My New Blog

Last Week in Review: The Jobs Report numbers are in, but did they make us roar with happiness?

Forecast for the Week: It's a quiet week when it comes to economic reports, but will that be true of events around the world?

View: Thinking of making your home more energy efficient and wondering if you still get a tax break? Rules are different this year - see the details below.

"I've got just what the doctor ordered...." And last week, the Jobs Report certainly had just what the doctor ordered for our economy. What did the report say, and what are the implications for home loan rates? Read on to learn more.

The Jobs Report showed that 192,000 jobs were created in February, with a gain of 222,000 jobs in the private sector offsetting job losses in the public sector. As expected, there were also upward revisions to the prior two months, which added 58,000 more jobs than were previously reported: another positive!

What's more, unemployment lines were a little shorter last month as the Unemployment Rate fell to 8.9%, down from the prior month's reading of 9.0%. This represents the best reading on the Unemployment Rate in nearly two years! Remember, the Unemployment Rate is derived from the Household Survey (exactly as it sounds, from calls made to households), and is considered to be more accurate than the Current Employment Statistics or Business Survey (again as it sounds, from calls made to businesses), which is used to determine the headline jobs number.

The one sour note within the report was the Hourly Earnings component, which showed that earnings remained flat and didn't grow. If wages don't increase, it suggests that wage based inflation is under control, but in light of the recent price increases in commodities and oil, there is a concern that people will start to demand higher wages.

So what does all of this mean for the housing market and home loan rates? In terms of the housing market, the continued improving trend for the job market is good news, as people tend to avoid purchases when they're concerned about their job stability or prospects.

In terms of rates, February's Jobs Report suggests that the Fed's Quantitative Easing 2 Program (or QE2, which is their plan to purchase $600 Billion in Treasuries through mid-2011) will continue through the end of June as originally planned. This is because the report was good, but not a blowout reading... and Fed Chairman Ben Bernanke said earlier last week that we need to see a long stretch of sustained job growth in order to remove the present accommodative monetary policy.

Remember: The Fed's three goals for QE2 are to boost Stock prices, lower unemployment, and create inflation. While these goals are designed to improve our economy, they can also cause home loan rates to rise, something we've seen since the program began. And while continued unrest around the world could help our Bonds and home loan rates, as Traders seek a safe haven for their money, in the long-term continued improvement in unemployment and achievement of the other goals of QE2 may cause home loan rates to rise.

The good news is that if you have been thinking about purchasing or refinancing a home, home loan rates are still very attractive. Call or email me if you have any questions at all - I'm always happy to talk to you! Or forward this newsletter on to someone you know who may benefit from today's historically low rates

This week in March will start off more like a lamb than a lion, at least on the economic report front, with no reports scheduled for Monday through Wednesday. But that doesn't mean world events may not cause some rumbles in the markets any day ahead. Be sure to also look for:

• Thursday will bring another weekly Initial and Continuing Jobless Claims Report. Last week's Initial Jobless Claims were reported at 368,000, also great news for the labor market as this is the lowest reading since May 2008. Will this week's report follow suit?
• Friday will bring the Consumer Sentiment Index - will it show consumers are feeling better about our economy?
• Friday will also bring the Retail Sales Report for February, which is considered a timely indicator of broad consumer spending patterns.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.