John's Finance Corner: A Quiet Week Behind Us, A Big One Ahead
Last week was relatively light on economic data, but one key report stood out: the Personal Consumption Expenditures (PCE) index—aka the Fed’s favorite inflation gauge. Headline PCE rose 0.2% for July, bringing the annual rate to 2.6%, right in line with expectations. Core PCE, which strips out food and energy, climbed 0.3% for the month and now sits at 2.9% year-over-year. That’s still above the Fed’s target of 2%, but it’s inching in the right direction.
The Fed’s Balancing Act: Inflation vs. Employment
The Federal Reserve operates under a dual mandate: price stability and full employment. Persistent inflation could keep interest rates elevated, but signs of labor market weakness might nudge the Fed toward easing policy. Fed Chair Jerome Powell recently hinted that the central bank is nearing a pivot point, with upcoming data playing a critical role in their decision at the September 17th meeting.
It’s worth noting: when the Fed cuts rates, they’re adjusting the Fed Funds Rate—a short-term benchmark for overnight lending between banks. While this rate influences borrowing costs across the economy, including mortgages, it doesn’t directly control long-term mortgage rates. Case in point: last September, the Fed made its first rate cut in years. Mortgage rates dipped briefly, only to bounce back after a strong jobs report reignited market concerns about inflation.
Jobs Week: What to Watch
This week’s labor data could be a game-changer. Here’s what’s on deck:
- Wednesday: JOLTS report, offering insight into job openings and labor demand
- Thursday: ADP private payrolls for August and weekly unemployment claims
- Friday: The big one—Bureau of Labor Statistics report, including non-farm payrolls and the unemployment rate
While no one roots for a weaker labor market, softer numbers could signal to the Fed that it’s time to ease up. For the housing industry and consumers alike, that could mean lower rates and renewed affordability.
Bottom Line
All eyes are on this week’s labor reports. If they show continued cooling, the Fed may finally have the green light to cut rates again—potentially bringing relief to buyers, sellers, and mortgage professionals across the country.
Curious how this week’s data might affect your plans?
Let’s chat. I’m always here to help you make sense of the numbers and explore what they mean for your next move.
John Lamberg
MORTGAGE LOAN ORIGINATOR
NMLS 189233
