Weekly economic news
There was little to dislike about last week's tsunami of economic news. First, little of it was housing focused (which, unfortunately, is usually a good thing these days). Second, it was all generally positive.
Economic growth in the U.S. unexpectedly accelerated in the third quarter, powering ahead to an annual rate of 3.9%, the highest in a year. The rate baffled most experts, who were sure the economy was barreling toward a recession because of the tumult in the mortgage and housing markets and commercial-borrowing costs that jumped to six-year highs. I just love it when the economic experts are so wrong.
Just as important, the economic growth appears to be of the good inflation-friendly variety. Indeed, American employers added almost twice as many jobs as forecast in October. In addition hourly wages rose 0.2%, on average to $17.58 in October.
Recent good news on the inflation front allowed the Federal Reserve to lower its influential federal funds rate to 4.5% (which, to be candid, was universally expected).
Good news on inflation also translated to good news on mortgages. Prime rates are now trading at levels unseen in six months. According to Freddie Mac's weekly survey, the 30-year fixed rate loan averaged 6.26%, the 15-year fixed-rated loan averaged 5.91%, while the five-year Treasury-indexed hybrid adjustable-rate loan averaged 5.98% for the week. Points ranged between 0.4 and 0.6.
Naturally with all the good economic news, consumer confidence fell to its lowest level since October of 2005 along with a big sell-off of stocks last Thursday. Although the third quarter gain in real gross domestic product (GDP) of 3.9 percent was stronger than market forecasts, the housing market has subtracted from GDP growth over the past twenty-one months. In its most recent policy announcement, the Federal Open Market Committee noted that the rate of expansion in the economy will most likely slow in the near term, due in part to a reflection of the intensity of the housing correction.
Economic growth in the U.S. unexpectedly accelerated in the third quarter, powering ahead to an annual rate of 3.9%, the highest in a year. The rate baffled most experts, who were sure the economy was barreling toward a recession because of the tumult in the mortgage and housing markets and commercial-borrowing costs that jumped to six-year highs. I just love it when the economic experts are so wrong.
Just as important, the economic growth appears to be of the good inflation-friendly variety. Indeed, American employers added almost twice as many jobs as forecast in October. In addition hourly wages rose 0.2%, on average to $17.58 in October.
Recent good news on the inflation front allowed the Federal Reserve to lower its influential federal funds rate to 4.5% (which, to be candid, was universally expected).
Good news on inflation also translated to good news on mortgages. Prime rates are now trading at levels unseen in six months. According to Freddie Mac's weekly survey, the 30-year fixed rate loan averaged 6.26%, the 15-year fixed-rated loan averaged 5.91%, while the five-year Treasury-indexed hybrid adjustable-rate loan averaged 5.98% for the week. Points ranged between 0.4 and 0.6.
Naturally with all the good economic news, consumer confidence fell to its lowest level since October of 2005 along with a big sell-off of stocks last Thursday. Although the third quarter gain in real gross domestic product (GDP) of 3.9 percent was stronger than market forecasts, the housing market has subtracted from GDP growth over the past twenty-one months. In its most recent policy announcement, the Federal Open Market Committee noted that the rate of expansion in the economy will most likely slow in the near term, due in part to a reflection of the intensity of the housing correction.
posted by Ken Calhoon at 8:39 AM
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