Chicago's Mortgage Choice - June 7, 2016 Real Estate Report - Jobs and Yellen

The Chairperson of the Federal Reserve Board spoke at an event at Harvard University on the last Friday of May. The probability for a June or July rate hike increased because of her statement that a rate hike is "probably" appropriate in the near term, given an improvement in economic data. "As I have said in the past, it's appropriate I think for the Fed to gradually and cautiously increase our overnight interest rate over time and probably, in the coming months, such a move would be appropriate," she said. A very important slate of this data was released this week, headlined by the May jobs numbers released one week after Yellen's talk. The job numbers were very weak with only 38,000 jobs added, while the unemployment rate fell from 4.9% to 4.7%. These numbers could be seen as contradictory, but the fact that more people dropped out of the job force, lowering the labor force participation rate, shed doubt about the lower unemployment rate. All in all, it will be seen by the Fed as a sign that the economy is not improving as much as we would like. Other numbers released recently have been mixed, with positive numbers from the real estate sector and consumer outlays, but lower construction spending and slightly lower readings for consumer confidence. What does this mean? The jobs numbers are the most important, and this means that the chances for an immediate rate hike by the Fed have decreased significantly. We won't have to wait long to find out about a rate hike in June as the Fed's Open Market Committee meets next week. Keith Stewart 773-529-7000