The
Great Recession officially started in December of 2007. It officially ended in
June of 2009, according to the National Bureau of Economic Research. However,
the economic recovery since that time has been anemic to say the least --
"In determining that a trough occurred in June 2009, the committee did not
conclude that economic conditions since that month have been favorable or that
the economy has returned to operating at normal capacity," the NBER
reported in September 2010. After meandering around for over three years since
the end of the recession, the economy seems to be returning closer to a normal
recovery pattern. This is an extremely long time for a period of returning to
normalcy. There is some good news regarding this struggle we have had. For one,
the overall recovery has been weaker than normal, yet should last longer than a
normal recovery. And we have already seen that interest rates have stayed lower
for a longer period of time.
As a
matter of fact, this period of record low interest rates is absolutely
unprecedented in our history. We will note that oil prices have fully recovered
from recessionary prices a while ago. It was only recently that rates started
to rise. So the next question is--will rates continue to rise as the economy
gets stronger? The most important data to watch in this regard are the
employment numbers and releases within the real estate sector. Certainly, these
two factors are tied because as one gets stronger so does the other. Right now,
we are not seeing numbers that show our economy is overheating. Retail sales
are still struggling, especially outside the automobile sector and energy
expenditures. Car sales continue to be in recovery mode along with the real
estate markets. The bottom line? Yes, the recovery seems to have reached a new
phase, but this is not a strong recovery as of yet. We are still in danger of
influences that could scale back the recovery and if these scenarios occur,
rates could continue to stay low. However, if momentum continues to build,
rates could continue to increase in the short run.
Mike Ervin
Senior
Mortgage Banker
NMLS # 282715
Cell:
650-766-8500
mike@mikeervin.com
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