Stocks ended the week higher as strong corporate earnings data helped offset worries of another round of interest rate hikes, following the Federal Reserve’s meeting this week. All major stock benchmark indexes posted weekly gains, with the exception of the Russell 2000. Ten-year Treasury yields slipped on rising bond prices. Crude oil prices ended the week lower, the dollar was flat, while gold prices advanced.
Last Week’s Economic News
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The first-quarter gross domestic product showed the economy accelerated at an annualized rate of 1.1%. Compared to the fourth quarter, when the GDP rose 2.6%, the deceleration in the first quarter GDP primarily reflected a downturn in private inventory investment and a slowdown in nonresidential (business) fixed investment. These movements were partly offset by an acceleration in consumer spending, an upturn in exports, and a smaller decrease in residential fixed investment. The Personal Consumption Expenditures Price Index, an indicator of inflation, increased 4.2% in the first quarter, an increase of 0.5 percentage point over the fourth quarter. Excluding food and energy prices, the PCE price index increased 4.9% in the first quarter, compared with an increase of 4.4% in the prior quarter. Personal consumption expenditures increased 3.7% in the first quarter after inching up 1.0% in the fourth quarter.
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Personal income increased in March, while consumer spending saw no change from the prior month. The latest information from the Bureau of Economic Analysis saw personal income climb 0.3% in March, the same increase as in February. Disposable personal income advanced 0.4% (0.5% in February). Personal consumption expenditures were unchanged in March from February. The closely watched Personal Consumption Expenditures Price Index inched up 0.1% in March, following a 0.3% increase in February. Prices excluding food and energy rose 0.3%. Spending on goods declined 0.6%, while services increased 0.4% in March. Over the last 12 months, consumer prices rose 4.2%, down from 5.1% for the 12 months ended in February.
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While sales of existing homes declined in March, sales of new single-family homes advanced for the fifth straight month. March saw sales of new single-family homes increase 9.6% from the previous month. However, sales were 3.4% below their year-earlier total. The median sales price of new houses sold in March 2023 was $449,800. The average sales price was $562,400. Inventory for new single-family homes available for sale in March sat at a 7.6-month supply at the current sales pace, down from 8.4 months in February.
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In March, new orders for durable goods increased 3.2%, following two consecutive monthly decreases. Excluding transportation, new orders advanced 0.3%. Excluding defense, new orders rose 3.5%. Transportation equipment led the overall increase in new orders, climbing 9.1% in March after decreasing in each of the prior two months.
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The advance report on international trade in goods revealed that the trade deficit declined $7.4 billion to $84.6 billion in March. Exports in March were $4.9 billion more than February exports, while imports were $2.5 billion less than February imports. The trade in goods deficit is $40.6 billion less than the March 2022 deficit. Over the last 12 months, exports have risen 2.7%, while imports have fallen 12.3%.
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The national average retail price for regular gasoline was $3.656 per gallon on April 12.
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For the week ended April 22, there were 230,000 new claims for unemployment insurance, a decrease of 16,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 15 was 1.3%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 15 was 1,858,000, a decrease of 3,000 from the previous week’s level, which was revised down by 4,000.
Eye on the Week Ahead
The Federal Open Market Committee meets this week, where the Committee is likely to announce a 25-basis point interest rate increase. The week closes with the release of the April jobs data. March saw 236,000 new jobs added, while average earnings rose 0.3%.
Have a nice week!
Sincerely,
Robert G. Carpenter