"Paltry" Jobs Report Drops Market
After yesterday’s positivity, collapse. The better than expected weekly unemployment numbers caused optimist about today’s government June jobs report. However, any hopes of strong gains were dashed, bringing about musings of a “double dip” in the recession.
The government reported that in June just 18,000 jobs were added, which increased the unemployment rate from 9.1% to 9.2%. Stocks tumbled, with the Dow currently down 90.52 to 12,628.97. Although some analysts have counseled optimism (expected that such paltry growth figures would result in an even bigger sell off), there is widespread frustration with the numbers due to the expectations that the economy had made a firm steps toward improvement. Descriptors floating about the media includes: “shocking”, “stunning”, “horrific”, and “paltry.”
As for larger implications to the economy, the question is – does job creation correlate with GDP growth? Loosely, this is the case. Job growth suggests that the economy is healthy and expanding. Weak job growth, then, could be correlated with low spending and low production, and thus a low GDP (Gross Domestic Product – the market value of goods and services produced by a country, which is used to measure strength of economy). On the other hand, the recovery is also influenced by low interest rates, a stronger Japan and lower gas prices. Unemployment is not the only factor to use in judging recovery, although as we have seen today in the market decline, it is viewed as central to the picture.
For our purposes at Central Coast Lending, such selloffs keep interest rates low. As investors flee the market, they invest in bonds, which have an inverse relation to interest rates (bond prices go up, interest rates go down).
For more on the report, see the following links:
Here are Central Coast Lending's mortgage rates: 30 Year Fixed 4.250% (4.416 APR) 15 Year Fixed 3.375% (3.685% APR) 5 Year ARM 2.375% (2.541% APR) 30 Year Jumbo 4.250% (4.374% APR).
