Record Travel, Job Openings, & More
Week in Review: May 29-June 1
People often ask me about my economic forecast and I happily provide one, knowing that they’re likely to forget what I said and therefore won’t hold me accountable. Forecasting the economy is tough enough, but just trying to understand what’s happening with the economy right now is also challenging. In short, the data are telling contradictory tales. Strong economy? Weak economy? Yes to both.
This week started with record setting travel for Memorial Day weekend and ended with yet another stronger than expected jobs report, the latter of which we covered at length in a separate post earlier today. In between, we got new data on manufacturing, construction spending, job openings, and more.
Gas prices inched up to $3.68/gallon, the highest price since early May but still more than a dollar less than during the same week last year.
TSA Checkpoint Travel Numbers
Travel numbers surged over Memorial Day weekend, with 3.6% more people flying compared to Memorial Day weekend in 2019. This is a good start to what is shaping up to be a busy summer travel season. That means the TSA lines will be long, the middle seat will be full, and precisely one baby will be crying directly behind you on every flight.
Home Price Indices
The FHFA U.S. House Price Index indicates that U.S. home prices expanded 0.6% in March, while the S&P Corelogic Case-Shiller Index produced a 1.3% increase for the month. The S&P measure includes a separate reading for the 20 largest Metro areas, all of which experienced monthly price increases in March.
I would love love love to tell you that I saw that coming, but I didn’t. I thought higher mortgage rates would put downward pressure on prices even in with scant inventory. Moreover, the number of prospective buyers has been truncated not only by higher borrowing costs, but by all those families sitting on 30-year fixed rate mortgages in the range of 3%. Unless forced to move by government, someone doing their best Samuel Jackson impression (see Lakeview Terrace, 2008, 6.2/10 IMDB), or by natural disaster, a lot of people are staying put. Nonetheless, there are enough buyers out there (apparently) to keep prices as high as Cheech & Chong at a Grateful Dead concert.
Conference Board Consumer Confidence Index
This measure of consumer sentiment declined in May. There are two components of this — the Present Situation Index and the Expectations Index. The Present Situation Index remained below 80. Historically, that has meant there will be a recession within the next year, but it’s been below 80 during pretty much every month since February 2022 and still no recession.
This is a good time to remind you of my recent post regarding how unreasonably poor consumer sentiment has been lately.
Apartment List National Rent Report
Rents rose 0.5% in May and have now increased in 4 straight months, a stark reversal after rents declined every month from September 2022 to January 2023. Even so, rent inflation has cooled dramatically. Rents are up just 0.9% since May 2022, the smallest annual increase since March 2021. The apartment vacancy rate is now up to the highest level since July 2020. Rent growth has been a big contributor to inflation, so this is good news for those of us eager to see inflation restored to its 2% target. There are also many new apartments about to come online, which translates into even softer rent growth going forward.
Job Opening and Labor Turnover Survey (JOLTS)
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