What is happening with the job market? That is a question we have not had to answer for several years because job growth has been consistently positive. And though the job market continues to be strong in 2019, we can no longer use the word consistent from month-to-month. Since January we have had a month in which we have added over 300,000 jobs, which is in the spectacular range. We have also had two months barely above 50,000 jobs added — which is in the poor range.
The overall average for the year is down from last year, which is not unexpected because last year we had the positive influence of the tax plan. Tomorrow the Federal Reserve Board is meeting amid calls for lower short-term interest rates. The inconsistency of both the jobs report and other economic data will only make this decision harder. Still, most analysts are predicting a 0.25% decrease, with some even forecasting a 0.50% cut. We would guess that the Fed would love to see this week’s jobs report before they make a decision.
In the absence of this data, they will be relying upon other indicators. One very important indicator was released last week. The Commerce Department’s first measure of economic growth for the second quarter showed an increase of 2.1%, slightly higher than the expectations of slowing growth compared to the first quarter. This number is preliminary and will be subject to more than one revision. One thing to keep in mind, if the Fed does cut rates, it does not mean that rates on home loans will also fall by the same amount, as these rates have already moved lower in anticipation of the economy slowing.
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.