Is It Too Soon for the R Word?

Week In Review: July 25-29

Yeah, yeah, two consecutive quarters of GDP decline. If you want to hear that we’re in recession, please watch Fox News. If you want to hear that we’re not, CNN’s your choice. Me, I just provide the facts (more of those on GDP under Thursday).

In addition to GDP, we got more housing data, there was a chunky rate hike, and Joe Manchin was back in the news, this time agreeing to an environmental spending package. What a difference a week can make!

A quick reminder: send me your questions for the July Q&A, and we now offer discounted group subscriptions:

Monday

Chicago Fed National Activity Index

This terribly intricate composite index remained unchanged at -0.19 in June. A zero value for the CFNAI has been associated with the national economy expanding at its historical (average) rate of growth. Negative values are associated with below average growth. In early 2009, when the economy was in sorry shape, the reading on the index was around -3. So what it’s saying right now is that the economy is growing, but at a slightly slower pace than it normally does.

Tuesday

S&P Corelogic Case-Shiller Home Price Index

This release pertains to May and showed that house prices once again soared, up 19.7% year over year after increasing 20.6% year over year in April. That may seem surprising, but with mortgage rates meaningfully higher than they were to start the year, the people who are most likely to be transacting are those who have plenty of money. They tend to purchase more expensive homes, and that drives average and median sales prices figures higher. Over the next few months, expect year-over-year price increases to slow dramatically.

Federal Housing Finance Agency Home Price Index

This release also pertains to May and tells the same story as the home price index above—home prices increased 18.3% from May 2021 to May 2022.

New Home Sales

New home sales fell 8.1% in June and are down 17.4% year over year. Inventory increased slightly, up 2.2% on a monthly basis. There’s a ton of housing indicators, and they all point in the same direction. High prices, low inventory and slowing sales.

Conference Board Consumer Confidence Index®

This index of consumer sentiment fell for a third consecutive month in July. Both components of this index (present situation and expectations) fell in July, but the present situation index remains significantly above the expectations index (by historical standards, the present situation index is still elevated). So it’s good now—think travel, strong June retail sales, solid job growth, and the Baltimore Orioles, but it’s going to get worse—think weaker orders for manufactured goods, a worsening single-family housing market, and the Pittsburgh Steelers.

Hey, just for kicks, check out what’s happening to consumer confidence in China.

Wednesday

Fed Interest Rate Hike