WHAT TO WATCH: GDP

What To WatchThe final GDP reading of 2015 reveals a slowing economy. What does that mean for consumers, exactly?

What is the GDP report? GDP measures the total production and consumption of goods and services in the U.S. GDP covers consumer spending, business and residential investment, and price inflation. Combined with employment data, GDP gives an important measure of productivity growth or stagnation.

What’s happened recently? The U.S. fourth quarter GDP reading showed a disappointing 0.7 percent increase, leaving the 2015 annual GDP reading at 2.4 percent. While the annual growth rate landed within the 2 to 3 percent range considered ideal by most economists, the tepid quarterly gain left everyone scratching their heads.

What’s the bottom line? Without an excuse (like extreme cold weather) to blame, the report called out businesses ramping up efforts to reduce inventory and falling consumer spending as possible causes. Should this economic weakness continue in 2016, home loan rates could remain in historic territory as investors try and navigate volatile markets and choose the “safety” of the Bond markets over Stocks (which tend to be more volatile). And since home loan rates are tied to Mortgage Bonds, rates tend to improve when Mortgage Bonds do well.

I’ll continue to monitor economic reports closely. If you have any immediate questions about loan products or home loan rates, please call or email today.

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