Economist's Commentary: May 30, 2008

Quick Take on the Economy: May 30, 2008

By Lawrence Yun, NAR Chief Economist

Aggregate personal income grew 0.2 percent in April and is up 4.8 percent from a year ago.
Wage payments actually fell 0.1 percent. This is consistent with fewer people on payrolls in the past few months. But proprietary income also fell a notch.
What went up then? There was an increase in transfer payment, reflecting tax rebate checks to some people in April. Rental income rose strongly. Not quite sure for the surge of 10 percent in this component. Apartment vacancy rates have not been notably falling lately.
Disposable income - that is after taxes - rose a notch. On a per capita basis, it increased 0.1 percent in April and is up 4 percent from a year ago. Disposable income per person in the U.S. is now $34,725.

Aggregate personal consumption edged up 0.2 percent. On inflation adjusted basis - there was no change.
Consumer spending is expected to be soft. A temporary lift will be provided from tax rebate checks, but structurally, consumers are hampered from spending by rising energy prices and falling home values in many regions of the country.

The yield on 10-year Treasury Note breached the 4 percent market yesterday for the first time this year. This interest rate is the benchmark for which many mortgage rates are priced off from.
The spread from 10-year Treasury to 30-year mortgage rates are at historically high levels. It the spread can return back to normal, then the rise in 10-year Treasury yields may not lead to higher mortgage rats.

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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