I do not often write about rates and economic reports, but 
today's Gross Domestic Product report is sparking talk of recession. Expectation for GDP was an increase over 2%, but the actual report was under 2%. Unemployment numbers for the week are also significantly higher than expected.
For these reasons mortgage and other bond rates dropped today.
These reports coupled with lower revisions to the reports in the two previous quarters raised the question of recession. The new figures for the last quarter in 2007 showed a contraction. Projections for the last quarter of 2008 are also not good. Economists suggested that the $600 tax rebate may take a good bit of the credit for expansion in GDP for this quarter and possibly for the next quarter, but that the rebates would be expended before the last quarter.
Additional credit for the GDP expansion this quarter, modest though it is, goes to exports that benefit from the low dollar.
NPR quoted a former Federal Reserve govenor that lost home and stock values are not reflected in the GDP numbers, but that those losses were real. Additionally, the perceived loss of wealth would likely contribute to continued reduced spending.
I recently read an article that illegal aliens were leaving the country. Is it because of increased enforcement or because of decreased opportunity?
Is there a sector of the economy positioned well enough to lead a recovery?
If bad economic news continues to keep mortgage rates low and if gas prices can lower or stabilize, then a a recession or a slow growing economy might just let housing bring us back. Low rates and low prices may make purchasing a home an affordable choice. That is if you have a job and if your credit rating has not taken a beating.
Otherwise, I guess we can just sell enough of our stuff to China and the Middle East so that exports can spur a recovery.
And we can all take heart to know that the government sector is leading the way in growth for our nation's economy.
Does anyone know - did the mortgage crisis cause this economic slowing or was the mortgage crisis just the first sign of an economic problem?
Richard Smith
Home financing in Tennessee, Georgia, and Alabama.
Experience matters when it is your home loan.
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