Last week, when the Federal Reserve issued its policy statement regarding rates and the economy, analysts rushed to slice and dice the statement. But JMAC’s experienced brokers took the news in stride, and it left some wondering how important the Fed is at this point – especially in the mortgage market.
The Fed has made it clear that it is focused on employment and on inflation. Inflation is relatively tame, but let’s look at unemployment. Information received since the last FOMC meeting in April indicate that the labor market will improve. Some analysts think it can’t be any worse: it is most encouraging that, at the rate people are leaving the labor force (820,000 in the past 2 months), there will be zero unemployed by the end of 2017.
Seriously, JMAC’s brokers who carefully monitor the economy, or even just minor observers, know that whatever problems the U.S. economy faces have little to do with monetary policy and looking to the Fed for a solution is pointless.
Some percentage of the workforce is under-educated, and the gap between the incomes and financial contribution of those with higher education and those that don’t have it is widening. Many believe that the biggest economic problem in the United States is the underfunding of Social Security and Medicare. Social Security has an unfunded future liability of nearly $25 trillion. It has also been spending more than it take in for the past 5 years. The Medicare underfunded liability is estimated to be around $48 billion.
We know that an election is coming up, and yet the candidates don’t seem to be dedicating much rhetoric toward these issues. And our brokers, and plenty of others, know eventually something must be done. Meanwhile, we, as an industry, grapple with something else weighing down productivity: government regulation. And we’ll see if the candidates address this.