The first week in August was a block buster in terms of economic news. First, we had a reading on personal income and spending for the month of June. This report showed that consumers were still spending, but at a lower rate compared to the previous few months. This was the last major data released before the Federal Reserve Board released their decision to lower their benchmark rates by .25%, the first cut in a decade. This decision was not unexpected. However, the markets were disappointed that the Fed’s statement did not open the door wider for future increases.
The week ended with the jobs report for July. As we have pointed out, the employment data has been erratic recently and this month was an exception. The increase of 164,000 jobs was right on expectations and consistent with the lower rate of growth this year as opposed to last year. The headline unemployment rate came in at 3.7%, which was unchanged from the previous month. The previous two months of data were revised downward by 41,000 jobs.
Yes, it was quite a week. Overall, the news shows that the economy continues to grow, albeit at a slower pace. The first reading of economic growth for the second quarter was 2.1% and the markets were rocked by the threat of more battles on the trade front. The question is–did the Fed move too slowly in light of this most recent data? Only time will tell. For now, interest rates are at a level which will continue to stimulate the economy which is good news for consumers purchasing big ticket items such as cars and homes — and refinancing the loans they took out just last year.
Dave Hershman is the top author in the mortgage industry. Dave has published seven books, as well as hundreds of articles and is the founder of the OriginationPro Marketing System and Mortgage School. Want to send this commentary and other news in a personalized format to your sphere database or on social media? Sign up for a free trial at www.OriginationPro.com.