U.S. Economic News

U.S. Economic News

August 22, 2019

U.S. Economic Indicators

The Conference Board’s Leading Economic Index (“LEI”) increased 0.5% in July following a 0.1% decline in June. The improvement was driven by housing permits, unemployment claims, stock prices, and credit conditions, although the manufacturing sector remains weak. Conference Board Report

Initial jobless claims fell 12,000 to 209,000 last week. The four-week moving average rose 500 to 214,500. DOL Report

U.S. News

The Washington Post reports that the U.S. federal deficit is set to expand by $800 billion more than expected over the next decade, deepening concerns that policymakers have fewer tools than in the past to bolster the economy in the event of a recession. A wider deficit gives the federal government less room to spend or pass tax cuts, while already-low interest rates leave little room for the Fed to make major cuts. WaPo

According to the Wall Street Journal, Fed officials viewed their move to cut interest rates last month as a mid-cycle “recalibration” of monetary policy rather than the start of a more aggressive easing cycle. The extent to which the Fed may lower rates in the coming months is uncertain, especially given disagreement among Fed officials about whether recent weak inflation is temporary or likely to persist in the absence of intervention. WSJ

U.S. Economic News

U.S. Economic News

August 21, 2019

U.S. Economic Indicators

Existing home sales rose 2.5% to a seasonally adjusted annual rate of 5.42 million in July and are up 0.6% compared to a year ago. NAR notes that falling mortgage rates are nudging buyers into the market, though the supply of affordable homes remains low. NAR Report

U.S. News

According to the Wall Street Journal, strict lending requirements for home loans put in place after the financial crisis are beginning to erode, making it easier for homebuyers with low credit scores or high debt levels to receive a loan. Borrowers took out $45 billion of unconventional loans in 2018, the most in a decade, leading some analysts to worry that competition for customers is causing lenders to overly loosen standards. WSJ

The Financial Times reports that the U.S. and Japan are rushing to finalize a preliminary trade deal to partially relieve both countries from the commercial tensions weighing on the world economy. The agreement will likely involve Japan further opening its agricultural market to American goods in exchange for exemptions on auto tariffs and other industrial levies. FT

U.S. Economic News

U.S. Economic News

August 20, 2019

U.S. News

According to the Wall Street Journal, Boston Fed President Eric Rosengren maintains that further rate cuts are unwarranted at present, though he would be open to lowering rates if the economy worsens. The Fed lowered interest rates by 25 basis points in July due to concerns surrounding global growth and trade conflicts, but Rosengren worries that cheaper borrowing costs could cause excessive domestic risk-taking while remaining ineffective in fixing economic weakness abroad. WSJ

The Wall Street Journal reports that the People’s Bank of China has decreased benchmark lending rates in an attempt to support struggling small businesses. China has largely refrained from lowering borrowing costs even as other central banks cut interest rates, as such a move could inflate property bubbles and drive up debt levels. WSJ

The Washington Post reports that White House officials have discussed pushing for a temporary payroll tax cut to confront an economic slowdown. The policy would favor middle-income earners, further boosting robust consumer spending in the face of trade disputes that have dampened business and consumer confidence. WaPo

U.S. Economic News

U.S. Economic News

August 19, 2019

U.S. News

The Wall Street Journal reports that shipments of recreational vehicles — a reliable indicator for predicting recessions — have fallen about 20% so far this year after a 4.1% drop in 2018. While consumer demand for such luxury items tends to wane at the first sign of economic anxiety, many components of recreational vehicles are sensitive to tariffs imposed on Chinese goods. WSJ

Adam Samson reports for the Financial Times that the U.S. will grant licenses for companies to do business with Huawei for 90 days amid uncertainty over whether the telecom company would face a ban. The licenses will allow companies to export to Huawei if they are selling updates or repairs to existing products. FT

U.S. Economic News

U.S. Economic News

August 16, 2019

U.S. Economic Indicators

Privately-owned housing starts dropped 4.0% in July to a seasonally adjusted annual rate of 1.19 million (up 0.6% year-over-year). Housing permits surged 8.4% to a 1.34 million annual pace in July and are up 1.5% from last year. Census Bureau Report
 
The University of Michigan Consumer Sentiment Index fell 6.3 points to 92.1 in the preliminary August reading and is down 4.1 points from August of last year.
The Index of Consumer Expectations dropped 8.2 points to 82.3 while the Current Economic Conditions Index eased 3.3 points to 107.4. University of Michigan

U.S. News

Heather Long of the Washington Post writes that nine major countries — including several key U.S. trading partners — are in a recession or on the verge of one, stoking fears that the U.S. economy may be dragged into contraction as well. Long points out that most of these at-risk countries have export-dependent economies that have suffered due to escalating trade tensions between the U.S. and China. WaPo

The Wall Street Journal reports that despite the partial scaling-back of the newest round of tariffs on Chinese goods, consumers likely will still face higher prices for goods such as apparel, electronics, and sporting goods. Analysis shows that the partial de-escalation of the new tariffs will still result in higher tariffs on more than half of all consumer goods imported from China starting September 1st and higher tariffs on virtually all Chinese goods starting December 15th. WSJ