December's Non-Farm Payrolls report shows that the economy may (finally) be slowing.  Mortgage rates are improving this morning in response.

The two key take-aways from the jobs report were that:

1. Monthly payroll gains averaged 111,000 per month in 2007 versus 186,000 in 2006
2. The Unemployment Rate reached 5.0% in December, the highest since 2005

Both of these points are indicative of an economic slowdown over the long-term and that is easing inflation concerns in mortgage bond markets this morning.

Because consumer spending makes up two-thirds of the economy, inflation is closely tied to the jobs report.  The more Americans that are working, the stronger consumer spending tends to be.

As consumers spend more on goods and services, of course, businesses are forced to hire more workers and that fuels more consumer spending.  By contrast, a soft jobs report reduces consumer spending and softens the economy further.

To borrow from Physics 001, an economy at motion tends to stay at motion and right now, that motion is slowing.

So, there's no shortage of news coverage decrying today's jobs report as "awful".  But because of how mortgage rates respond to stuff like this, "awful" is not a fair use of adjectives. 

There are loads of Americans that are benefiting from today's jobs report.

• If you're buying a home, the monthly carrying cost of your mortgage just got cheaper
• If you're selling a home, your buyers' purchasing power just got bigger
• If you're remortgage a home, your mortgage rates just fell
• If you bought a home in the last two years, mortgage rates are probably lower now than when you bought

This is why high unemployment and weakness is not always so bad.  A lot of Americans fall into these four classifications and there so there's a tangible benefit in today's jobs report.

Source
U.S. payrolls rose 18,000 in Dec
Glenn Somerville
Reuters.com, January 4, 2008
http://www.reuters.com/article/economicNews/idUSN0324081520080104

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Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.