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…
May Retail Sales Revised to Stunning Number
On Monday, the Commerce Department announced that retail sales rose 0.5% in June. This was in line with economists’ estimates. The big surprise was that May’s retail sales were revised to reflect a 1.3% gain. This is a stunning increase from the previously reported gain of 0.8%. Over the past year, retail sales have surged 6.6%. Now that the May and June retail numbers have been posted, it’s likely that second-quarter GDP growth will be revised higher.
Fed Beige Book Survey Paints Sunny Picture
Meanwhile, the Fed’s Beige Book survey stated that the U.S. economy grew “moderately” from late April through May. Better yet, inflation remained tame, as the price for goods and services rose modestly in most regions. Translated from “Fed speak,” the Fed is looking for excuses to postpone further interest rate hikes. And, between the lack of inflation and the latest wave of tariffs, the Fed has plenty of excuses right now.
Industrial Production Picked Up in June
On Tuesday, the Fed announced that industrial production rose 0.6% in June. This was slightly higher than economists’ consensus estimate of a 0.5% gain. Excluding the volatile utility and mining sectors, core industrial production rose an even more impressive 0.8% in June.
Due to record domestic energy production, mining rose a robust 1.2% in June, but mild weather caused utility output to decline 1.5% in June. In the past 12 months, industrial production has risen 3.8%. However, the really exciting news was that in the second quarter, industrial production surged at a 6% annual pace. This bodes especially well for second-quarter GDP growth.
Housing Market Cooled in June
On Wednesday, the Commerce Department made the shocking announcement that housing starts plunged 12.3% in June. Last month, housing starts fell to a seasonally adjusted annual rate of 1.173 million and building permits declined 2.2% to 1.273 million. This was the largest monthly drop in housing starts since November 2016
Economists expected housing starts and building permits to come in at an annual pace of 1.32 million and 1.33 million, respectively. So, housing starts are now running at the lowest level in nine months and building permits have declined for three straight months. Between higher home prices, higher mortgage rates and a labor shortage, there is no doubt that the housing industry is cooling off.
That’s all I have for you this week. I’ll be in touch again next week with the latest ratings out of Portfolio Grader.
Until next week,