August 2019 Monthly Briefing
WILL THE RATE CUT HELP THE HOUSING MARKET?
Julie Bae, Pension Analyst/Economic Specialist
The Federal Reserve lowered its benchmark interest rates by 25 basis points to a range of 2.00% and 2.25% at the end of July for the first time since 2008. Growing fears of recession, trade disputes with China, along with other factors including a global slowdown, precipitated the move. Although the reasons behind the recent rate cut do not send positive signals to investors, it may work in favor of the housing market as mortgage rates have a linkage to the Federal Funds rate. As shown in the following page, based on data from Freddie Mac, the average 30-year fixed rate is now approximately 3.6%, the lowest since late 2016. Theoretically, lower mortgage rates should help increase the affordability of ownership, thus likely resulting in a higher number of homeowners. Wouldn’t the housing market be stimulated with the help of the rate cut? The short answer would be … “maybe.”
REVENUE: WEAK FEDERAL SOURCES RESULTS IN AUGUST REVENUE DECLINE
Jim Muschinske, Revenue Manager
Overall base receipts declined $118 million in August. An extremely weak month for federal sources accounted for the decline, while performances from the other revenue sources basically offset each other. The month had one less receipting day than did last August.
Through August, overall general funds receipts have posted gains of $482 million, mostly on the strength of transfers related to the Income Tax Refund Fund. Absent that, revenue performances have been mixed to start the fiscal year.