{"id":3784,"date":"2023-01-07T08:37:19","date_gmt":"2023-01-07T08:37:19","guid":{"rendered":"https:\/\/frankbuysphilly.com\/solid-jobs-report-sends-mortgage-rates-lower\/"},"modified":"2023-01-07T08:37:19","modified_gmt":"2023-01-07T08:37:19","slug":"solid-jobs-report-sends-mortgage-rates-lower","status":"publish","type":"post","link":"https:\/\/frankbuysphilly.com\/solid-jobs-report-sends-mortgage-rates-lower\/","title":{"rendered":"Solid jobs report sends mortgage rates lower"},"content":{"rendered":"


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Can we have a soft landing in the economy? Friday\u2019s job report<\/a> shows there is a clear pathway to get there. Mortgage rates<\/a> fell aggressively down to 6.20%, putting us at more than 1% below the highs of 2022. <\/p>\n

The bond market saw that wage growth was cooling down, leaving the Federal Reserve with few reasons to keep the rate hike story going much longer. <\/p>\n

We ended 2022 on a solid note as 4.5 million jobs were created last year \u2014 and we still have more than 10 million job openings and historically low jobless claims. And now, the growth rate of inflation is falling. <\/p>\n

Bond yields fell after the report since wage inflation is cooling down, a key for the Federal Reserve<\/strong>‘s strategy<\/a>. The Fed will not tolerate a tight labor market, or Americans on the lower end of the wage pool making more money. They believe this is a bad thing and will create too much entrenched inflation, so the fact that wage growth is cooling off is a positive sign.<\/p>\n

If the inflation growth rate and wage growth are slowing down, the Federal Reserve doesn’t need another rate hike. In fact, the Federal Reserve needs its own reset. That is going to be a big theme of mine for 2023 if this trend continues. <\/p>\n

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However, the bigger story here is there is a pathway for a soft landing for America, and the Fed should be ashamed of itself for believing that a job loss recession is the best way to kill inflation. The inflation growth rate is already falling and the labor market is still solid. <\/p>\n

If shelter inflation had a more real-time tracking system, the headline inflation data would already be lower. Thankfully, the Fed has created its own index to account for much of the lagging inflation in the data line. This is a big deal since nearly 43% of CPI inflation is shelter inflation.<\/p>\n


This is why Friday\u2019s data is exciting to see and why the bond market sent mortgage rates<\/a> to 6.20% and yes \u2014 we are back on 5-handle mortgage rate watch. It wasn\u2019t that long ago (in October) that people were talking about 8%-10% mortgage rates and a big recession for the United States of America.<\/p>\n

Job report<\/strong><\/h2>\n

From BLS<\/a><\/strong>: Total nonfarm payroll employment increased by 223,000 in December, and the unemployment rate edged down to 3.5 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in leisure and hospitality, health care, construction, and social assistance<\/em><\/p>\n

This chart shows a breakdown of the jobs created and lost. The two sectors of the economy that are getting hit are the tech sector and housing, but this is a good report for construction. The backlog of homes needing to be built has kept construction labor up until those homes can be finished. I can\u2019t express what a blessing this is because the best way to fight inflation is always by adding more supply. <\/p>\n

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Here’s a breakdown of the unemployment rate tied to the education level for those 25 years and older. <\/p>\n