– Patrick Dunn, Westwood Mortgage Inc. & MMG Weekly
patrick@westwoodmortgage.com
“THE ONE FUNCTION THAT TV NEWS PERFORMS VERY WELL IS THAT WHEN THERE IS NO NEWS- WE GIVE IT TO YOU WITH THE SAME EMPHASIS AS IF THERE WERE.” David Brinkley No kidding…and although the week did start out with little real economic news for talking heads to deliver with drama, the calendar picked up steam in a hurry. Mixed news arrived for both New and Existing Home Sales – and on the heels of the recent strong housing starts and building permits that had the bad-news loving media choking, they attempted to paint a very dismal picture on housing – but it should be taken with a grain of salt. Most closings in March were likely originated in February, which was an incredibly cold month across the US – not the best month to be out home shopping or mucking around construction sites. With spring on the way, there could be some strength in housing in the upcoming months.
This week also brought an interesting report called the Employment Cost Index – one of former Fed Chair Alan Greenspan’s favorites – which measures the change in employment costs like wages and benefits. This report showed that costs are increasing, with wages increasing by 3.6% and benefit costs increasing by 3.1% over the past year. So not only are employers having to pay more in salaries due to a tight labor market, but the benefits they are providing to their employees are costing more too. What’s a business owner to do? You got it – consider raising the price of their goods and services to cover the rising costs of their employees…and higher prices means inflation. Not good news for inflation-hating Bond prices and home loan rates, which lost the improvements made earlier in the week and ended unchanged to slightly worse for the week overall.