Recession: what Recession?

It is only a short 3 months ago (well I guess in political terms that’s almost a lifetime) that all the pundits were cautioning – not of course forecasting – that a recession was possible.


Since the yield on the 10-year Treasury is the most sensitive to the economic outlook, and since mortgage rates are based on the 10T yield, mortgage rates followed the drop in the yield on 10T, but only to a limited extent.

Basically, the 30-year fixed Rate Mortgage rate went from 4.5% at the beginning of the year to 4% in June and 3.5% around Labor Day, when R talk was all the rage amongst commentators.

So what has happened recently?

Well, the R talk has receded on the back on the continuing robustness of the US economy. As one commentator said recently, the economy is “nothing to get excited or overly concerned about.”

A lot of the negative economic news has related to the manufacturing sector, but the truth is that manufacturing today is an essential, but quite a small, part of the economy, in 2018 accounting for 11.6% of economic output and just 8.5% of jobs. The consumer drives the US economy, which is why measures of consumer confidence are watched so carefully, even if they tend to be lagging indicators.

At the end of 2018 in Is a recession coming soon? I concluded:
“The key – both to real estate prices and to the path for the economy – is the level of consumer confidence. While all recorded reports show that level currently to be high, consumer confidence can also be very fragile….. but confidence is a fickle thing. At the moment it is intact. As long as that remains so the likelihood for 2019 is a slowing, but still growing, economy and a stable housing market.”

Nearly 11 months later, despite the daily, hourly bombardment of “news” the outlook is largely unchanged, with the same caveat.

Andrew Oliver
Market Analyst | Team Harborside |

Sagan Harborside Sotheby’s International Realty
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