Catch Up on the Economy In Two Minutes (Or Less)

It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines:

Summer Gas Prices Heat Up

In June, the Consumer Price Index increased to a seasonally adjusted 0.3%. All prices posted a 2.1% year-over-year increase last month, and when you exclude energy and food, it was a 1.9% annual gain. A 3.3% increase in gasoline prices is the reason for the June increase, while food prices only climbed 0.1%. With the index now above the Fed’s 2% target, there’s no denying that inflation is brewing. But given that we’re nowhere near runaway inflation rates, the Fed will likely continue to maintain its ultra-low interest rate policy.

Existing Home Sales Break Through 8-Month High

For the third-straight month, existing home sales climbed higher, rising to their fastest annual pace since October 2013. Sales increased 2.6% to a seasonally adjusted annual rate of 5 million. May sales were revised higher, up to 4.91 million. At the current sales pace, there are enough homes on the market for a 5.5 month supply. And the median existing home price was $223,300 in June. While it is a positive sign that existing home sales have increased for the past three months, supply is still tight. A six-month supply is considered balanced, and sales are likely to be lower this year than last year.

Layoff Activity Reaches 8-Year Low

For the week ending July 19, initial claims for unemployment ticked down by 19,000 to an annual rate of 284,000. This was the lowest level since February 2006 and significantly lower than economists’ estimates for 308,000. The four-week average dropped 7,250 to 302,000. As we’ve discussed before, any reading below 350,000 indicates moderate job creation. In fact, employment has expanded by more than 200,000 jobs in each of the past five months. So the labor market is improving faster than anyone expected.

New Home Sales Lose Steam

New home sales lost some momentum in June, sliding 8.1%. The dip comes after two-straight months of increases. Sales of new homes were 406,000 in June, which is down from May’s revised 442,000 (original pace was 504,000). The decline was driven by a 20% decrease in Northeast sales. The median price of new homes sold was $273,500, which is up 5.2% year-over-year but down 3.2% from May. While monthly new homes sales can be volatile, this report was disappointing and the housing market is not improving as quickly as hoped.

Commercial Aircraft Orders Surge

Durable goods orders rebounded in June, increasing 0.7%. Economists were looking for a 0.5% rise. The bump higher was due to stronger demand for commercial aircraft and machinery, as there was a huge 8.2% increase in orders for commercial aircraft. Total orders in June were $239.9 billion, and orders are up 3.5% year-over-year, so far. It’s great to see durable orders goods bounce back in June, after a disappointing report in May. Stronger factory production in the final months of 2014 should continue to help boost economic growth in the U.S.

Have a nice weekend,

Louis Navellier

Louis Navellier

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