Weekly Economic Summary 12-13-2012
Table Source: Mortgage Success Source
On Friday, the Labor Department reported that employers added 146,000 new jobs in November, well above the 90,000 that was expected. In addition, the unemployment rate hit 7.7%, the lowest level since December of 2008. On the surface, both figures seem like a positive sign for the labor market.
It is also important to understand that the decrease in the unemployment rate was due in part to 350,000 people dropping out of the workforce. That’s why the Labor Force Participation Rate (LFPR) fell to 63.6%, the lowest reading in over 31 years. The LFPR calculation is quite simple. If you are 16 years old and not in the military, then you either have a job or you don’t. The ratio of people "participating" or working is then compared to the total population. In addition, the biggest increase in jobs was seen in the retail sector, which was probably due to seasonal holiday hiring.
What does this mean for home loan rates? Bonds and home loan rates worsened slightly last week, in part due to the positive headline numbers from the jobs report. But there is still much uncertainty in the markets, both here due to the ongoing fiscal cliff stalemate and the continued uncertainty in Europe. This means that investors will likely continue to see our bond market as a safe haven for their money. And since home loan rates are tied to mortgage bonds, this continued uncertainty could benefit home loan rates as well.
Home loan rates still remain near historic lows, making this a great time to consider a home purchase or refinance.
Forecast for the WeekThe second half of the week heats up with several important reports.
- Economic data doesn't begin until Thursday with Weekly Initial Jobless Claims. Claims have been moving lower the past few weeks after the big spike higher in November due to Superstorm Sandy.
- Retail Sales will also be delivered on Thursday.
- A double dose of inflation news ends the week, with the wholesale-measuring Producer Price Index on Thursday, followed by the Consumer Price Index on Friday.
Author Bio: Rob Alley earned a bachelors degree at Virginia Tech, in Blacksburg, VA in Biology. Rob Alley has been licensed for 6 years, he and his team of 4 agents consults with homeowners regarding Real Estate transactions and speciliazes in listing and selling Central Virginia Real Estate - Charlottesville, Louisa, Orange, Lynchburg, Nelson, Fluvanna, Amherst, Bedford, Campbell, Waynesboro and Augusta. Realtor/Owner of Virginia Real Estate Solutions at RE/MAX Assured Properties