Back in the Saddle

We celebrated our 14th wedding anniversary as a family in Hawaii last week.  It was a magical time and I think that a part of me is still there.  The rest of me that did make the trip home had difficulty comprehending the source of the buzzing sound from my nightstand this morning at 6 o’clock.

The fourth quarter GDP was released this morning up 0.6%, or up 2.6% year-over-year, bringing the 2014 average reading at 2.4%.  That is right in line with the Federal Open Market Committee’s (FOMC) target of 2-2.5%.  Speaking of the Fed, they maintain their pledge to be “patient” on raising interest rates.  Though they confirm that economic activity has been expanding at a solid pace and the labor market continues to improve, the plunge in oil prices is cooling inflationary pressures, further delaying the first Fed rate hike since 2006.


Inflation numbers so far this week (as construed by the leading economic indicators of Philly Fed, Producer Price Index, and Retail Sales) have shown it tame at best and could be interpreted by some as a foreshadowing od widespread deflation.  Today’s Consumer Price Index shows that the cost of purchasing stuff by households across the country has declined in tandem with the cost of manufacturing said goods by -0.4% since the prior month.  In both cases, this is the lowest reading in the last six years and has caused many to call for the Feds to start hiking interest rates.

Contrary to the deflationary decriers, my untrained take is a little (in my biased opinion) more level-headed.  It sees obvious enough to me that the costs of manufacturing and distributing goods for sale has declined commensurate to the cost of fuel this last month and not a result of a domestic economic downturn.  So while the black clouds brewing overhead might alarm some, I believe we should just take advantage of the beautiful scenery thus created because it won’t last forever.  Hence the picture.  Translation: interest rates are really good and we should take advantage of that.

I believe that my 10th Grade Creative Writing teacher would be proud right now.

I am doing a lot of no-cost FHA loans at 3.5% and Conventional 30 year no-cost loans at 3.875% this week.  I realize that most of you are enjoying interest rates that are already lower than this, but if not, we need to talk.