The Federal Open Market Committee meets this week, and everyone, and their uncle, expects the FOMC to raise the overnight Fed Funds rate by .250 percent. The move itself doesn’t impact 30-year mortgage rates offered by Orion, but the FOMC will by analyzing various parts of the economy in reaching its decision, not the least of which is inflation. The Federal Reserve is in a tough spot, combatting inflation, dealing with issues with a handful of banks, and not wanting to push the U.S. economy into a deep recession. Alert: recessions bring lower rates, but if your client doesn’t have a job, does it matter?

Recession talk is all the rage, but the U.S. economy managed to eke out another gain in Q1, with Gross Domestic Product (GDP) growth expanding by an annualized rate of1.1%. That severely missed estimates of 2.0% growth and was slower than the 2.6% growth seen in Q4, but investors were excited nonetheless.

Many analysts and economists had predicted that a recession would already come in Q1, and while the U.S. economy is clearly shifting into a lower gear, the latest data may suggest that it also might be able to escape one in 2023. Orion’s management believes that the numbers also support the case for the Fed to begin pausing its aggressive rate hike cycle, while consumer demand is still holding strong despite lower private inventories and residential fixed investment. Robust job growth has additionally outpaced layoffs, with the unemployment rate still at multi-decade lows, suggesting that Americans might be well-positioned to deal with inflation and economic uncertainty.

Orion’s brokers should be aware that the U.S. economy has proven to be very resilient. But inflation and interest rate increases, and a tightening in lending, are now affecting small and midsize businesses. But consumers continue to spend.

Some contend that a rolling recession has been happening to different sectors of the economy, and could support a soft landing, while others are doubling down on amild to moderate recession coming in the latter half of 2023. Regardless of the interest rate environment, Orion’s brokers should know that we will be offering competitive pricing on our very wide-ranging set of products! Contact your AE with questions.

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