Employment Report Disappoints but Probably Won’t Delay Federal Reserve’s Tapering Plan

The September employment report disappointed analysts; will it also complicate the Federal Reserve’s plan to begin withdrawing the monetary support that has cushioned the economy throughout the pandemic?

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If you’re looking for one word to describe the economic climate, try “confusing.” Every day seems to bring a different statistical report accompanied by conflicting interpretations of what it means. One recent headline neatly conveyed this statistical schizophrenia: “Indicators Point to Firmer Economy – More Layoffs Ahead.” Translation: The economy, measured by rising GDP, declining factory inventories and resurgent manufacturing activity —is emerging from the recession, but it is leaving unemployed workers behind.

The economic recovery seems to be following the zigzag pattern many analysts have predicted: Strong gains in some sectors followed by setbacks in others — two steps forward, a step or two back, a few steps sideways. Looking more like a Rorschach test than a road map, the picture is far from clear.

The Obama Administration has decided that it needs a larger stick to prod mortgage lenders and servicers to help homeowners who are struggling with unaffordable mortgages avoid foreclosure. That stick is in the form of a series of measures announced by the Treasury Department, designed to increase the pace and volume of loan modifications under the Administration’s Home Affordable Mortgage Program (HAMP).

Reverse mortgage lenders, battling intensifying criticism from consumer advocates and some legislators, are now facing a financial squeeze as well. To close a widening budget gap in the Home Equity Conversion Program (HECM), the Federal Housing Administration (FHA) has slashed by 10 percent the maximum amount borrowers can receive in FHA-insured reverse mortgages.