It’s certainly been an interesting year so far. The first two quarters of 2015 saw some relatively healthy signs the economy was on the mend and the Fed would surely raise rates at their July round of FOMC meetings. But during the  Real Estate Jobslatter part of May and throughout June, those thoughts began to fade as reports of an economic slowdown appeared. GDP numbers for Q1 were disappointing and job growth was weaker than expected. The unemployment rate continued to drift lower but many attributed that to the number of those simply leaving the workforce entirely, keeping them out of the unemployment calculations.

Yet today’s Unemployment Report and Non-farm Payroll numbers perhaps reaffirmed the notion that the Fed will indeed raise rates in December for the first time in years. The headline unemployment rate fell from 5.1% to 5.0% yet the number of new jobs created got more attention. In October, there were 271,000 new jobs, an amount closer to what is needed for a real economic jump start and the strongest reading of the year.  Anything above 300,000 and economist generally agree the economy has some steam and while we’re not quite there with the October data at least the engine seems to be heating up.

The Fed has clearly stated on multiple occasions that a 2.0% annual inflation rate is a target and retail inflation has had some trouble getting to that number. Wage gains have been flat for some time and when consumers don’t have more money they don’t spend. In October, wages jumped to an annualized 2.5 percent rate, which by any measure is a good sign. More jobs created and workers earning more mean a rate increase is on the way.

For real estate investors, mortgage bonds have already priced in the initial rate increase by the Fed and more data will be needed before another move is made but mortgage bonds are retreating and Treasury yields are rising in anticipation of the next Fed move.