contributing to low inflation, including declining commodity prices, a stronger US dollar, continued productivity improvements through restructurings and global competition, more use of technology, and government downsizing.

· Economists are closely watching for increases in compensation. Compensation has not grown as economists would expect at this point in the business cycle, and the eventual impact of labor costs on the pricing structure could eventually push inflation higher.

· We think the short term trend for bond yields is still upward. We appear to be in the trading range between 6.25% and 7% for the 30 year treasury bond. We are in a moderately defensive posture.

· Stock market investors are carefully watching both corporate earnings reports and the recent rise in interest rates. We expect that earnings comparisons are likely to be more difficult with the moderating economic growth, a stronger US dollar, and more competitive product pricing.

· We have a fairly cautious position toward equities in the short-term, as our valuation model shows the market to be about 16% overvalued at this point. Even though we think there is a high probability of a fairly sharp short-term correction at anytime, it is difficult to make a case for not owning common stocks over the longer term.

ECONOMY

Gross Domestic Product (GDP) is estimated to have grown at a 2.2% (this is expected to be revised to above 3%) rate in the second quarter, confirming the expected slowdown from the unsustainable rate of 5.8% in the first quarter.

We estimate the economy will continue to expand at a reasonable pace of 3% during the third quarter. The economy has strengthened in the last month with retail sales and inventory growth stronger than expected. Retail analysts will be closely watching the comparisons for the back-to-school and year-end holiday sales, especially in light of a 15% increase in orders for imported Christmas goods. Second quarter GDP growth was heavily influenced by inventory building. Inventory increases have continued into third quarter, but we do not believe that this is sufficient to cause an inventory recession. Business appears to be reasonably optimistic, as they build their inventories to satisfy an increase in consumer demand.

Inflation numbers are still very good. There are many factors contributing to low inflation, including declining commodity prices, a stronger US dollar, continued productivity improvements through restructurings and global competition, more use of technology, and government downsizing. Gold prices

are still weak. Oil prices, which have been fairly stable, have only increased over the last few weeks. Chrysler Corporation has announced price cuts for their automobile product line. The consumer price index increased by only 2.2% year-over-year, and is currently at a 1.5% annual rate. Housing starts have been flat in recent weeks after several months of significant strength. Industrial production is somewhat less than had been forecasted, and auto sales are slow.

The UPS settlement and possible General Motors strike suggest that organized labor has some bargaining power at this point which is cause for caution. Economists are closely watching for increases in compensation. Compensation has not grown as economists would expect at this point in the business cycle, and the eventual impact of labor costs on the pricing structure could eventually push inflation higher. However, increases in labor costs have certainly not shown up as yet, and inflation does not seem to be a problem at this point.

FIXED INCOME

The bond market started August with a fairly sharp sell-off, moving the value of bonds lower and increasing interest rates. The bond market is concerned about increased levels of economic activity and the potential for inflationary pressures or the perception of pressure going forward. We think the short term trend for bond yields is still upward. We appear to be in the trading range between 6.25% and 7% for the 30 year treasury bond. We are in a moderately defensive posture, as our mutual fund bond portfolios are positioned slightly short in duration to our benchmarks.

We are encouraged with reductions in the Federal deficit. The robust nature of the economy has increased the government's revenues, which has moved us closer to a balanced budget without factoring in the effects of the balanced budget plan.

The Federal Reserve Bank continues to sit on the sidelines. Chairman Greenspan has made it clear he is willing to risk an economic slowdown to maintain control over inflation. We do not expect the Federal Reserve to raise interest rates unless there are further indications of an increase in the strength of economic activity.

EQUITIES

Stock market investors are carefully watching both corporate earnings reports and the recent rise in interest rates. Stronger than expected corporate profits have been pushing the market higher during the last two years. Investors are justifiably concerned that stock market valuations may be excessively high if corporate earnings grow more slowly going forward than they have during the past few years. We expect that earnings comparisons are likely to be more difficult with the moderating economic growth, a stronger US dollar, and more competitive product pricing. There are fewer cost reduction opportunities, as well as tighter labor markets and more expensive working capital as interest rates increase.

We have a fairly cautious position toward equities in the short-term, as our valuation model shows the market to be about 16% overvalued at this point. Our longer term point of view on stocks is fairly positive as long as the US economy continues to do as well as it has in the global environment. Even though we think there is a high probability of a fairly sharp short-term correction at anytime, it is difficult to make a case for not owning common stocks over the longer term. Therefore, we are carrying higher cash positions in our equity mutual fund portfolios to take advantage of opportunities we believe could develop in the short-term.

Under the newly legislated "Tax Relief Act of 1997," investors who own equities for a period of 18 months or longer will receive preferential capital gains tax treatment. Such tax preferences should help to make stock ownership more attractive, particularly for the smaller sized companies which have a propensity to grow more rapidly, and could appreciate significantly during an 18 month period. Valuations for small capitalized stocks are still attractive relative to larger companies. During the past few months, small companies have outperformed larger capitalized stocks. This should help accounts which have a strategy of broader diversification.

