US economy surges in Q3, lifting mortgage market outlook
PCE inflation rose 3.6% year-over-year in September, up from 3.4% in August, while core PCE held at 3.1%, nearly 110 basis points above the Fed’s 2% target.
Federal Reserve Chair Kevin Warsh, speaking ahead of the release, described the economy as expanding at a “strong pace,” telling reporters that “domestic spending has been resilient, productivity growth is strong, and capital investment robust.”
Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA) in Washington, DC, provided the most direct read for the broker channel.
“Residential investment and net exports continued to weigh on economic growth, with the initial estimate showing the impacts of a decline in the pace of construction and a large jump in imported goods,” Frantantoni said.
On inflation, Fratantoni said: “Perhaps of note for the mortgage market, the September reading for PCE inflation showed an increase to 3.6 percent from the prior reading of 3.4 percent. While this increase was certainly impacted by the recent spike in oil prices, core PCE inflation remained at 3.1 percent, still well above the Fed’s target of 2 percent.”
