[Washington, DC] To the chagrin and frustration of Donald Trump and his administration, today the Bureau of Labor Statistics released employment data for September. The decline was expected but goes against the mantra Trump spouted about the HUGE success workers would see once he was running things.
No one can predict natural disasters. Hurricane season is common for the Caribbean and states which buffer against the Gulf of Mexico. It’s something you can never get use too, however the magic of those states, territories and countries is why people choose to call it home. Harvey and Maria packed a punch not seen in years. The result was pure devastation and many workers were sidelined as whatever job they previously performed disappeared.
Unemployment rate dips to 4.2%
Even though job numbers dipped, there was good news as the unemployment rate slid to 4.2%. These numbers are important as they affect the psyche of those in the workforce and have a direct impact on consumer confidence.
Trump is known for his bombastic rhetoric and marginalization of anything which places him in a negative context. Ever since taking over as the president, he coined a new phrase to counter such news as “fake.” He was warned repeatedly that running government is different from a family held business. Yet, he boasted tremendous improvement that has never been seen before would occur! The big difference is accountability and factual public data which will contradict even the most confident-appearing person. While the clock is ticking, reality is setting in for many and they are pleading for his critics, “just to give him a chance.”
As we move into the fall season, October is also projected to be down as the employment effects of hurricane Maria will be announced.
Mortgage rates which have been sliding during the past several months reached their lowest point of 2017. As reported by the weekly Freddie Mac Primary Market Rate Survey, the benchmark 30-year mortgage dropped another four basis points in week over week reporting and came in at 3.780%
The dip was attributed to the 10-year treasury yield which also fell to new lows at 2.061%. Of all financial indicators which influence mortgage movement, it is the 10-year treasury yield which is the most predominant. At the beginning of the year there was much optimism that the Trump Administration could jumpstart economic growth and inflation by cutting taxes and regulations. However, with the administration not being able to claim any legislative victories investors are wondering whether they have the will to move the economy at a faster pace.
Rates are cyclical and will not always drop, however the recent national disaster of hurricane Harvey will have an effect in consumers applying and qualifying for mortgage. Low mortgage numbers are great but you still have to be able to qualify based on your credit and condition of the property being used as collateral. One of the first economic data points of Harvey was the BLS report reflecting unemployment claims. The report showed that claims jumped 62,000 from week over week reporting and came in at the highest level since 2015. That is worth mentioning as there as several more hurricanes, with equal or greater strength which is slated to hit the United States within the next several days.
Based on Harvey and other pending hurricane’s which primarily affect regional economics, consumers can expect a broader impact resulting in rates remaining at their current level. The big question is with all that is going on, can consumers switch gears and be concerned about mortgage money?
September 7, 2017 (based on Freddie Mac weekly rate survey)