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:
Existing Home Sales Drop In August
The National Association of Realtors reported that the pace of existing home sales fell 4.8% in August to an annual rate of 5.31 million units. This just missed economists’ expectations for a 0.3% rise. This missed economists’ expectations for a 5.51 million-unit pace. The sales pace for July was revised lower to a 5.58 million-unit pace, down from the previously reported 5.59 million-unit pace. Home prices have started to rise in certain areas of the country, which is deterring potential homebuyers. A housing shortage, particularly on the West Coast, will add to rising prices in the coming months, which could continue to weigh on existing home sales.
Jobless Claims Fall Below Estimates, Despite Increase
For the week ending September 19, initial claims for unemployment increased by 3,000 to a seasonally adjusted 267,000. This was below economists’ forecast for 270,000. The four-week moving average slipped to 271,750, down from 272,500 and the lowest level in more than a month. Jobless claims are now near historically low levels, thanks to rising demand for employees and less layoffs. And jobless claims have remained below the 300,000 threshold for 29-straight weeks now.
Durable Goods Orders Dip
Orders for durable goods orders slipped 2% in August, after rising 1.9% in July. This is the first monthly decline since May, due in part to auto part orders falling 1.6% and commercial aircraft dropping 5.9%. Excluding autos and commercial aircraft, durable goods orders were flat. Business investment also edged down, falling 0.2% last month. Much of the slowdown was seasonal in nature in August, especially for the automotive industry. Auto part orders are up 9.2% year-to-date, and commercial aircraft orders surged 10.5% in July.
New Home Sales Surge
The Commerce Department announced that new home sales soared 5.7% in August to a seasonally adjusted 552,000 annual rate. This was the strongest annual pace for new home sales since February 2008. In the past 12 months, new home sales have surged about 22%. An increase in new home sales is a positive sign for the U.S. housing market and economy overall, as new home construction boosts jobs and demand for building materials.
Second-Quarter GDP (Third Estimate) Higher
This morning, the Commerce Department revised second-quarter GDP growth higher to an annual rate of 3.9%, up from the previous estimate of 3.7%. This beat economists’ expectations for second-quarter GDP growth to remain unchanged at 3.7%. The primary reason for the upward GDP revision was that consumer spending grew at an annual pace of 3.6% in the second quarter, up from a previous estimate of 3.1%. Naturally, the increasing pace of consumer spending bodes well for third-quarter GDP, especially now that gasoline prices are falling below $2 per gallon in many parts of the U.S.
University of Michigan’s Consumer Sentiment Index (Final) Down
The University of Michigan’s Consumer Sentiment Index showed a September reading of 87.2, down from a 91.9 reading in August. This was slightly higher than economists’ expectations for an 86.5 reading, but it is the lowest level since last October. Similar to August, the increase in stock market volatility this month has weighed on U.S. consumers’ minds. But falling gasoline prices and an improving jobs market should boost consumers’ outlook and spending in the coming months.
That’s all I have for you this week; I’ll be in touch again next week with the latest ratings updates out of Portfolio Grader.
Have a great weekend,