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…
Q2 GDP Growth Hits Four-Year High
On Friday, the Commerce Department announced the U.S. economy grew at an annual pace of 4.1% in the second quarter. This was slightly below economists’ consensus estimate of 4.4% annual GDP growth. Also noteable is that first-quarter GDP growth was revised higher to reflect a 2.2% annual pace, up from 2% previously reported.
In the second quarter, consumer spending accelerated to a 4% annual pace. Business investment also grew at a healthy 5.4% annual pace and durable goods spending added 0.64% to the preliminary GDP estimate. Trade added 1.06% to second-quarter GDP as the trade deficit narrowed due booming exports. Meanwhile, declining inventories deducted 1% from the preliminary GDP estimate. This last point is very bullish for third-quarter GDP, since inventories need to be replenished.
Overall, the preliminary second-quarter GDP estimate was very bullish.
Vehicle Orders Drive Durable Goods Gain
On Thursday, the Commerce Department announced that durable goods order rose 1% in June. Vehicle orders surged 4.4%, marking the largest monthly gain in three years. Excluding the volatile transportation category, durable goods still rose a healthy 0.4%. Interestingly, demand for metals, including aluminum & steel, declined 0.4% in June. This represents the second straight monthly decline since trade tariffs were imposed. However, outside of aluminum and steel, the tariffs aren’t significantly impacting trade. Overall, the June durable goods orders should cause some economists to revise their second-quarter GDP estimates higher.
Existing Home Sales Sputter
The National Association of Realtors announced that existing home sales declined for the third consecutive month in June. Sales of existing homes are now running at a annual pace of 5.38 million. In the past 12 months, existing home have risen 2.2%, while median home prices have risen 5.2% to $276,900. The inventory of existing homes for sale remains tight, at a 4.3-month supply. Existing home sales in June rose 5.9% in the Northeast and 0.8% in the Midwest, but declined 2.2% in the South and 2.6% in the West.
As a result, I will be carefully monitoring consumer confidence for any potential concerns regarding the slowdown in existing home sales.
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,