How is the economy?
Question of the week: How is the economy?
Answer: Strong.
The final economic data before our national and local elections next week show a strong economy, incomes outpacing inflation, slower inflation, and consumers still spending.
The economy grew at strong 2.8% in the 3rd quarter, a bit slower than 2nd quarters 3.0%, but at a pace that supports a good job market and consumer spending.
Regarding the job market, as expected, today’s employment data for October is one that is easy to ignore, and should be. Employers added a net 12,000 jobs for the month; a number that ordinarily would foretell a down turn in the economy. Ordinarily a two significant hurricanes that result in tremendous damage, loss of life and shutting down of regions of the country do not occur within ten days of each other, while also having a major strike by workers of one of the largest employers in the country. Absent these events, speculation may say that employment growth was strong or weak for the month.
Consumer spending is 65-70% of our nation’s economy. The 4th quarter of the year began with consumers still spending, increasing spending from September by 0.5% in October. Year of year consumer spending was up; 3.7%, well above the rate of inflation. Supporting continued strength in consumer spending is personal income. Workers earned 0.3% more in October than the month before, and year over year have seen their income increase by 3.0%.
Personal Consumption Expenditures (PCE) is the preferred gauge of inflation for the Federal Reserve when determining its policies. In September PCE showed a 0.2% increase in prices from August and a 2.1% increase from September 2023; down from 2.3% the month before.
The Fed digs a bit further into the PCE data for its decision making, using the “core” rate, which strips out food and energy costs. Due to lower gas prices not in the data, the core rate showed a 0.3% growth month-to-month and a steady 2.7% annual growth. The core rate is sticky primarily due to housing prices remaining high.
The overall data supports the Fed enacting minor rate cut(s) in the near future as overall inflation is slowing. However, with wages, spending and growth all showing moderate to strong growth, the potential for inflation increasing seems more likely than the economy slowing towards recession.
From my viewpoint, there is little data supporting mortgage rates declining in any significant manner before the end of the year—absent some major event.
Schedule an appointment to discuss your options if you are considering purchasing a new home or property or refinancing an existing one and want to know the mortgage options available to you.
Have a question? Ask me!
Rates for Friday November 1, 2024: Mortgage rates end October the way they started—going up—reaching their highest levels since mid-July.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 6.50% Up 0.125%
30-year high-balance conforming 6.75% Up 0.125%
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
When the match-up for the World Series was known, my text thread with four others that all met in August 1980 on the campus of Pitzer College exploded with “let’s go to game 1!” Two of them are LA area local and Dodger lifers, the others are Dodgers are our second favorite team. When the first text came across, I did some quick research and said I was tapping out on going as the lowest price seat at that time for five together was $1300. Quickly the plan changed.
Let’s watch game six together, our home as game central with one friend from San Francisco and another from Houston, staying Friday to Sunday. A great college reunion, and play off baseball!
As you are aware, the Yankees less than Little League play in the top of the 5th inning Wednesday night blew our view plans and put the World Series trophy in Los Angeles.
Not to be deterred from our plans, we are still on for a weekend together, sort of “Big Chill” without the funeral, the romantic underpinnings, or the fancy-injury-inducing sports car.
We will be watching a World Series game six however. Thanks to technology, we can watch one of the greatest games in Series history, game six between the Cincinnati Reds and Boston Red Sox in 1975.
