When the Federal Reserve Board’s Open Market Committee met last week, they did not have the jobs data from April to chew on before they made their announcement. Thus far this year, the Fed has been taking a “wait and see” approach to fiscal policy, with many predicting no rate changes in 2019. Others have predicted at least one rate increase and still others have predicted a rate decrease.
That tells us that the markets are really guessing regarding the next move from the Fed. And if the markets are guessing, the Fed may be guessing as well. Most think that the economy will slow down this year, and the preliminary measure of economic growth for the first quarter came in at 3.2%, which does not support this assumption. Of course, this number will be subject to multiple revisions.
Do the jobs numbers support the theory that the economy is slowing? The first quarter included some volatile data and the April report represents the first data from the second quarter — plus revisions of the first quarter’s numbers. The increase of 253,000 jobs and headline unemployment rate of 3.6% indicate that the economy may be stronger than expected. The previous months of job gains were revised up by 16,000. Wage growth came in 3.2%. The report was seen as robust, which will keep the Fed guessing for another month, but certainly they will be resisting calls for a decrease in short-term rates anytime soon.
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.