The storms are over. The regions hit by the storms are recovering to various degrees. We all thought that the third quarter would see a pause because of the storms’ devastation. However, with a preliminary reading of 3.0% economic growth, a lot of forecasters were surprised. What this number tells us is one of two things. First, the national economy could be a lot stronger than we were thinking and should sprint in the fourth quarter. Or, since the hurricanes hit during the second half of the quarter, we may see a downward revision of this preliminary number.
We do know that the storms negatively affected the jobs numbers for September. We felt that October’s numbers would give us a better reading of the storms’ damage — with the revision of September’s numbers just as telling as the October results. It is hard to accomplish accurate surveys when people are in shelters and the power is out. So, how did the report come out? Indeed, the numbers for October were as expected, with an upward revision to September’s dismal numbers and a bounce back for October.
Looking at the two months together, we had approximately 140,000 jobs added each month, which is about 50,000 less than the previous year’s average. Wage growth for the month was dismal but the unemployment rate dropped one more time. Again, we expect additional recovery as the year ends, which is important because the latest meeting of the Federal Reserve indicated that they are still on track to raise rates one more time this year, and that means December, which is the only remaining meeting date. Add that to a new Fed Chairman nomination and haggling over the tax plan — especially the mortgage interest deduction — and it should be a very, very busy end of the year.
The Weekly Market Update
Rates were flat in the past week, with the markets on hold before the jobs report and Federal Reserve releases. For the week ending November 2, Freddie Mac announced that 30-year fixed rates remained at 3.94%. The average for 15-year loans rose two ticks to 3.27%. The average for five-year adjustables also increased two ticks to 3.23%. A year ago, 30-year fixed rates averaged 3.54%.
Attributed to Sean Becketti, chief economist, Freddie Mac — “Following a strong surge last week, rates held relatively flat this week. The rate on 30-year loans remained unchanged at 3.94 percent, while the 10-year Treasury yield dipped roughly 4 basis points. The markets’ reaction to the upcoming announcement of the next Fed chair may impact the movement of rates in next week’s survey.”
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.