Money Talk Podcast

(with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik)

No major releases

Housing prices reached another all-time high July, according to the S&P CoreLogic Case-Shiller home price index. Although prices peaked for the 14th month in a row, the pace of increase slowed to 5% above the year-ago level, down from 5.5% in June. That was the fourth monthly deceleration since February, when prices were up 6.5% from the year before. Of the top 20 housing markets, 18 showed weaker pricing, including eight that had decreases from June. An S&P analyst said houses in lower price tiers continued to gain the fastest.

The Conference Board said its consumer confidence index fell in September by the widest margin in more than three years. The business research group said more consumers expressed concerns about labor conditions, although fewer worried about recession, which the Conference Board had warned about through much of 2023. Prices and inflation still ranked as top economic fears, even though the group noted that price gains overall have been ebbing.

The seasonally adjusted annual rate of new home sales fell nearly 5% in August, although it remained above the pre-pandemic level. The Commerce Department reported the sales rate was up nearly 10% from the same time last year and the median price was down almost 5%, as lower-priced houses made up a greater share of the sales. The sales pace of 716,000 houses in August compared to a recent high of nearly 1 million in late 2020 and an all-time peak of 1.4 million in 2005. The supply of new houses for sale outpaced the pre-pandemic level for the 39th month in a row.

The Commerce Department said orders for durable goods were unchanged in August following a 10% increase in July and a nearly 7% decline in June. A swing in large orders for commercial aircraft affected the month-to-month totals. Excluding transportation equipment, demand for durable goods rose 0.5% in August. Compared to August 2023, orders declined 1.3% for all durable goods but rose 1.2% not counting transportation. Core capital goods orders, a proxy for business investments, rose 0.2% from July and were up 0.3% from the year before.

The U.S. economy grew at an annual pace of 3% in the second quarter of 2024, according to a final estimate of the gross domestic product. The rate was unchanged from a previous estimate by the Bureau of Economic Analysis and improved from 1.6% in the first quarter. Consumer spending, which drives more than two-thirds of the economy, was slightly slower than initially estimated but still a steady 2.8% annual rate.

The four-week moving average for initial unemployment claims dropped for the sixth time in seven weeks, falling to the lowest level since early June. The average was down 38% from its 57-year average, highlighting employers’ continued reluctance to let workers go. The Labor Department said nearly 1.7 million Americans were claiming unemployment compensation in the latest week, down 2% from the week before.

The National Association of Realtors said its index on pending home sales rose 0.6% in August after reaching a record low in July. The indicator of housing demand ticked up as slightly lower mortgage rates have helped improve affordability, the trade group said. Plans to buy houses were down 3% from the year before. According to the index, pending home sales are about 70% of what they were in 2001.

Consumer spending increased 0.2% in August, in line with gains in income for the month but at the slowest pace since January. Corrected for inflation, spending was up 0.1%, according to the Bureau of Economic Analysis. Spending rose only in services, led by housing, financial services and insurance. Spending on goods declined. The Federal Reserve’s favorite inflation gauge – the personal consumption expenditure index – edged down to 2.2% from the same time last year, the smallest increase in three and a half years. The rate reached a four-decade high of 7.1% in June 2022. Just before the 2020 pandemic, it was at 1.6%.

The University of Michigan’s consumer sentiment index rose 3% in September on broad improvements in both expectations and assessments of current conditions. Though still below historic averages and held back by concerns about prices, consumers’ overall outlook reflected recognition that inflation overall has been moderating. The director of the survey said sentiment appears to be building momentum even while many consumers say they’re tying their expectations to the results of the presidential election.

Kyle Tetting

Art Rothschild

John Sandstrom

with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik

No major announcements

The Commerce Department reported a 0.1% rise in retail sales in August. Sales rose in only five of 13 categories, led by online retailers. Decliners included car dealerships, supermarkets and gas stations, where lower prices meant a drop in revenue. Adjusted for inflation, retail sales fell 0.1% in August.

