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  • Fed Acknowledges a Healing Labor Market; Housing Starts Jump 8.9%

    December 21, 2009 - After a two-day policy meeting, the Federal Reserve expectedly left its interest rates unchanged while reassuring that inflation will remain low as we head into 2010. Fed policymakers also acknowledged that the labor market has begun to heal after deteriorating over the past three years. With financial markets slowly regaining their footing, the Fed should begin unwinding many of the large liquidity programs it has put in place to fight the financial crisis that started nearly two years ago.


    Housing starts jumped 8.9% last month to a seasonally adjusted rate of 574,000 units. The increase was lauded by many as an early sign housing may have put in its bottom. Multifamily housing starts were the biggest contributor with a 67.3% gain, pulling new home construction out its recent doldrums.


    This holiday-shortened week does have some important economic releases notably fourth quarter estimates for GDP. If the GDP comes in greater than 2.5% we could see rates staying fairly level for this week, perhaps even sliding back slightly. We'll also get some insight into how the housing market is fairing with new and existing home sales reports.

     

    Dec 21 2009