Unemployment Rate Drops To Lowest In 2 Years

Mortgage and Lending with Pacor Mortgage Corp

Non-Farm Payrolls (2009-2011)Americans are getting back to work. Sort of.

This morning, at 8:30 AM ET, the Bureau of Labor Statistics released its Non-Farm Payrolls report for January 2011. More commonly called "the jobs report", the government's data showed a large decrease in the number of working Americans as compared to December, but a sizable drop in the Unemployment Rate.

The job growth figures were much lower than consensus estimates:

  • Expected job growth in January : +148,000 jobs
  • Actual job growth in January : +36,000 jobs

January's Unemployment Rate surprised analysts, too, but not in a bad way, falling from 9.4 percent in December to 9.0 percent last month. This is the nation's lowest Unemployment Rate in nearly 2 years.

Today's jobs report is rough news for home buyers and rate shoppers in Oak Lawn. Shortly after the report's release, Wall Street is attributing the low jobs number to "bad weather" and is choosing to focus on the strong Unemployment Rate instead.

U.S. stock futures are now rising ahead of open, an increase that will come at the expense of the bond markets. Indeed, mortgage-backed bonds are losing this morning already.

Conforming mortgage rates are expected to start the day at least +0.125% from Thursday's close and, if momentum continues, could tack on an additional +0.125% before today's closing bell.

The government's report is an excellent example of how important jobs data can be to home affordability -- especially in a recovering economy.

The economy shed 7 million jobs between 2008 and 2009 and fewer than 1 million of those were recovered in 2010. It's a data point Wall Street watches closely because more working Americans means more consumer spending, and more consumer spending means more economic growth. Consumers account for 70% of the U.S. economy, after all.

More workers also means more taxes paid to federal, state and local government, and, in theory, fewer loan charge-offs from banks. These, too, keep the economic engine moving forward, spurring more spending and job growth. 

If you have not yet locked a mortgage rate, consider locking one today. On the heels of today's jobs data, 30-year fixed rates will scratch at their highest levels of the year.


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Larry Costa
Century 21 Classic Gold, Carver MA - Carver, MA
Realtor, MA Real Estate

Always nice to hear some good news in troubled times.....

Feb 04, 2011 04:09 AM #1
Steve, Joel & Steve A. Chain
Chain Real Estate Investments & Mortgage, Steve & Joel Chain - Cottonwood, CA


There is a turn of events and this is just one sign. Last month the majority of economists polled are forecasting more strength in the recovery.  I believe wise buyers will grab their purchases before increased demand make rising interest rates far more obvious.

Have a great weekend!


Feb 04, 2011 04:46 AM #2
Michael Loeb
TGC Financial - Port St Lucie, FL

The Unemployment number is highly inaccurate and problematic at best.

- It only takes into account those collecting unemployment benefits. 

-It does nothing to reflect those 1099'ers who can go months without collecting a paycheck. 

-It does nothing to reflect the numbers of small business owners that have closed up shop and have not yet gone back to working for someone else. 

-It does not include those who have timed out on unemployment, or just simply stopped looking for work.

-It does not include college or high school grads who are entering the work force but haven't gotten a job yet.  They've never been employed and do not qualify for benefits.


Most importantly, to our industry, it does not take into account those who have taken jobs at significantly reduced incomes.   If you trade a $75K job for a $25K job after 6 months of looking for a $75K job,  those in Washington will be tickled pink that the unemployment figure has gone down.  When in reality your personal purchasing power has been reduced by 66%.  For a family of 4, that extra $50K went to paying for your mortgage, your utility bills, your credit card bills, your retirement, your kids education.  Now at $25K, a family of 4 is just above the poverty line ($22,350).

But this is OKAY.. because according to Ben Bernanke we have no inflation (which was his rationalization for monetizing the debt).  Which proves only one thing, Ben has not step foot into a grocery store, purchased gas, or heating fuel, or paid any household bills in a year.  ----  but that's another axe to grind.




Feb 10, 2011 08:26 AM #3
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