U.S. industrial output rose 0.8% in August, bouncing back from a 0.9% setback in July. The auto industry was the chief driver, the Federal Reserve reported. Output at U.S. car factories rebounded in August after seasonal plant shutdowns in July. Since August 2023, overall industrial production was unchanged, with manufacturing output up 0.2%. Meanwhile, capacity utilization rose marginally but remained below the 50-year average for the 18th month in a row.

Rates of housing starts and building permits picked up in August, according to the Commerce Department. The annual pace of starts rose nearly 10% from July and were about 4% above the year before, with critical single-family structures taking the lead in both periods. For the sixth month in a row, housing starts lagged the level set before the pandemic, which was the fastest pace of building since late 2006. Housing permits – an indication of future housing construction – rose almost 5% from July and were down 6.5% from August 2023. The pace of houses under construction remained among the highest in 50 years, though it was about 12% below the all-time peak set two years ago.

The policy-making body of the Federal Reserve Board reduced short-term lending rates and signaled more cuts are on the horizon. The Federal Open Market Committee reversed two and a half years of efforts to combat inflation by raising interest rates to their highest level in more than 20 years. The Fed’s aggressive half-point cut in the fed funds rate signaled its confidence in taming inflation while shifting attention to the health of the labor market.

The four-week moving average for initial unemployment claims declined for the fifth time in six weeks. The measure was 38% below the all-time average and the lowest since early June, according to data from the Labor Department, a sign of employers’ continued reluctance to let workers go. Barely 1.7 million Americans were receiving jobless benefits in the latest week, down from 5% the week before but up 3% from the year before.

The annual rate of existing home sales fell in August for the fifth time in six months, dropping 2.5% from July’s pace and down more than 4% from the year before. The National Association of Realtors said an increase in inventory and a decrease in mortgage rates should boost sales activity in coming months. The median sales price hit $416,700 in August, up 3% from the year before and the 14th consecutive month of year-to-year price increases.

The Conference Board’s index of leading economic indicators declined in August for the sixth month in a row. The index fell 0.2% from July because of weaker factory orders, consumer expectations and stock prices as well as a negative interest rate spread. But August’s decline was less than July’s, and the six-month slide of 2.3% compared to a 2.7% setback in the previous six months. The business research group projected weaker economic growth for the rest of 2024 but said activity should pick up in 2025 because of the Fed’s plans to lower interest rates.

No major announcements

Kyle Tetting

Steve Giles

Dave Sandstrom

(with Max Hoelzl, engineered by Jason Scuglik)

In a sign of resilient consumer spending, the Federal Reserve Board reported another rise in consumer credit debt outstanding in July. Total debt rose at a 6% annual rate, and more significantly, revolving credit climbed at a clip of 9.4%. Revolving credit is mostly consumer credit card debt, and its advance in July was the 38th in 39 months, following a slight decline in June. Rising credit card use suggests consumers’ confidence in their spending, which accounts for more two-thirds of U.S. economic activity.

No major announcements

The broadest measure of inflation reached its lowest level in three and a half years in August. The Consumer Price Index rose 0.2% from the month before, led by a 0.5% increase in shelter costs, according to the Bureau of Labor Statistics. Compared to the same time last year, the inflation rate edged down to 2.5%, the slimmest margin since February 2021. The core CPI, which excludes volatile prices for food and energy items, rose 3.2% from the year before, tied with July as the lowest since April 2021. The Federal Reserve Board has used higher interest rates to dampen inflation since 2022, when the CPI hit a four-decade high of 9.1%. Analysts expect the central bank to beginning cutting rates this month as inflation has neared the long-range target of 2%. The average annual CPI since 1914 was 3.3%.

