Here’s a fact that could ruin your Monday morning (unless you’re a banker).
Peter Morici, former chief economist at the U.S. International Trade Commission, points out that the U.S. gross domestic product increased by a weak $176 billion in the second half of 2009 (after adjusting for business inventory bookkeeping procedures). During the same period, Morici points out, U.S. banks paid out nearly $150 billion — and earned roughly twice that amount of money in profits.
As Morici says in a RealClearMarkets.com post, “It is easy to see who is benefiting from (President) Obama's growth policies, and why most Americans feel a bit poorer each day.”
Maybe that’s why so few financial pundits — and American families — made a big deal out of the news that the GDP grew by 5.7% in the last quarter of 2009. Discounting the inventory liquidation that took place during the quarter as panicked companies throttled down on inventories in the teeth of a big consumer recession, real GDP was closer to 2.2% for the quarter. In addition, business investment is off by 14.6% from a year ago at this time, and American workers are taking a huge hit in their paychecks. According to the U.S. Labor Department, wages and benefits rose by just 1.5% in 2009 — the lowest number ever recorded.
Clearly, the U.S. economy remains in a world of hurt, and that pain is reflected in the downward trend in mortgage rates last week.
Here are the numbers, as measured by the BankingMyWay Weekly Mortgage Rate Tracker:
Description This Week Last Week
One-Year ARM 3.95% 4.31%
Three-Year ARM 4.03% 4.46%
Five-Year ARM 4.18% 4.41%
15-Year Mortgage 4.5% 4.57%
30-Year Mortgage 5.09% 5.15%