Three Things That You Should Know About the Economy

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…

Housing Starts and Building Permits

On Wednesday, the Commerce Department announced that housing starts in June rose to an annual pace of 1.22 million. This was significantly above economists’ consensus estimate of 1.16 million. June’s housing starts were 8.3% higher than May’s starts and 2.1% higher than a year ago. Building permits also rose 7.4% in June compared with May; they are now up 5.1% higher than a year ago. Single family home starts rose 6.3% in June compared with May. So while it’s clear that builders are favoring multi-family homes, the acute shortage of new homes for sale may finally be addressed. Median home prices should continue to rise due to the lack of inventory, so hopefully builder sentiment will improve in the upcoming months.

U.S. Crude Oil Inventories

The Energy Information Administration (EIA) reported that crude oil inventories declined by 4.7 million barrels in the latest week. I should add that the American Petroleum Institute (API) reported that crude oil inventories rose by 1.6 million barrels in the latest week. Both the EIA and API reported a sharp decline in gasoline inventories of 4.4 million barrels and 5.4 million barrels, respectively. We are now in the midst of the summer driving season and peak gasoline demand. The next big test will be whether or not crude oil inventories will resume rising after seasonal demand for gasoline declines after Labor Day.

Index of Leading Economic Indicators

Finally, the Conference Board announced that its leading economic index (LEI) rose a robust 0.6% in June. This was a big improvement over May’s revised 0.2% increase. Economists were only expecting the LEI to rise 0.4%, so this was a big surprise. A resurgence in housing permits (after several months of weakness) contributed to the strength in the LEI.

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,

Louis Navellier

Louis Navellier

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