Economy Stays Hot
Week in Review: June 26-30
This week didn’t give us a ton of high-impact economic data, but the news we did get was surprisingly good: consumer confidence is up, rents are flat, summer travel is hot, and the market for new homes is even hotter.
Gas prices inched lower for the second straight week and are $1.29 cheaper per gallon than one year ago.
TSA Checkpoint Travel Numbers
The number of people passing through TSA security during the week ending June 27th was 2.3% higher than during the same week in 2019. This is going to be a big summer for travel.
New Home Sales
New home sales surged 12% in May. This was the seventh increase in the past eight months, and new home sales are now higher than they were pre-pandemic. Yes, this is partially due to the complete lack of existing homes available for sale but still, the market for new homes is way hotter than anyone anticipated.
Part of this increase, as pointed out by Ali Wolf, is due to the fact that new homes have averaged a 27% price premium over existing homes since 2010, but that premium is currently just 4%.
There was a huge increase in the number of housing units sold but not yet started, which means residential single-family construction will heat up over the next few months. As a result of this release, several forecasters upgraded their Q2 and Q3 GDP projections.
Durable Goods Orders
U.S. companies sold more durable goods (think items that last a long time like computers, refrigerators, cars, etc.) in May than they did in April, the third straight monthly increase. Excluding transportation goods (very volatile), orders for durable goods increased 0.4% for the month. This is another sign that the economy just keeps chugging right along.
Conference Board Consumer Confidence
This measure of consumer sentiment improved in June, up to the highest level since January 2022. The expectations index, which measures how consumers think the economy will perform over the next few quarters, remained just below the level that typically signals recession. Of course, it’s been below that level for 17 of the past 18 months, so take that with a tiny little grain of salt. Overall, consumer confidence is higher than at any point from 2009 to mid-2017.
The S&P Corelogic Case-Shiller home price index showed prices rose 1.3% in April but are down -0.2% year over year, the first annual decline shown by that index since 2012. The FHFA U.S. House Price Index showed a similar 0.7% monthly uptick in prices and, unlike the S&P measure, a 3.1% year-over-year increase. First, these measures are for April, so they’re literally old news. Second, whether prices increased 3.1% or fell 0.2% year over year, home price inflation is cooling off.
Apartment List Rent Data
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