Morning Report: Q2 GDP estimate revised upward.

Vital Statistics:

	Last	Change
S&P futures	4,159	15.27
Oil (WTI)	95.15	0.26
10 year government bond yield		3.10%
30 year fixed rate mortgage		5.74%

Stocks are higher as we await the Jackson Hole economic summit. Bonds and MBS are down small.

Second quarter GDP was revised upward from -0.9% to -0.6% as the estimate for personal consumption was increased. The GDP Price Index rose 7.7% on a year-over-year basis. Ex-food and energy it rose 4.4%. These rates were the same as the first estimate.

Note the Atlanta Fed’s GDP Now estimate for the third quarter was updated yesterday. They now see Q3 GDP rising at a 1.4% rate, a downward revision from the 1.6% predicted a week ago.

Housing affordability improved for the second straight month, according to the MBA. “Affordability conditions improved modestly in most of the country in July, as slightly lower mortgage rates and a decrease in the median loan amount led to the typical homebuyer’s mortgage payment falling $49 from June,” said Edward Seiler, MBA Associate Vice President of Housing Economics and Executive Director of the MBA Research Institute for Housing America. “Homebuyer demand has faltered this summer, as lingering economic uncertainty, high inflation and still-high mortgage rates caused many prospective buyers to delay their home search. The combination of a strong job market and moderating home-price growth could entice some of these buyers to return in the coming months.”

The silver bullet that will offset rising rates and home prices is wage inflation. Wage inflation generally lags goods and services inflation since raised are usually negotiated at the end of the year.

Note that the college loan forgiveness plan that the Administration recently unveiled might help here too, though it probably will just cause colleges to raise tuition in response.

Initial Jobless Claims ticked down to 243k last week. Despite all of the economic headwinds, the labor market continues to hold up.