This week, the stock market continued to slosh around as we received a handful of mixed economic reports. These data have a real impact on our portfolios, so let’s review what’s going on with the economy right now:
Consumer Prices Rose in April
On Tuesday, the Labor Department announced that the Consumer Price Index (CPI) rose 0.4% in April. The marked the largest monthly gain in over three years. However, energy prices accounted for most of the increase, spiking 8.1%. Excluding energy and food costs, the core CPI jumped just 0.2%. Over the past 12 months, the CPI has risen 0.9%.
Despite evidence that inflation may be brewing, inflation-adjusted hourly wages declined -0.1% in April and have only risen 1.3% in the past 12 months. As a result, I do not believe that the Fed will be raising key interest rates anytime soon.
Good News On the Housing Front
Also on Tuesday, the Commerce Department revealed that housing starts rose by 6.6% to an annual rate of 1.17 million new units in April. Economists were expecting a rate of 1.13 million units, so this was stronger than expected. Meanwhile, permits for new construction climbed 3.6% to an annual rate of 1.12 million. This was slightly lower than the consensus forecast of 1.13 million.
Regardless, with both housing starts and building permits on the rise, it’s clear that the housing market is carrying its fair share of the economic recovery
Leading Indicators Pick Up
The week ended on a high note, after the Conference Board announced that its index of Leading Economic Indicators (LEI) increased 0.6% in April. This was twice the rate expected by economists. According to the Conference Board, nine of the 10 (except consumer expectations) indicators picked up in April.
At the same time, the March LEI reading was revised lower to reflect no growth from February. What this tells us is that the economy is still clearly recovering in fits and starts.
That’s all I have for you this week; I’ll be back online on Monday with your weekly ratings changes.
Have a great weekend,