GDP Report: Economy Slowing, Inflation Rising: Go Figure
27 April 2007
Mortgage Market Outlook: Float
The bond marketﾃつ improved slightly today despite a GDP report that came in much weaker than expected.
The report demonstrated that the economy grew at a much slower pace than expected during the first quarter of 2007.ﾃつ It was the lowest reading since 2003.ﾃつ ﾃつ ﾃつ This is further evidence that the economy is slowing.ﾃつ However,ﾃつ the report also showed aﾃつ burst of inflation last quarter.ﾃつ The GDP report’s price index rose at an annual rate of 4 percent, the most since 1991.
The report continued the mixed economic messages that we have been seeing over recent months, messages which prevent Federal Reserve policy makers from lowering interest rates to stimulate growth.ﾃつ The economy is clearly slowing, the housing sector for sure is still in decline, yet the threat of inflation rears its head enough to prevent the fed from dropping rates yet, giving relief to the situation.
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