End of the Quarter

The quarter just ended and it was a very important quarter for the American economy. Especially considering the fact that last quarter was weak due to our long and harsh winter and international economies are slowing. Economists will be looking for a bounce back from the first quarter in which the economy actually contracted. And the first important statistic wrapping up the quarter was reported this past week -- the jobs report. The employment numbers give us a clue as to how we did in the second quarter. Certainly at lowest unemployment rate in seven years is an indication of good news.

Because the numbers were moderately strong, this means that the quarter is likely to have been strong as well. The question is, does that puts us closer to an increase in rates courtesy of the Federal Reserve Board? As we have previously indicated, the Fed is also watching for increases in wages and wage inflation continues to be muted. While higher wages are great for the economy, they also would represent the first spark in inflation. Strong jobs and a rebounding real estate market are hallmarks of the better economy the Fed is looking for. There is no doubt that the real estate markets are getting stronger.

The end of the quarter also means that we are going to see a slew of earnings reports. The stock market often reacts to these reports and if corporate earnings falter, many are expecting to see the stock market correction that we have avoided for quite some time. Mix in international influences and the situation can get very cloudy. Just this past week we have seen how the Greek crisis and China's stock market crash affected movements in our
stock market as well as interest rates. This is why predicting the future is so difficult -- for us and the Fed.

Mike Ervin
Branch Manager/Mortgage Banker
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O: 650.451-7797
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mike@mikeervin.com