Interest Rate Update

Don’t believe everything you read and here is an example.  Although it may turn out to be correct, mortgage-backed securities are what moves interest rates, not economists.  If economists knew anything they would have said home prices track inflation and when the prices were way above inflation an alarm would have gone off.  But of course that didn’t happen. 

“Economists in the latest Wall Street Journal survey, on average, expect the Federal Reserve to raise interest rates around September 2010, a politically sensitive time considering midterm elections will be right around the corner and unemployment is forecast to still be over 9.5%. The 52 surveyed economists — not all of whom answer every question — on average expect the unemployment rate to rise to 10.3% by the end of this year from its current 10.2%, and they expect it to stay above 9.5% through 2010.  The economists expect gross domestic product to expand around 3% at a seasonally adjusted annual rate through 2010, slightly slower than the 3.5% recorded in the third quarter.”