Mortgage Week In Review March 8th

Apr 28th 2010

Print This Post

Last week, we looked at current worries. This week, like the market itself, it’s time to take a more positive view of the near-term future.

For one thing, Greece passed an austerity program last week; and France and Germany backed a bail-out amounting to $41 billion; and the sale of $6.85 billion of Greek 10-year notes went very well. There’s still reason for on-going concern, but the heat was definitely turned down last week.

For another, where the markets expected a rather grim employment report for February, the actual report—released Friday—was rather positive in most ways. Sure, it tallied 36,000 payrolls lost over the month, but the strong market consensus was that we’d see 75,000 job losses. The unemployment rate, meanwhile, didn’t move, but the consensus expectation was that it would rise at least a point to 9.8%.

This may not seem like a big deal, but the element of surprise usually moves the markets, and we saw the Dow rise and, with it, interest rates rose slightly on the good news. Perhaps equally important, it inspired a discussion of the possibility of positive employment numbers in the relative near term. As Kelly Evans, an economics writer in The Wall Street Journal, suggested: “Several forces suggest a powerful turn toward job growth could soon be at hand.”

For example, Evans notes that corporate profits have rebounded on the combination of steep cost-cutting and increased demand.

Further, a human resources consultancy called Towers Watson said that 92% of U.S. companies plan to hire in 2010, albeit at a gradual pace.

And, as a kind of harbinger of future full-time hirings, 284,000 new temporary jobs have been created since September 2009.

Also, the number of people unemployed for 27 weeks or more (the “long-term unemployed”) fell to 6.1 million from 6.3 million in January.

And consumers increased their borrowing for the first time in a year, with consumer credit outstanding rising at an annual rate of 2.4%.

Lastly, California added 32,500 payroll jobs in February.

All of this is good news, suggestive of possible improvements to our employment picture, at long last, and that would improve nearly every aspect of the economic recovery, even adding significant life to the real estate recovery (such as it’s been).

It would mean higher rates, of course, but let’s not forget that higher rates are a nearly inevitable component of genuine moves toward recovery.

So—maybe things are about to look a lot better in America. Maybe many of the problems we can’t seem to solve will move toward the solutions provided by recovery. Or—who knows?—maybe the markets will find reasons to turn pessimistic again by next Tuesday. We are, nonetheless, allowed to hope that the signs of recovery are gaining in durability.

Share this Post: