Recession fears sent stocks lower during the holiday-shortened week. All the major stock benchmark indexes closed in the red, with the small caps of the Russell 2000 and the Global Dow losing over 2.50%. The downturn ended a three-week rally for the Dow, a five-week winning streak for the S&P 500, and an eight-week surge by the Nasdaq. Concerns about rising interest rates and slowing economic growth weighed on equities. Rising inflation in Europe and Asia prompted more interest rate hikes by many central banks, which also dampened market growth. Ten-year Treasury yields dipped lower, while the dollar eked out a gain. Gold prices declined for the second straight week. Crude oil prices declined on fears of waning demand.
Last Week’s Economic News
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The number of residential building permits issued in May rose 5.2% over the previous month’s total, but was 12.7% below the May 2022 rate. Issued building permits for single-family construction in May rose 4.8% above the April figure. Housing starts increased 21.7% in May and are 5.7% above the May 2022 rate. Single-family housing starts jumped 18.5% in May. The overall rise in housing starts was driven by construction in the Midwest, which saw the number of housing starts increase 66.9% in May. Lastly, housing completions in May were 9.5% above the April total. Single-family housing completions were 3.9% above April’s pace.
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Existing home sales inched up 0.2% in May from April, but were down 20.4% from May 2022. According to the latest report from the National Association of REALTORS®, rising mortgage rates and lower inventory have impacted sales of existing homes. Total housing inventory sat at a three-month supply at the current sales pace, up from 2.9 months in April. The median existing-home price for all housing types in May was $396,100, up from $385,900 in April, but down from $408,600 in May 2022. Sales of single-family homes dipped 0.3% in May and 20.0% from May 2022. The median existing single-family home price was $401,100 in May, 2.8% above the April figure ($390,200), but down 3.4% from May 2022 ($415,400).
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The national average retail price for regular gasoline was $3.577 per gallon on June 19, $0.018 per gallon lower than the prior week’s price and $1.385 less than a year ago
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For the week ended June 17, there were 264,000 new claims for unemployment insurance, unchanged from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended June 10 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 10 was 1,759,000, a decrease of 13,000 from the previous week’s level, which was revised down by 3,000.
Eye on the Week Ahead
There’s plenty of important economic data available this week, including two of the more important economic indicators; gross domestic product and the report on personal income and outlays. The third and final iteration of first-quarter GDP is released this week. The latest data showed the economy advanced at a rate of 1.3%. Also, the report on personal income and outlays includes two important sub-categories: personal consumption expenditures and the personal consumption expenditures price index. Consumer spending rose 0.8% in April, while consumer prices for goods and services increased 0.4%.
Have a nice week!
Sincerely,
Robert G. Carpenter