The Economy as a Beheaded Saint

Week in Review: Apr 24-28

Today is the feast day of Saint Aphrodisius, a guy who got his head chopped off, picked it up, and carried it around like a football. The combination of inflation, rate hikes, and labor shortages is kind of like the economic equivalent of beheading, but much like Aphrodisius, the U.S. economy is still out here strolling around, head held, well, if not high, at least at chest level.

Last week, we said in our post on The Six Signs of Recession that the economy isn’t in recession (yet, anyway), a notion supported by the Q1 2023 GDP data released on Thursday. Aside from GDP, the most important data releases this week were the two inflation measures (Friday). We also got new data on a few housing measures, personal income, durable goods orders, and more.

Monday

Chicago Fed National Activity Index

The CFNAI is a weighted average of 85 economic indicators, and we don’t usually include it in Week in Review because it’s hard to make sense of a composite index with 85 components. That said, the CFNAI was unchanged in March at -0.19. Apparently a reading of 0 indicates normal economic growth, and anything below -0.70 indicates economic contraction. All of which is to say, this indicator suggests the economy grew but at a below average rate in March. That checks out.

Gas Prices

Gas prices fell slightly, ending a streak of three straight weekly increases. At $3.765/gallon, prices are still 10.6% lower than at the same time last year.

TSA Checkpoint Travel Numbers

Travel numbers for the week ending 4/25/2023 edged back above 2019 levels, an impressive feat given current airline prices and the state of business travel.

Tuesday

New Home Sales

New home sales jumped 9.6% higher in March and are down just 3.3% year over year. I say “just” because that’s an impressively small annual decline given the fact that mortgage applications are down 28% year over year.

Last week, we mentioned that “one-third of housing inventory is new construction, compared to historical norms of a little more than 10%.” There’s a lot of demand for homes out there, but with interest rates so high, few people are moving, severely limiting the supply of existing homes. That’s a big part of the reason that the new home segment is outperforming the remainder of the housing market.

Home Price Indices

We got two measures of February home prices this week. The Federal Housing Finance Agency’s House Price Index showed a 0.5% monthly increase and 4.0% annual increase, while the S&P Corelogic Case-Shiller U.S. National Home Price Index (not the name I would have gone with) increased 0.2% for the month and is up 2.0% year over year. Not much to see here other that home prices are still really high. If you want regional data, check out the Corelogic measure.

Conference Board Consumer Confidence Index

This measure of consumer confidence declined in April. Consumers feel a little better about the current situation but a lot worse about the short-term outlook. The Expectations index (short-term outlook) remains below 80, a level that typically signals recession, but it’s been below 80 in all but one month since February 2022.

Wednesday

Durable Goods