Just the Facts

Interest Rates Should Rise in December

You can’t argue with monthly growth of 271,000 jobs and an unemployment rate of five per cent. That was Wall Street’s response to the release, on Friday, of the U.S. employment report for October. The yield on Treasury bonds rose sharply as traders priced in a December rate hike by the Federal Reserve, which would be the first in almost a decade. Indeed, some analysts were speculating about a second quarter-point rise come March or April.  That last bit of prognostication was premature, but it does seem highly likely that Fed chair Janet Yellen and her colleagues will act: as recently as Wednesday, Yellen described a December rate hike as “a live possibility.”

-          New Yorker Magazine, November 6, 2015

   

October Job Boom; Unemployment Drops

October hiring burst adds 271,000 jobs, drops Unemployment rate drops to 5-year low
U.S. hiring roared back in October after two weak months, with employers adding a robust 271,000 jobs, the most since December. The unemployment rate dipped to a fresh seven-year low of 5 percent.  The burst of hiring across a range of industries came as companies shrugged off slower overseas growth and a weak U.S manufacturing sector. Big job gains occurred in construction, health care and retail.  Healthy consumer spending is supporting strong job growth even as factory payrolls were flat last month and oil and gas drillers cut jobs.  Any gain above roughly 150,000 was expected to keep Fed policymakers on track to raise interest rates from record lows at their mid-December meeting.  A survey by the Institute for Supply Management found that companies in the health care, retail, financial and transportation and warehousing industries all added more jobs in October than in September. Overall, services firms expanded last month at the fastest pace in three months. That’s in sharp contrast to the ISM’s survey of manufacturing firms, which barely grew in October.  Chair Janet Yellen and other leading Fed officials have said that the economy is generally healthy and that the December meeting is a “live possibility” for a rate hike.
      -     Dallas Morning News, November 6, 2015
   

And Texas Home Prices Keep Going Up

“Unsustainable. Overheated. Overvalued.”

Those aren’t the usual descriptions used for the Dallas housing market.  But that was before local home prices started jumping more than 10 percent a year and before buyers were bidding up the cost of putting a roof over their heads.  The Dallas area now leads the nation in home price gains, according to analysts at Core Logic Inc.  And it’s not just Dallas that’s seeing higher prices. Costs are soaring in Austin and San Antonio, too.  Even in Houston, where the economy’s been slapped around by oil and gas industry layoffs, home prices are rising more than 6 percent a year.  The cover of the latest issue of Texas Monthly magazine calls it “The Great Texas Housing Boom.”  In Texas, the home price binge is being fueled by pure demand from the people moving here every year.  “We have thousands of people moving to this state, and we are not building enough places for them to live,” said Texas economist Mark Dotzour. “That’s what is driving up prices.  “Our housing inventory is ridiculously low, and that’s what’s causing these spiky prices.”  Dotzour doesn’t see a cool-down in Texas home price gains as long as the flow of people from California, Illinois and elsewhere continues.  “This is going to go on as long as jobs keep coming into the state,” he said. “As long as we have a shortage of home supply, I don’t know why prices won’t continue to go up. That’s just how it works.”
-          Dallas Morning News, November 5, 2015