288,000 jobs were created in April and the unemployment rate dropped below 6.5%. Labor force participation fell which helps to lower the unemployment rate however the birth/death adjustment which is the Bureau of Labor Statistics' guesstimate of the net number of jobs created by small businesses which are not included in their survey. Without this birth/death adjustment, we would have only added about 54,000 jobs. In other words the jobs created went from 54,000 to 288,000 based upon a guess that small businesses added jobs.
US GDP for the 1st quarter of 2014 came in barely positive at an annualized 0.1% on expectations of 1.1%. The weather is the scapegoat for these poor numbers so we'll have to wait and see what comes in for 2nd quarter to see if it is the beginning of a trend. The fact that FED stimulus tends to wear off about 6-9 months after, and that the FED began to taper in January, it stands to reason that we would see softening of the economy somewhere around mid-2014. At the Federal Reserve Open Market Committee meeting, the FED reiterated its view that the US economy is recovering slowly and thus they continued to reduce bond buying by another $10 billion.
Mortgage purchase applications were down 4% last week and 20% year over year which is consistent with the double digit drop in new home sales and decline in existing home sales. Prices however based on the S&P/Case-Shiller 20-City Home Price Index was up 12.9% for the year and up 0.8% for the month of February. Looking closer at the seasonal adjustment, without it, prices were flat.