August 5, 2014 Real Estate Report - Let's Add Up The Data

We very rarely get a week of economic data like the past week. We had a week of employment releases, culminating in the release of the employment report on Friday. We also had the Federal Reserve's Open Market Committee meeting last week. Add to that the release of personal income and spending data for June and for good measure add in the first estimate of the second quarter growth of the economy (GDP). It is tough to sum up all that data in a short amount of time and indeed it may take some time for the markets to fully absorb the data as well. But let's give it a shot by asking the general question -- how did we do? With regard to second quarter growth, the preliminary number released on Wednesday was strong. However, the 4.0% growth rate is subject to revision and it comes after a drop of 2.1 % in the first quarter due to the harsh winter we experienced. Taken together, the economy grew at less than a 1.0% rate during the first half of the year and economists expect faster growth during the second half, but not necessarily as strong as 4.0%. Meanwhile, the Fed's statement after their meeting contained no surprises as they continue to lessen stimulus by paring down on purchases of securities and were a bit more upbeat in their assessment of the economy which gave the markets the idea that a rate increase will still come down the road, but that "down the road" is probably closer than it has been. The big release was supposed to be the jobs report on Friday. Actually the numbers released were fairly tame. The 209,000 jobs created were close to expectations, but did not exceed expectations. Even the increase in the unemployment rate from 6.1% to 6.2% was not seen as bad news because more Americans were participating in the labor market which is a key component of confidence. The tame numbers served to calm the markets which fell precipitously on Thursday because of fears that if the positive GDP report was coupled with strong jobs growth, the Fed could raise rates even sooner than expected. Keith Stewart 773-529-7000