Market Update - August 28th, 2023
After the hottest week of the year, it’s a relief waking up this morning to a bit of a cooldown in temperatures. The Pumpkin Spice Lattes are already being served and the sweatshirts are being pulled from the cedar chests. Folks still use cedar chests, right?
Get cozy and follow along with our quick 5-minute market update.
We are posting regular content to Instagram (Nick | Kreg) and Facebook (Nick | Kreg) to help you and your buyers. Be sure to follow us!
Powell Hawkish at Jackson Hole
On Friday morning, Jerome Powell spoke at the annual symposium in Wyoming and is holding ground on his efforts to fight inflation. “Although inflation has moved down from its peak…it remains too high. We are prepared to raise rates further, if appropriate, and intend to hold policy at the restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
Key Takeaway: His inflation goal is still 2%. Markets are predicting a pause in September, but the potential for a late 2023 hike is growing. There is currently a 50%+ probability in the markets that expect the Fed to hike another 0.25% at the November 1st meeting or the December 13th meeting. What a nice Christmas gift from the Fed 😒.
Is the Job Picture Still Rosy?
It’s a big week for jobs data. We get the JOLTS and ADP payroll figures ahead of the US Bureau of Labor Statistics (BLS) jobs report on Friday. Earlier this year, the BLS report beat expectations month after month adding an average of 312,000 jobs monthly. In July, we started to see a potential reversal with only 187,000 new jobs. Are we starting to see an economic cool down that Powell is looking for?
According to DailyJobCuts.com, in August an average of 10 businesses A DAY have announced a closing vs. 7 in July. From a layoff perspective, August is on pace to see about 5 companies a day announcing some form of layoffs vs. 4 in July. Anecdotally, it appears August is on pace to exceed July in terms of businesses filing for bankruptcy. Year-to-date through July, corporate bankruptcies are far outpacing 2021 and 2022 (chart below).
Unemployment is still very low, trending in the mid 3% range for most of 2023. This is on the main reasons Powell has had hit foot on the rate hike gas. The labor market appears super resilient. You can also see from the chart below that major recessions (indicated by the grey bars) generally follow the bottom of unemployment. It feels like we are on the cusp but what’s going to cause everything to break?
Mortgage Hack : OHFA Updates Purchase Price Limits
The Ohio Housing Finance Agency (OHFA) appears to have updated their purchase price limits for folks looking for down payment assistance. Kreg and I work with a lot of clients who leverage this program. Income and purchase price limits are based on the different counties across Ohio. Franklin County, for example, had a purchase price limit in the mid $300,000 range but it has now moved up substantially to $498,220. Income limits to participate in the program, in Franklin County, are currently $121,320 for a 1 or 2-person family and $141,540 for a family of 3+.
This agency has programs for Ohio Heroes (like veterans, nurses, police, firefighters, teachers, etc.) with lower rates relative to their standard program. They also have unassisted loans that occasionally have more favorable pricing than traditional loans.
Instagram Posts from Last Week
Don’t hesitate to reach out if you need anything at all. Have a wonderful week!