Economy, Your Mood Swings Are Giving Me Whiplash.

  • December 5, 2013

moodtoonDespite an influx of economic news, the market remained relatively calm. This morning interest rates increased slightly after strong economic news was released. Let’s break down what happened.

  • Jobless Claims fell for the third straight week. This means fewer people filed for unemployment than last week. “Lindsey, we got it. This is another report telling us that economic growth is going strong. Got it.”
  • A separate report stated consumer spending declined this week. This spending accounts for more than two-thirds of U.S. economic activity. “So, what you are telling me is the economy is not growing?”
  • Orders for manufactured goods fell .9 percent in October. “But Lindsey, you said manufacturing expanded last week.” Yes, yes I did.
  • The gross domestic product was also released today; it grew at a 3.6 percent annual rate. This is another win for the US of A; suggesting the Feds monetary policy is spurring economic growth. It was the biggest gain since Q1 2012. “Good job, Janet!”
  • That sounds good, but not so fast. Increased inventories accounted for half the GDP growth.  This suggests businesses are holding inventory due to lack of demand, which may hurt growth this quarter.  “I don’t even know what to believe anymore.”

Like I said, economic news gave me whiplash today. I better rest up because tomorrow is Jobs Friday! The first Friday of every month the Employment Situation Report is released. Investors and government officials have all been waiting for this report to show us if the Fed should decrease its bond purchases. If it does we could see mortgage rates increase. Hold on, tomorrow could be a bumpy ride.

-By Lindsey Fediuk, Quicken Loans Capital Markets Analyst

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