As vexing as the deterioration in affordability may be for Powell, he may have something even worse on his hands. For the best real-time and cleanest take on the state of the nation’s job market, always look first to non-seasonally adjusted continuing jobless claims. This figure is a pure reflection of the number of Americans covered by unemployment insurance who have applied for unemployment insurance and been approved and are collecting said insurance. In 2019’s last three months, continuing claims on this basis rose 1.9% from a year earlier, and were up 1.3% in the first three weeks of January. These are the first increases seen since 2009.
This all brings us back to the Fed. Speculation that the expanding coronavirus will cause the global economy to slow has sparked a rally in fixed-income assets, causing market-based rates to decline, including mortgage rates. Traders have priced in a rate cut by the Fed to happen somewhere between July and September. But the last thing a hesitant Powell needs right now is a market demanding lower benchmark rates. The only crueler fate would be rising joblessness clogging the transmission of lower rates to boost the critical and highly interest-rate sensitive housing market.
This article was provided by Bloomberg News.