Last week, the Fed Chairman Ben Bernanke gave his semi-annual testimony in front of the House Financial Services Committee. He provided his view of the economy, the labor market and housing marketing, essentially providing the same message we have heard before — conditions remain sluggish, uneven and fragile. However, the biggest news was that he made no mention of another round of bond buying or Quantitative Easing.
That news was disappointing to the markets and caused both bonds and stocks to react to the news and close lower the day he spoke to the House Services Committee. So the question on many people’s mind, is the economy strong enough to keep the Fed from infusing more cash into the economy? While we have seen some slight improvements overall, the economy is still not nimble and it would not take much for growth to sputter and require another round of cash infusion by the Feds. To top that off observe what is happening with regards to higher oil prices and more cost at the gas pumps, a worsening situation with Iran and Israel, and the deep breath we are taking watching Europe and China, and any one of these situations could cause our economy to slow.
This week’s economic front will provide lots of news to watch and see if we will have continued economic improvement or a slowing in the economy.
On Monday, the ISM Services Index will be released. The markets will be watching this report closely after the lower than expected ISM Manufacturing Index last week.
On Wednesday, the ADP Employment Report will be delivered as well as the Productivity Report. The Productivity Report measures the number of hours it takes to produce a good in a factory. In the service sector, it is measured based on the revenue generated by an employee divided by one’s salary.
The Initial Jobless Claims will be released on Thursday. The number of Americans claiming first-time benefits has declined over the last several months so it will be closely watched to see if this trend continues.
And to close the week out we will get the Jobs Report on Friday. This report always has the capability of making the markets react. We will see.
The most important thing to take away is that home loans remain near historic lows and now is a great time to purchase a home. If we can help you, please let us know.