Indianapolis Area Real Estate Blog

How Job Losses In The Economy Are Helping Home Affordability

On the first Friday of each month, the Bureau of Labor Statistics releases its Non-Farm Payrolls report.  More commonly, it's called the 'jobs report'. The jobs report is a sector-by-sector look into the U.S. economy and whether businesses are hiring -- or firing -- workers. 

This is one of the reasons why its release is so hotly anticipated each month -- the jobs report can reveal a lot about the state of the U.S. economy. Last month, the economy shed 62,000 jobs. Now, many people will assume that job losses like this are terrible for the U.S. economy.  Sometimes, that's true. This month, it's not. 

Given the ongoing tug-o-war between inflation and recession, markets are somewhat pleased with the June job loss figures because job losses reduce the likelihood of inflation in the U.S. economy. Inflation is considered by many -- Ben Bernanke included -- to be among the top threats to the U.S. economy -- it devalues the dollar and leads to increases in the Cost of Living.  Inflation also threatens home affordability because mortgage rates tend to rise when inflation is present.

June's job losses -- while bad for those impacted -- is helping to relieve inflationary pressures on the economy and that is boosting markets performance this morning.  Stocks are slightly up, and mortgage rates are slightly down.  

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