The markets were stunned today when The all important employment numbers came in 4,000 less than anticipated, the first time in four years. Really, the markets were surprised? The soothsayers finally acknowledging the fall out from the housing slowdown may be hitting other areas of our economy. Anyone else notice that the parade of construction vehicles and trucks with ladders, cement mixers and flooring on Interstate 10 and the 101 are now nonexistent? Even this week one of the Fed chairs stated that the fallout from the mortgage issues has not affected our economy. Really? Then why are the big boy banks stashing their cash instead of lending it? Could it be that all of the big boy banks have mortgages gone bad and are storing their money for the rainy days ahead? When the Feds lowered the bank discount rate a couple of weeks ago, it was to encourage the banks to borrow from the Fed at a reduced rate for a very short term, 1 to 3 months. It helped some of the banks to shore up their liquidity, temporarily. With today's employment numbers, the Feds will have to reduce the Fed rate on or before September 18th. Will the first cut (and there will be more) help us? No. It will help banks borrow at a lower rate for a longer term. But for us every day consumers it will take many more cuts for us to feel the effect with lower rates on car loans, home equity lines of credit and adjustable rate mortgages. And the 30 year fixed rate may not be affected at all. An a.r.m., anyone? Really?
FYI: Arizona's economy is so diversified that one segment may not be on your radar Our biosciences, medical research is getting mega global attention, with several biomedical companies relocating to Phoenix.
Submitted by:
Jeff Brock / The Mortgage Advantage, Inc.
