Fed Is Staying the Course on Interest Rates, Housing Is Feeling the Impact

 The overheated employment market appears to be cooling off, but probably not fast enough to demonstrate the progress the Federal Reserve wants to see in its efforts to combat inflation, still growing at an uncomfortable 8 percent annual rate.

Read More

We knew the April labor report was going to be bad, and it was. “Dismal.” “Devastating.” “Catastrophic.” Economists, who usually refrain from hyperbole, gave in to it in the face of statistics unlike any they had ever seen or expected to see.  The economy shed 20.5 million jobs for the month and the unemployment rate hit 14.7 percent, both numbers shattering previous records.

What’s up with the home ownership rate?  More precisely, why isn’t it up?  After sinking in the aftermath of the “Great Recession,” the rate has  rebounded from the  low point of  62.9 percent four years ago, to 65.1 percent in the fourth quarter of last year, according to a Census Department report. 

The forces driving the economy are no longer financial; they are primarily medical.  Concerns about the impact of the coronavirus, which continues to spread in the U.S. and abroad, have replaced speculation about whether the Fed will slash interest rates – which it did recently, announcing an “emergency” quarter-point reduction that analysts predict will be followed soon by another one, in an effort to forestall the panic that is gripping financial markets.

Consumers are feeling better about the housing market, and the housing market appears to be feeling better about itself.