This morning, the government reported that the U.S. economy lost 4,000 jobs in August. Led by losses in manufacturing and in construction, this is the first time since 2003 that the economy has failed to add jobs in any given month.

Markets had been expecting a job gain of roughly 110,000, but many players on Wall Street had been placing their bets to the weak side of that figure.

Very few (if any) expected a number this weak, however.

The implication of a weak jobs report is that many now believe that the Fed has an economic reason to lower the Fed Funds Rate at its next meeting. This is different from a “bail out”-type reduction that economists and market participants have debated ad nauseam in the press.

Remember, a lower Fed Funds Rate doesn’t directly correlate to lower mortgage rates. However, if the Fed acknowledges that the economy is slowing, that should help keep mortgage rates low.

Water isn’t just for flavoring anymore — how about for coloring?

For about $20, homeowners can buy a device that “colors” water blue right from the faucet. Using LED lights at the point of exit, the lights penetrates the water stream and makes for an interesting conversation piece.

The device has a practical side, too. When water temperatures exceed 89 degrees, the LED lights change colors to red, changing the color of the water, too. For children (and others), this is a terrific way to prevent scalding or hot water surprises.

Be sure to check out the “action shots“!

We’ve talked a little bit about how Fannie Mae and Freddie Mac conforming loans are largely left out of the mortgage market mayhem in the press.

To help define “conforming”, we’ve talked about average credit scores, salaried income, and average assets. We’ve also addressed loan size as a defining characteristic.

The conforming loan limits have changed over time, and currently stand at the following levels:

• Home, condo or townhome: $417,000
• 2-unit: $533,850
• 3-unit: $645,300
• 4-unit: $801,950

The loan size limit did not change in 2007 and it is not known whether it will increase in 2008. If the loan limits increase, homeowners that were previously considered “jumbo” borrowers may be bumped down to “conforming” and that can lower their overall cost of borrowing.

Currently, jumbo mortgage rates are as much as 0.875% higher than their conforming loan size counterparts.

Federal Reserve Chairman Ben Bernanke spoke at the annual Fed symposium in Jackson Hole Friday. His remarks did little to soothe those involved in real estate-related markets.

The Fed is aware of economic issues related to housing and mortgage debt, Bernanke said. But, he implied that the Fed wants more evidence that inflation has slowed before it will take more drastic measures to boost help the economy.

Well, just before his speech Friday morning, Bernanke’s preferred inflation gauge — Personal Consumptions and Expenditures — showed modest year-over-year growth of 1.9%. This indicates controlled growth in the economy so we can’t expect Fed action on that data point alone.

But this Friday, however, the Fed may see some easing in the form of the monthly Non-Farm Payrolls report. Economists are expected that August added 120,000 jobs to the economy, following up on July’s 92,000 increase.

More importantly, it’s the Unemployment Rate that bears watching.

The Christian Science Monitor estimates that 21,000 housing-related job cuts took place last month and layoffs may have also impacted other industries. Job losses can impact the economy as much as job gains and Bernanke did not specifically address this point during his speech.

When Americans are working, they earn income and they spend. Fewer workers means lower levels of consumer spending and that is what can trigger an economic slowdown.

Such a slowdown would be good news for home shoppers because less inflation helps keep mortgage rates low.

Therefore, if Friday’s jobs reports is weaker than expected, or if the unemployment rate increases, markets may get what the Fed wouldn’t give them last week Friday — evidence that the United States economy is slowing down.