My Mortgage Blog

   This is a big week for economic indicators and therefore for us all. The most important data of the week will arrive on Friday, as the growth in the number of jobs in February will be released. Notice that I said, “growth,” as if I were brimming with confidence that the jobs report will once again be an improvement on the prior month’s figures. Quite frankly, I don’t know with certainty that the number of new non-farm payrolls will exceed the 243,000 racked up in February, but the number will most likely be adequately high to add to the confidence of those economists who believe the jobs market is healing. And, therefore, that real estate sales volume is likely to improve.

Many analysts, though, have warned that the unemployment rate, figured from a different telephone survey—of households rather than of businesses—will remain at about 8.3%. In fact, many analysts have written that we can expect to hold at about 8.3% for most of the rest of this year.

Now, with a prediction like that making the rounds, you can be certain that the markets will react rather strongly if Friday’s report tells us the unemployment rate has actually improved—even if it is only a minor decline.

The reaction will surely be in the form of higher interest rates if this happens. And if the number of new jobs is higher, the same will surely happen, and stock market indices will very likely rise with the jobs numbers.

But if the numbers disappoint, falling below expectations, the opposite will happen, and we’ll be lectured by a gaggle of hawks who don’t believe the economy is gaining traction and are on the lookout for proof with which to feed their convictions.

There are other indicators waiting in the wings as well. “The temperature of global recovery can be taken this week by the release of data on US jobs, Chinese inflation and European production levels,” the Financial Times comments. So Chinese Premier Wen Jiabao has very recently announced that his country will shift its economic policy, bringing its rate of growth to about 7.5% in 2012 and very likely lessening Chinese demand for raw materials of productivity in world markets. This should have a moderating effect on world economic growth, though it isn’t likely to cause much concern—yet.

On Friday, we will also have the International Trade figures which should provide some insight into Europe’s economic strength, and how well it matches with that of China and America.

This is, I think, mildly arcane stuff. How many clients want a lecture on international economics when they ask where rates are most likely headed? It’s a MEGO (My Eyes Glaze Over) type of subject. Further, it’s unlikely that most of us are particularly adept at discussing international trade patterns meaningfully. It requires an unusual level of foolishness—mine, for example—even to hazard a guess about the near-term direction of interest rates.

That said, rates seem likely to edge higher over the near-term if our jobs picture is proven to be a bit stronger—as it probably is. How long will this be the case? We both know, from having watched the economy of late, that we’re on a tractor that only knows how to do the old back-and-fill, meaning that it will slow and even reverse and then start up again, causing concern and consternation with each move.

Besides, we have some potentially destructive forces waiting barely offstage in this economic theater—notably the price of gasoline. As Liam Denning wrote in today's Wall Street Journal, “Oil can’t go much higher without derailing the economy.”

It’s an important week to watch the economic indicators, in any case. Interest rates may well shift to a slightly higher level as a result of good jobs figures, and may stay there for awhile. That much we can say with at least a degree of confidence, before we start piling on the qualifiers and caveats.