Sunday, June 26, 2005

Economic upswing to spark more interest-rate hikes

Job market not so weak after all

Mortgage rates have behaved very well, low-fee 30s staying about 5.625 percent as long Treasury rates completed a return to 4.1 percent, "V"-ing out of sub-4 percent ground for the umpteenth time since 2003. This latest excursion below 3.9 percent was the temporary artifact of end-stage short-covering by rate bears and equally last-ditch buying by economic bears. Both extremes paid the price for error.

The business media are so completely preoccupied with Housing Bubble coverage that it's hard to find straight stories on the economy.

(The bubble stories all say that people in and near housing sound like tech stock players circa 1999; maybe, but the media are in a perfect replay of their Y2K coverage. This week's bubble-booby prize to the New York Times: its huge, front-page biz-section blast on the surge in interest-only mortgages since 2001 failed to mention that there weren't any available before 2001 – quarter-century-old products like equity lines of credit and option ARMs excepted.)

The economy is behaving in ways different from the cyclical patterns 1945-1990, and some we do not yet understand (the trade deficit), but the differences should not be mistaken for weakness. The changing market for jobs tops that list.

A "weak job market" has been the mantra of this post-bubble (stocks, that is) era: soggy growth in "non-farm payrolls"; wage growth barely even with inflation; 65 percent of Americans saying jobs are hard to find; and domestic employment suffering from overseas competition and outsourcing.

Read the entire Lou Barnes Inman News Article

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