Economist's Commentary: May 19, 2008
Quick Take on the Economy: May 19, 2008
By Lawrence Yun, NAR Chief Economist
Index of Leading Economic Indicators
- The leading economic index rose 0.1 percent in April. It is the second straight month of increase after having declined steadily since mid-2007.
- The increase was driven by several components including the rising stock market, the first increase in housing permits, and the widening spread of 10-year Treasury yield over the Fed funds rate.
- The index is still being weighed-down by falling consumer sentiment and cutback in work hours in the manufacturing sector.
- This index has lost some of its clout in predicting recession or expansion as economists have developed more sophisticated modeling techniques. Nonetheless, it has a long history of fairly good predictive power.
What does today's data mean for REALTORS® and consumers?
- The economy is slugging along without a firm direction. However, the economy is expected to improve in the second half of this year. Today's data is consistent with this outlook.
- If there was a recession in the early part of this year (for which a committee will decide), it will have been one of the most short-lived ever. The economy is poised to rise.
Daily Forecast Update
- NAR's monthly official forecast as of May 7th (15K PDF)
- GDP Q2: 1.1%
- GDP Q3: 2.1%
- Unemployment rate by election time: 5.4%
- Average 30-year fixed mortgage rate in June: 6.1%
- Average 30-year fixed mortgage rate in December: 6.2%
- The next Fed policy change: a rate hike in January 2009.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
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