Sr. Loan Officer | NMLS #161362
Branch NMLS #1912212
Posted On December 15, 2017
Mortgage rates trended slightly downward this week, though there was no significant movement to report. Job openings were down slightly from September to October. As expected, the Federal Open Market Committee (FOMC) raised the benchmark interest rate for the third time this year, and Fed Chair Janet Yellen gave the final press conference of her term. Retail sales surged ahead of the holiday season.
The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) decreased slightly from September to October to a level of 5.996 million. Industries that driving the declines were wholesale business, financial companies, and media and public relations. Other sectors increased like hospitality and construction workers. As the market nears full employment and unemployment hovers a 17-year low, employers are struggling to find skilled workers to fill positions.
The Federal Reserve raised the benchmark interest rate to a level of 1.25% – 1.50%. Mortgage rates typically react to federal rate hikes, but the reaction can be gradual. With low unemployment and inflation closing in on the targeted rate, next year’s dot plot expects more rate hikes to come. Fed Chair Janet Yellen gave her final press conference. Her term will expire in February 2018, and incoming Fed Chief Jerome Powell will take over the position. In her statement, Yellen said, “At the moment the U.S. economy is performing well. The growth that we’re seeing, it’s not based on, for example, an unsustainable buildup of debt [...] The global economy is doing well, we’re in a synchronized expansion.”
Retail sales exceeded expectations in November, up 0.8% month-over-month. Less autos, the figure increased 1.0%, and less autos and gas sales were up 0.8%. Holiday spending is likely a factor in the strong month-over-month increase. Gains were driven by sales at electronics and appliance stores, up 2.1%, followed by furniture outlet sales, up 1.2%. Restaurant spending creased 0.7%, the strongest pace since January.
Economic momentum is building into the holiday season. The core measure of retail states is gaining at the fastest pace since 2014, unemployment has almost hit a two-decade low, and the Fed met its prediction of three rate hikes in 2017 and expects three more in 2018.