As we have pointed out in the past, a growing economy is great news. But it also means that we can expect higher prices to join the party. It is not a coincidence that home prices rose last year. More recently, oil prices are up around ten percent and interest rates have begun creeping up as well. All along we have warned that the Federal Reserve Board has no power to keep rates low in a stronger economy. Nor would they want to. There was more drama regarding the Fed meeting this week for this very reason and rates eased a bit when the Fed indicated they are continuing their support for low rates. Meanwhile, it is expected that those who have been on the sidelines may very well recognize that this is their last chance to purchase a home which is on sale. Rates and home prices are up slightly, but they are currently still a bargain. If the numbers keep rolling in like they have, this fact may no longer be the case.
The Numbers Don’t Lie
This week the markets were focused upon the all important employment report. While the number can be volatile from month-to-month, the dip in first time unemployment claims during the previous two weeks made the markets more optimistic regarding January’s numbers. They came in at a lackluster 157,000 jobs created for the month with an unemployment rate of 7.9%. These numbers were worse than expectations; however, a revision of previous data added over 300,000 new jobs to the data previously released in 2012. The numbers don’t lie. There have been additional reports released recently that show the economy is growing more quickly. For example, the December orders for durable goods were much higher than expected. Preliminary numbers indicated that the growth of the economy stalled in the fourth quarter, but this pause was attributed to temporary factors such as the weather according to commentary by the Federal Reserve released after the Fed meeting ended on Wednesday.
Courtesy of Scott Raphael @ GauranteedRate.com