Recent positive signs in the economy suggest that fears of a double-dip recession have been largely overblown, although the recovery remains too weak to provide much of a boost for employment or the housing market.

That's the "glass half-empty/half -full" assessment of the November economic outlook from government-backed mortgage insurer Freddie Mac. Of particular interest to mortgage borrowers, the agency predicts 30-year mortgage rates will remain below 5 percent for at least another year, though increasing about half a percentage point by the end of 2011.

On the good news side of the agenda, Freddie Mac's Office of the Chief Economist notes the labor market is picking up, with private employers adding 159,000 jobs in October, the 10th consecutive monthly increase in private jobs and biggest increase since March 2007. Manufacturing is also showing a broad-based return, after summer slowdown, with increases in production, new orders and employment.

Consumer spending has also been increasing over the past three quarters, with a 2.6 percent increase in the third quarter of the year, the biggest quarterly gain in four years. The Census Bureau also reported today that consumer spending picked up another 1.7 percent in October, making a 7.3 percent annual gain from October 2009.

On the "half-empty" side of the ledger, the report notes that even with October's gains, employment growth remains tepid, and barely enough to keep up with the growth of the population, let alone bring down the unemployment rate. In fact, the forecast predicts unemployment will remain above 9 percent throughout 2011; it current stands at 9.6 percent.

The report note that the housing market continues to struggle and that unforeseen consequences of the foreclosure documentation (i.e. robo-signing) controversy could delay a recover or even cause the market to stall out again.

It predicts the 30-year mortgage rate will gradually rise to 4.8 percent by the end of 2011, up from 4.2 percent currently.

The forecast predicts that inflation will remain subdued for the foreseeable future, holding steady at a 1.2 percent annual rate throughout 2011. Although that's encouraging for many consumers, economists are concerned that rate is too low to support economic growth, which is one of the reasons for the Federal Reserve's recent decision to purchase another $600 billion in U.S. Treasury securities to inject more capital into the economy.

Published on November 15, 2010