Chicago's Mortgage Choice - May 12, 2015 Real Estate Report - The Three Bears Jobs Report

After a disappointing March jobs report, we will go back to the old nursery library to describe April's numbers. Everyone knows the story about the three bears and Goldilocks. One chair was too big and one chair was too small. But the last chair was "just right." We think that an increase of approximately a quarter of a million jobs for April is just about right as well. Why is that? With regard to the Federal Reserve Board raising interest rates, the last quarter of 2014 had the economy adding an average of over 300,000 jobs per month, or just about a million for the quarter. If that level had continued, the Fed probably would have raised rates by now. The first quarter of this year, we added just under 200,000 jobs per month. While not shabby, it is just not enough jobs to keep the economy improving fast enough. Thus, 223,000 jobs is just right. Not too fast to scare the Fed and strong enough to move the economy forward. This is especially true considering the fact that hourly wage growth was lower than expected. However, the good signs included an increase in the labor force participation rate and a decrease in the unemployment rate to 5.4%, the lowest since May of 2008. Leading up to the report, rates and oil prices increased pretty steeply. While this report may give us some breathing room, it reminds us that these ridiculously low rates will not be with us forever. For those who are thinking of making a purchase, you may be well advised to move quickly before Goldilocks grows out of that chair. Keith Stewart 773-529-7000