February report shows more U.S. jobs, but what does that mean?

Graph courtesy of CNN.com

 

The U.S. government released its monthly jobs report today, and the results seemed mixed. Jobs added to the economy were higher than expected at 175,000, yet the unemployment rate remained at best steady at 6.7 percent, up slightly from January's 6.6 percent. Seems a little conflicting, right?

There are many factors at play to explain the jobs report data - even including rough winter weather keeping people home from work - but the overall question is how the Fed chiefs will act on the data. February's added number of jobs showed a steady, growing economy, and this is more than likely enough evidence to keep the Fed on its stimulus tapering track.

The Fed will meet later this month and is expected to drop another $10 billion a month in its bond-buying program to a total of $55 billion per month. Despite a weak/mixed jobs report in January, Fed leaders forged ahead with the plan to continue tapering its monthly bond buying. It's likely only a drastic economic change will stop this progression until no more bonds are purchased.

How does all this affect the mortgage industry? Interest rates have been dropping slightly on weak jobs data in 2014, hovering around 4.25 to 4.5 percent, currently at the lower end of that range. Of course the future is uncertain, but assuming the economy continues improving and interest rates rise, now could be a prime time to take advantage of historic low rates, saving you thousands of dollars in interest over the long term.