About this Economic Recap

This report is a simple recap of economic statistics and events that occurred over the past week. It is not
intended to portray DoubleLines opinion. If you are interested in DoubleLines views, please review our
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Economic Recap
February 2013 Week 1
As of February 1, 2013
By DoubleLine Research



Week 1 Recap

The Dow Jones Industrial Average finished the week 150 points off of the all-time highs, despite the economic
report released the week ending February 1
st
which showed that Gross Domestic Product (GDP) declined
during the last quarter of 2012. It is possible that this 0.1% decline had an impact on the markets;
government defense spending dragged down GDP by 1.3%, and inventory accumulation dragged it down a
further 1.3%. Personal Consumption showed strength by expanding 2.2% during the quarter. The GDP price
deflator came in at 0.6%, implying nominal GDP growth of 0.5%.

The Federal Housing Finance Agency (FHFA) release served as a good proxy for the more comprehensive
S&P/Case-Schiller release this week, both are currently reporting November data and showed a nearly
identical 0.63% month-over-month (MoM) change in November. San Francisco was the leader with prices
increasing 2.5%, while New York was the laggard at -0.3%. The more impressive figure was the increase of
5.5%, a six year high year-over-year (YoY). In the 12 months through November prices have increased 22.8%
and 12.7% in Phoenix and San Francisco, respectively, and decreased by 1.24% in New York.

New orders for Durable Goods grew by 4.6% in December, the fourth consecutive monthly increase. The
11.9% increase in transportation-related orders was a major contributor to this increase, and without, orders
increased a mere 1.3%. Defense related purchases, which exhibit high levels of MoM volatility, increased
110.4% during December, actual shipments of durable goods increased 1.3%.

Personal Income grew in December at the fastest pace relative to Personal Spending in eight years. The 2.4%
differential between 2.6% income growth and 0.2% of spending growth shows consumer deleveraging made
strong gains during December. The income surge was also an eight-year high. December 2004 saw incomes
grow 3.3% and spending grow 0.7%. Inflation faced by consumers over December as measured by the
Personal Consumption Expenditure (PCE) Deflator was zero. In 2012, the PCE showed inflation of 1.3%.

The University of Michigan Consumer Sentiment Survey (UMCSENT) and the Conference Board (CB) showed a
mixed picture of Consumer Confidence in January. Data collected by the CB showed their index declined from
66.7 to 58.6, while data from the UMCSENT showed an increase from 71.3 to 73.8. Both the Economic
Conditions and Economic Outlook subindices of the UMCSENT showed increases. The 1-Year Ahead
inflation component continued to be above 3.0%, making it the 25
th
consecutive month above this level.
There has been no month in the last 12, however, that has shown a Consumer Price Index (CPI) figure at or
above the 3.0% level YoY.

The private firm ADPs National Employment Report showed 192,000 jobs were added to private payrolls in
January, after Decembers report was revised down from 215,000 to 185,000. After a month where job gains
came nearly entirely from firms who employ over 50 persons, this months gains were concentrated in firms

1
Economic Recap
February 2013 Week 1
As of February 1, 2013
By DoubleLine Research

Week 1 Recap continued

employing less than 50 people. Data from the Bureau of Labor Statistics (BLSs) Establishment Survey showed
a more tepid 157,000 jobs added during the month, of which 166,000 were in the private sector. These last
two data points imply government payrolls continue to shrink. The household survey which serves as the
basis for the Unemployment Rate showed 17,000 jobs were added and that the rate itself increased 10 basis
points (bps) to 7.9%. The broader Underemployment Rate held steady at 14.4%.

The Institute for Supply Managements (ISMs) Manufacturing Purchasing Managers Index (PMI) of 53.1
showed marked growth over Decembers 50.2 figure. Large increases in the new orders and inventories
components led the increase. Another proxy for manufacturing, Domestically Made Vehicle Sales, also
showed growth, increasing from the seasonally-adjusted annualized rate (SAAR) of 11.97 million to 12.08 in
January. Total vehicle sales saw a small decline from 15.3 million to 15.2 million.