We are still optimistic about technology stocks as long as the economy continues to perform at a moderate pace and are adding to financial stocks which we expect will continue to grow reasonably well.

We continue to be concerned about high market valuations which reflects our general conservative and disciplined approach to selecting securities. We believe that our caution will be rewarded, as the market cycle continues to lengthen.

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CHAMBER OF COMMERCE

by Sam Nettinga, General Manager

Greater Pocatello Chamber of Commerce

Phone: (208)233-1525

Email: mailto:pocchamber@sisna.com

THE FOLLOWING ARTICLE WAS PROVIDED BY SAM NETTINGA TO BE PRINTED IN OUR PUBLICATION. IT IS TAKEN FROM THE AUGUST 1997 PUBLICATION PUT OUT BY THE IDAHO ASSOCIATION OF COMMERCE AND INDUSTRY. THEY CAN BE REACHED AT P.O. BOX 389 * BOISE, IDAHO 83701 * (208)343-1849 * FAX (208)338-5623

Just The Facts…

WORKER'S COMPENSATION:

New Law Makes Use of Temporary Workers More Cost-Effective, While Reducing Work-Site Employer Liability

By: Dawn Bushman, Director of Human Resources

Idaho Association of Commerce & Industry

There's a trend in today's workplace for companies to employ temporary workers for a variety of jobs. Nationally, the use of the temporary help has increased 400% since 1982. In Idaho, the story is much the same. In 1987, an average of 880 temporaries were employed per day, with an annual payroll of $6.6 million. By 1996, that number had grown to an average of 6,100 temporaries per day, with an annual payroll of $76.1 million.

But there's been at least one problem: Who had the responsibility to pay for worker's comp coverage on the employees- the temp agency, or the work-site employer? Often, the temp agency paid for the coverage- but if the worker was injured, the work-site employer had third-party liability for damages. To avoid that liability, many work-site employers went ahead and bought worker's comp coverage- an additional expense, and unnecessary and duplicative coverage.

Then came a 1995 decision by the Industrial Commission that "clarified" the issue- but in a way that threatened the temp help industry and companies that used their services. The Commission ruling held the work-site employer responsible for paying for worker's comp coverage for temp employees. This decision hurt the temp-help industry by reducing their competitiveness and making the use of temporary workers less cost-effective for work-site employers. If the work-site employer had to pay the worker's comp costs in any case, why not just hire the workers outright?

Temp help businesses, including several IACI (Idaho Association of Commerce & Industry) members, turned to the IACI Worker's Compensation Subcommittee for help. That Subcommittee developed Senate Bill 1094. Legislators passed the bill, Gov. Phill Batt signed it, and S1094 became law on July 1, 1997.

The bill has three components:

1- It allows the work-site employer and the temporary, leasing, or professional employer agency to decide, by written agreement, which one will carry the worker's comp insurance.

2- If no written agreement exists, the responsibility for buying worker's compensation coverage falls to the temporary, leasing or professional agency.

3- If through agreement, or by default, the temporary, leasing or professional agency carries the coverage, then the work-site employer is immune from third-party liability.

The language in the bill specifically refers to temporary employers and professional employers as being the entities impacted by the new law. However, there is nothing in the definition of those two entities (Chapter 24, Title 44, Idaho Code) that necessarily precludes any other alternative staffing arrangement from benefiting from the law.

S1094 benefits everyone: (a) The worker is guaranteed coverage, (b) The temporary, leasing and professional employment industry retains its ability to be competitive, and (c) The work-site employer avoids unnecessary costs and liability.

…good for employees and good for business.

**If you have specific legal questions, please consult your attorney to ensure your protection under the law.**

Grant Burgoyne, a Boise attorney with Mauk, Smith and Burgoyne, and a principal author of the language in S1094, offers the following general definitions that may help to identify and organize some of the new employment options now available to employers.

DEFINITIONS:

Alternate staffing arrangements: Any arrangement by which an entity carries out its activities through workers (i) who are not its employees, or who are also the employees of another entity, and (ii) who are subject to sufficient direction and control by the entity that they are not independent contractors or the employees of independent contractors.

Temporary staffing service (temporary employer): Typically, an entity that hires and assigns temporary employees to work-site employers (the customer or client of a temporary employer, leasing company, or professional employer).

Employee leasing company: Typically, an entity that hires and assigns skilled workers to a work-site employer for a special project, and for a specific period of time longer than a temporary employee assignment.

Professional employer organization (PEO): Typically, an entity that provides a business all, or a substantial portion, of its work force on a long term or permanent basis; employees typically hold their positions for periods of long duration.

**If you are already in, or plan to enter into a unique employment relationship, you should make certain that the language of the agreement does not disqualify you from the provisions in S1094.**

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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

Please distribute the Email address (mailto:newsletter@mykro.com) for this newsletter or the web site address ( http://www.Mykro.com/news ) to anyone that you find that may have interest in knowing more about the Pocatello area. We hope you find the information provided to be worthwhile and beneficial.

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.