Whiplash in This Week’s Three Things to Know

By Ryan Casey Stephens,  FPQP®
Special Contributor

There are ideas that can only be represented by one word — for example, parallel. Many phrases can describe the idea, but the word has no synonym. Here’s another: whiplash. No single word equally captures a quick snap back in motion.

So, here’s my tribute to you, whiplash, the one word that best captures what’s going on in this week’s Three Things to Know.

Neck-wrenching Jobless And Jobs numbers

It began last Thursday with Initial Jobless Claims numbers (folks filing for unemployment for the first time). According to reports, 260,000 individuals filed for unemployment, the highest level since January. The number of people continuing unemployment also rose to 1.4 million, the highest reading since April. It led me to wonder if this was a “canary in a coal mine,” and a sign of an adverse upcoming Bureau of Labor Statistics Jobs report. Well, that report was released Friday, and, SNAP! Instead of the expected number of jobs created in July (250,000), the report blew us away: 528,000 job creations, more than double expectations

Head-spinning Plot Twist

We had an unbelievable job creations number. That’s great, right? My two cents: No, not so much. On the one hand, of course, I’m very happy for everyone applying for those positions and the possibilities they present. However, now we’re facing some new and renewed threats. 

First, more jobs but less GDP means our economy is less efficient. It’s not great if it takes more employed Americans to generate a flat GDP.

Second, what was everyone afraid of last week? Recession. But with such a strong jobs report, that’s less threatening. More jobs will mean more competition for jobs, thus higher wages. Higher wages will mean greater consumer spending. Do you see where I’m going with this?

Out With Recession, in With Inflation (Again … Or Still?)

You guessed it: I’ll bet you a penny the talking heads will be switching back to covering inflation this week. How well timed, too! This week we’ll get the Consumer Price Index, the inflation report that factors in fuel and food. A smaller inflation rate than previous months could quiet fears that have crept back in, but a negative report could be rough for mortgage rates over the next few weeks. I’m sure the Fed will be watching too, as they consider their next hike.

Ryan Casey Stephens FPQP® is a mortgage banker with Watermark Capital. You can reach him at [email protected].