Econ 1A

January 18, 2021

Orion’s brokers know that jobs and housing drive the economy in the United States. We also know that our brokers want to know what is moving rates here in mid-January… Or not moving rates, depending on recent news. Overall rates for home loans have been relatively stable over the last half of 2020, and as we head through winter autumn, we felt that it would be good to take a look at recent economic news to see what’s up with the U.S. economy. It is not critical to remember actual numbers, but instead be aware of trends in order to help your clients.

With relatively light economic data over the last week, much of the bond market’s attention remained focused on unemployment. Although people are returning to work and unemployment has decreased significantly from the lows seen in April, many expect the trend to moderate throughout the remainder of the year. The Initial Jobless Claims last Thursday, however, shot higher, suggesting that the United States’ economy is not “out of the woods” yet.

Initial state jobless claims were up 181,000 to 965,000, beating expectations. Economists believe that this signals a full recovery is still far off, the thoughts about timing depending on arresting the spread of the virus. And it is difficult to ascertain when that will be.

 

As COVID continues to be a cause for concern for consumers, business owners remain optimistic that conditions will continue to gradually improve. Hiring plans over the next three months are back near pre-COVID levels suggesting that employment is poised to maintain its upward trend. As those sidelined employees head back to work there is the potential that they may soon be able to take advantage of the low interest rate environment to purchase a new home or refinance.

 

Orion’s brokers know that the housing market is tight. A recent survey showed that 52 percent of young adults are living with their parents, an astounding number. Real estate agents and mortgage brokers know that this represents future demand for housing (who doesn’t want their own place?). Inventory remains tight, and that is not expected to improve any time in the near future. So between this demographic, and continued low interest rates, Orion’s brokers may have a long spell of great business!


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