The Employment Report "Report"

Every month we seem to sit on edge waiting for the employment numbers. There is good reason for this, of course. During the recession America lost several million jobs and we have yet to recover fully from these significant losses. Though the unemployment rate keeps falling from its peak during the recession, it is nowhere near the low of 4.4% we reached in 2007. What we are talking about is slow and steady progress. A drop in the unemployment rate from 10.0% to 7.3% is pretty significant. But at least some of that decrease is due to many adults leaving the labor force. That includes those who are retiring and those who become discouraged and put their job hunt on hold. For example, a spouse may decide to stay at home with their children if the job they can find does not pay for child care and other expenses of working.

This slow and steady progress mirrors exactly the state of our economic recovery for the past four years. Slow growth is much better than a recession or no growth. But it is not strong enough to satisfy our appetite for repairing the damage done by the recession. The real question is whether the Federal Reserve Board thinks that the jobs numbers are strong enough to start easing off the gas pedal with regard to stimulus activity. Interest rates have risen precipitously this year in anticipation of the Fed reversing course. The Fed is watching the jobs numbers closely as well. The average jobs creation for the past three months has been just under 150,000 per month. That is a big improvement from the recession years, but not strong enough to keep up with population growth. If the Fed concludes the numbers are not strong enough, we may enjoy lower rates for a longer period of time. And that would be good news. The Fed meeting this month will be watched closely for clues in this regard.

Mike Ervin

Senior Mortgage Banker

NMLS # 282715

Cell: 650-766-8500

mike@mikeervin.com