Why This Week’s Economic Data Matters to You

This week is full of important updates that could impact mortgage rates, the bond market, and the overall economy—things that affect all of us. The labor market is front and center, with data giving us insight into how jobs are holding up, and there's also news about the ILA strike that you might want to keep an eye on.

The ILA (International Longshoremen’s Association) is the largest union in North America, and it controls a massive part of the shipping operations at some of our country’s biggest ports. With nearly 50% of U.S. imports passing through these ports, a strike could have a significant impact. Just last week, $14 billion worth of goods passed through the affected ports. If the strike happens, companies that rely heavily on imports, like Walmart, could be hit hard. It could even disrupt car imports, especially from Europe.

So, what can be done? There are two potential solutions: the strike could end with an agreement on compensation, or the administration could invoke the Taft-Hartley Act. This act gives the President the power to intervene if a strike affects the nation's health and safety. If invoked, it would force union workers back to their jobs for 80 days while negotiations continue. However, the White House has made it clear that they aren’t considering using this act right now.

Unfortunately, negotiations haven’t even been scheduled, so it looks like the strike is coming. And while it probably won’t be as disruptive as the supply chain chaos we saw during COVID, it’s still something that could impact inflation and the economy. 

Inflation from the strike may be temporary, but it could affect the bond market and mortgage rates. Economists estimate the strike could cost us $6 billion in economic activity per day.

Other Big Events This Week:

1. Fed Chair Powell Speaks – Monday

   Today, Fed Chair Jerome Powell is addressing economists and financial experts. Many are concerned that a mistake in setting interest rates could harm the economy over the next year. Powell’s speech could give us insight into where the economy is headed.

2. September ISM Manufacturing Data – Tuesday

   This report will give us a feel for how the manufacturing sector is doing. If manufacturers are feeling down, we might see a slowdown in economic activity, which could lead the Fed to ease up on monetary policy.

3. JOLTS Job Openings Data – Tuesday

   This report gives us a detailed look at the job market. A lot of job openings can mean companies might have to raise wages to attract workers, which could lead to higher inflation. The Fed keeps a close eye on this to determine future interest rate decisions.

4. ADP Nonfarm Employment Data – Wednesday

   Consider this a preview of the official jobs report coming out later in the week. It’s essential for anyone watching the market.

5. October OPEC Meeting – Wednesday

   OPEC’s decisions affect oil prices, which in turn can influence inflation. Rising oil prices could put more pressure on the Fed to avoid cutting rates.

6. Initial Jobless Claims – Thursday  

   We’ll get a real-time look at how the labor market is doing with this report on unemployment claims.

7. September Jobs Report – Friday

   The big one. The jobs report could shape the Fed's future rate moves. Strong job growth and low unemployment may keep the Fed from cutting rates. But if we see weakness in the labor market, rate cuts might be more likely.

What’s Going on with Mortgage Rates?

The Federal Reserve has kicked off a new cycle of easing, starting with a 50-basis-point rate cut. This marks the first rate cut since 2020, and it’s a big deal because it signals a shift from the tight monetary policies we’ve seen lately.

Inflation is slowing, and the labor market is strong, which means more rate cuts are expected in the near future. The Fed is targeting a year-end rate of 4.25-4.50%, and some in the market expect even lower cuts. While rate cuts don’t always mean lower mortgage rates right away, they’re a step in the right direction.

While this is all positive, there are still signs of a consumer pullback, which could impact growth. Retail sales have grown only 2.1% over the past year, which is below average. Meanwhile, the U.S. personal savings rate has dropped as higher prices strain consumer wallets.

The Housing Market

The housing market has been in a tight spot for a while now. Sales of existing homes have fallen year-over-year, and we’re seeing the lowest activity since 2010. Homeowners are reluctant to sell because of high mortgage rates, and many buyers are finding homes unaffordable due to rising prices and interest rates.

But there’s some good news. Mortgage rates have dropped to their lowest level in 19 months, which could start opening up the market. If this trend continues, we might see more sellers feeling confident enough to list their homes, creating a better balance between supply and demand.

Despite the slowdown, I don’t expect a crash in home prices. Demand still outweighs supply, especially in high-demand areas.

Homeownership vs. Renting

In many parts of the country, it’s becoming cheaper to own a home than rent. While this might not be true everywhere just yet, the shift is happening fast. If you’ve been on the fence about buying, now might be the time to reevaluate. 

Talking to a local real estate agent can give you more insights into whether homeownership is the right move for you. And I’m always here to help if you want to explore your options.

The Wealth Gap

Lastly, let’s talk about the wealth gap. As central banks stimulate economies globally, savers often lose out while investors come out ahead. Investing in appreciating assets like stocks or real estate can protect you from inflation, which erodes the value of savings over time. That’s why it’s important to think about how you’re growing your wealth, especially in this current economic environment

This week is packed with important data that could shape the economy and the housing market. Whether you’re thinking about buying a home or just keeping an eye on your investments, it’s worth staying informed about these key events. As always, I’m here to help if you have any questions!