Looking at the highlights from last week’s real estate news including the government shutdown, mortgage rates and much more…
There was no shortage of drama and political grandstanding last week due to the government shutdown. I have read everything from insightful commentary & analysis to the normal crazy stuff from both political parties. No matter which side you are on, you need to understand the negative consequences of the shutdown on real estate and the economy.
Hitting the Fan Part 2
As if the government shutdown wasn’t bad enough, we have to be worried about the upcoming debt ceiling battle. Many people think the debt ceiling battle will be a bigger economic problem than the shutdown and could lead to a global financial crisis. The debt ceiling is a limit on how much the government can borrow to pay America’s bills and Congress has the power to raise it so the United States can meet existing financial obligations.
On October 17th, if we hit the ceiling it means the government will not have enough money to pay all of it’s bills. Sadly, this could lead to a big plunge in the stock market.
Treasury Secretary Jack Lew has said all resources to avoid hitting the debt ceiling will be exhausted by October 17th. If the debt ceiling isn’t raised, it means the government won’t be able to to make payments such as social security checks, Medicare reimbursements and interest on the existing debt.
Another bad report I read that Goldman Sachs thinks that it will result in a 9% reduction in the GDP. This means it will put a serious dint in the economy. As if we didn’t already have enough on our plates!
Furlough Delays Unemployment Report
A big indicator of how the economy is doing is unemployment. Sadly, the Bureau of Labor Statistics delayed the release of September’s Non-farm Payroll and Unemployment that were due last Friday. But we can look at the ADP Employment report for September to get an idea of what unemployment is doing.
The good news is there were more jobs added in September compared to August according to ADP. But if the shutdown continues or we hit the debt ceiling, I expect that we will see the unemployment numbers worsen.
On Friday I posted what could be the last report from both Freddie and the MBA until the government shutdown is over. The good news is that both Freddie and the MBA reported that rates fell. The bad news is most people think the rates fell because of the government shutdown.
So can we expect rates to increase once the shutdown is over? Or will the damage to the economy from the shutdown keep rates low?
This week’s scheduled news may be on the light side if the government shutdown continues. Some of the stuff we should be on the look out for this week:
- FOMC Meeting Minutes
- Weekly jobless claims
- Freddie Mac’s PMMS survey of average mortgage rates
- The University of Michigan Consumer Sentiment Index for October
I Disagree : Senators Urge FHFA Not to Change Loan Limits
One of the Best Home Buying Articles I Have Read: Smaller House, Larger Life!