Economic Statistics for 18 Sep 13
The MBA reports that mortgage applications rose a sharp 11.2% last week, with purchases up 3.0% and re-fis up 18.0%. As rates are starting generally to rise, last week’s 5 basis-point drop has everyone locking in the best rate they can.
A downward revision in July’s housing starts resulted in a nominal rise of 0.9% in August to a 0.891 million annual rate. Housing permits, an indicator of future activity, declined to a 0.918 million annual rate from July’s 0.943 million.
At today’s meeting of the Federal Open Markets Committee, the Fed surprised the markets by not tapering off its Quantitative Easing program. They fear that doing so will result in a fiscal drag on the economy. They also say that labor market conditions still are questionable. The Fed is predicting 2013 GDP growth at a below-trend 2.0% to 2.3%. The Fed also predicts a slow improvement to the unemployment rate, with it dropping below 7.0% sometime in 2014. Inflation is below the Fed’s long-term goal of 2 percent, and says downside risks to growth have eased. Chairman Bernanke indicated that increases in interest rates may not occur until the unemployment rate is substantially below 6.5 percent, which is expected in late 2014 or 2015.