| Concerns about global economic growth continued to push mortgage rates lower over the past week. Two days of testimony from Fed Chair Yellen to Congress had little net impact. Mortgage rates are now not far from the record lows seen a few years ago. Economic conditions in the U.S. appear to be resisting the troubles in other countries so far. Friday'sreport on retail sales revealed another month of solid growth. Retail sales in January increased more than expected, and upward revisions to the December results added to the strength of the report. This was the fourth straight month of gains. Steady job growth and lower gas prices have helped to increase consumer spending. Economists also like to look at a subset of the retail sales data called core retail sales, which exclude sales of automobiles, gasoline, building materials and food services. Removing these volatile categories provides a clearer indication of the underlying trend. In addition, core retail sales correspond more closely to the consumer spending component of gross domestic product (GDP). In January, core retail sales jumped 0.6%, double the expected increase of 0.3%. Since consumer spending accounts for roughly 70% of U.S. economic activity, the retail sales data is an important indicator of the economy's performance. For mortgage rates, the stronger-than-expected results for retail sales were negative news, since it increased the outlook for future inflation. Mortgage rates moved higher after the release of the data.
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