4th Quarter GDP Probably Didn’t Contract Thanks to Narrower Trade Deficit
An advance estimate of 4th quarter GDP was released last week which showed the economy contracting 0.1 percent in the final three months of 2012. A report released today on the trade deficit for December points to an expanding economy in the 4th quarter. A decline in oil imports and a rise in exports shrank the trade deficit in December to $38.5 billion, the lowest point in three years.
A narrower trade deficit leads to stronger GDP growth which will lead to higher interest rates in the near future. 10 year Treasury yields are higher today on the news of a narrower trade deficit and are just below 2.00 percent. The best savings account rates on our rate tables are at 1.00 percent and the highest money market rates remain unchanged at 1.04 percent.
Interest rates have been low for many years but there is hope that interest rates will be higher sooner than later. The Federal Open Market Committee has kept the fed funds rate in a targeted range of zero percent to one quarter percent for about 5 years now. A fed funds rate near zero percent has forced interest rates down to record lows which is what it is designed to do.
The FOMC has also stated they plan to keep the rate near zero percent until the end of 2015, when the unemployment rate falls below 6.5 percent. Many people, including George Soros, believe interest rates will move higher before then.
Once the unemployment rate falls below 6.5 percent the fed will increase the fed funds rate which will lead to higher deposit rates. All this might happen sooner than the end of 2015 which is welcome news since we have been suffering with low interest rates for so long. To help you with your search in finding the highest rates we have listed this week's highest savings and money market rates below:
Current Savings Account Rates
Current Money Market Rates
RatesORama.com Average Mortgage Rates