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:
Fed To Keep Rates Low As Consumer Prices Increase At Glacial Pace
On Tuesday, the Labor Department reported that U.S. consumer prices nudged up just 0.1% in July, following a 0.3% jump in June. In the past 12 months, the CPI has gained 2%. Excluding food and energy, the Core CPI gained 0.1%. Energy prices dropped 0.3% in July, down from a 3.3% surge in June, while food prices increased 0.4%, up from 0.1% in June. Inflation has ticked up a bit this year, but it remains below the Fed’s 2% target. As a result, we’ll likely see the Fed continue to keep rates ultra-low.
Housing Starts Hit Highest Level since Last Year
The Commerce Department announced on Tuesday that home construction increased significantly in July. Housing starts jumped nearly 16% to an annual rate of 1.093 million units. Home construction soared 22%, while applications for building permits increase 8.1% to a 1.052 million rate. Starts on single-family homes climbed 8.3% last month. The increase in housing starts is the highest level of home construction since November, and has been driven in part by new apartment construction and a rebound in construction in the South. And thanks to a bump up in building permits, we’re likely to see more homes being built in the second half of the year. So the report bodes well for a stronger housing recovery.
Unemployment Claims Drop, But Stops Short Of Meeting Expectations
Last week, unemployment claims dipped by 14,000 to 298,000. Economists were expecting claims to fall to 300,000. The week ending August 9 was revised higher to 311,000. The four-week average is now 300,750. Unemployment claims are nearly back to levels we saw before the Great Recession, and this marks the third time in five weeks that claims are below 300,000. The job market is definitely showing more strength.
Existing Home Sales Beat Expectations In July
Existing home sales climbed 2.4% in July to a seasonally adjusted annual rate of 5.15 million. This beat economists’ expectations for sales to decline to 5 million last month. June’s sales were revised slightly higher to 5.03 million, up from 5 million. At the current sales pace, there is a 5.5 month supply, and the median sale price was $222,900. Existing home sales are now at their highest level since September 2013, which is another great sign that the U.S. housing market is finally showing some real signs of recovery.
Index of Leading Economic Indicators Up In July
The Conference Board reported yesterday that its Leading Economic Index climbed 0.9% higher in July. Economists were only expecting a 0.6% increase. June’s reading was revised to 0.6%, up from 0.3%. The report shows that the U.S. economy is gaining traction, and now there is growing optimism that economic growth may be stronger in the second half of the year.
Have a great weekend,