The Mortgage Bankers Association (MBA) Mortgage Application Index contracted 8.1% during the week
ending January 25
th
, as mortgage rates saw a notable increase. The contraction was broad based with
refinancing activity over the period decreasing 10.2% and applications for new purchases falling 1.8%. New
purchases represented 20.9% of total applications and 24.9% of total dollar value during the week. The rate
on the Fixed-Rate Mortgage (FRM) 30-year contract rose 5 bps to 3.67% and the FRM 15-year contract
increased 8 bps to 2.95%. At the end of January 2012, the 30-year rate stood at 4.09% and the 15-year rate
was at 3.36%.

Initial Jobless Claims increased by 38,000 to 368,000 during the week ending January 25
th
. Continuing Claims
increased to 3.20 million, and Emergency Unemployment Claims increased to 2.11 million. The Extended
Unemployment rolls fell by 500 people to now only cover 700 persons. The total number of individuals
receiving some form of unemployment benefit stands at 5.31 million.


















2
Economic Recap
February 2013 Week 1
As of February 1, 2013
By DoubleLine Research

2
Important Information Regarding This Report
DoubleLine has no obligation to provide revised assessments in the event of changed circumstances. While we have gathered this information from
sources believed to be reliable, DoubleLine cannot guarantee the accuracy of the information provided. DoubleLine assumes no duty to update this
information, which is not a complete discussion of all economic factors reviewed by DoubleLine. DoubleLine reserves the right to change its investment
perspective and outlook without notice as market conditions dictate or as additional information becomes available.
Certain data discussed in this report is publicly available only on a time delayed basis. DoubleLine strives to analyze data as it becomes available, but
makes no representation that all data is reviewed contemporaneously to its release.
Sources: Bloomberg Financial Services, Bloomberg News, Conference Board, Department of Labor, Department of Commerce, Mortgage Bankers
Association, Redbook Research, U.S. Census Bureau, Institute of Supply Management, Federal Reserve.
*Data above is as of 1/25/2013, except for the following data points: ISM Manufacturing (1/2013), CB Consumer Confidence (1/2013), Unemployment
rate (1/2013), Discouraged Workers (1/2013), Employment-to-Population (1/2013), Initial Jobless Claims (1/26/2013), Continuing Jobless Claims
(1/18/2013), Extended Jobless Claims (1/11/2013), Emergency Unemployment (1/11/2013), and all Nonfarm figures (1/2013).


Terms:










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2
Statistic* Value Last Change
ISM Manufacturing Index 53.1 50.2 -
CB Consumer Confidence 58.6 66.7 -
MBA Applications Index 822.1 - -8.1%
MBA Purchase Applications Index 211.1 - -1.8%
MBA Refinance Applications Index 4,415.2 - -10.2%
MBA 15-Year FRM Contract Rate 2.95% 2.87% -
MBA 30-Year FRM Contract Rate 3.67% 3.62% -
Unemployment Rate 7.9% 7.80% -
Discouraged Workers not in Labor Force 0,804k - -264k
Employment-to-Population Ratio 58.6% 58.6% -
Initial Jobless Claims 368k - +38k
Continuing Jobless Claims 3,197.0k - +22k
Extended Jobless Claims 0.7k - -0.5k
Emergency Unemployment Compensation 2,112.6k - +418.8k
Nonfarm Payroll 134,825k - +157k
Nonfarm Private Payrolls 112,961k - +166k
Nonfarm Government Payrolls 21,864k - -9k
BLS = Bureau of Labor Statistics
bps = basis points
CB = Conference Board
CPI = Consumer Price Index
FHFA = Federal Housing Finance Agency
FRM = Fixed-Rate Mortgage
GDP = Gross Domestic Product

ISM = Institute for Supply Management
MBA = Mortgage Bankers Association
MoM = month-over-month
PCI = Personal Consumption Expenditure
SAAR = seasonally-adjusted annualized rate
UMCSENT = University of Michigan Consumer Sentiment Index
YoY = year-over-year