The Bureau of Labor Statistics said its Producer Price Index, a measure of wholesale inflation, rose 0.2% in August. It marked only the second gain in four months, with no change in May or July. Costs of services made up the entire increase because good prices overall were level. Since August 2023, the PPI rose 1.7%, the lowest in six months. Excluding food, energy and trade services, the core PPI rose 0.3% from July and was up 3.3% from the year before.

The four-week moving average for initial unemployment claims rose for the first time in five weeks. According to Labor Department data, the average moved to 230,750 new applications, 37% below the average since 1967. Just over 18 million Americans claimed jobless benefits in the latest week, down more than 2% from the week before and 3% higher than the year before.

The University of Michigan reported preliminary results of its September consumer sentiment index. The longstanding report is based on surveys of consumers, whose spending drives more than two-thirds of U.S. economic activity.

Kyle Tetting

Kendall Bauer

(with Max Hoelzl and Joel Dresang, engineered by Jason Scuglik)

Markets and government agencies closed for Labor Day

The manufacturing sector contracted in August for the 21st time in 22 months. The Institute for Supply Management reported that the rate of decline slowed slightly from July, but key components in its index – news orders and production – fell faster. In a statement, the trade group said in part, “Demand continues to be weak, output declined, and inputs stayed accommodative.”

The Commerce Department said construction spending fell 0.3% in July, the first decline since October 2022. Spending on residential construction, accounting for 44% of total expenditures, dipped 0.4% from June, led by single-family housing. Compared to July 2023, total construction spending rose 6.7% while spending on housing rose 7.7%. Manufacturing, representing 11% of all construction spending, was up more than 20% from the year before.

The U.S. trade deficit widened by nearly 8% in July to $78.8 billion – the biggest gap in two years. Exports rose 0.5% from June, led by automotive vehicles, gem diamonds and semiconductors. Imports increased 2.1%, led by computer accessories and non-monetary gold. The Bureau of Economic Analysis reported that through July, the trade gap widened more than 7% from the year before with a 3.7% gain in exports and a 4.5% rise in imports. Trade deficits detract from U.S. economic growth, as measured by the gross domestic product.

Employer demand for workers slowed in July with job openings declining to 7.7 million postings, the lowest since January 2021. As many as 12 million openings were posted in the spring of 2022, according to the Bureau of Labor Statistics. July’s job openings still exceeded the number of unemployed workers looking for work, but it was the narrowest gap between supply and demand in more than three years. In a sign that workers continue to lose confidence in the labor market, the number of workers quitting their jobs to seek other positions stayed below the pre-pandemic level for the eighth month in a row.

The Commerce Department said factory orders rose in July for the first time in five months. The measure of demand for manufactured goods gained 5%, led by sales of commercial aircraft. Through the first seven months of 2024, orders were up 0.4% from the year before. Excluding requests for transportation equipment, orders rose 0.4% from June and were up 1.9% from July 2023. Orders for core capital goods, a proxy for business investments, declined 0.4% for the month and were up 0.5% from the year before.

The four-week moving average of initial unemployment claims fell for the fourth week in a row, dropping to 37% below the 57-year average, a sign that employers continue to be relatively reluctant about letting workers go. The Labor Department reported that total claims slipped less than 1% from the week before to just below 1.9 million, which was up 3.5% from the year before.

Worker productivity rose at an annual rate of 2.5% in the second quarter, reflecting a 3.5% uptick in output and a 1% increase in hours worked. The Bureau of Labor Statistics also reported that labor costs rose at an annual rate of 0.4% during the quarter Since the second quarter of 2023, productivity rose 2.7%, and labor costs increased 0.3% – the lowest since 2013. Adjusted for inflation, hourly compensation fell 0.1% in the last year. According to the report, average annual productivity has grown 1.6% since the end of 2019, slightly ahead of the pace during the previous economic cycle, which started in 2007. Since 1947, productivity has averaged 2.1%.

The U.S. service sector expanded in August for the second month in a row at about the same pace as July. The Institute for Supply Management said its survey of purchasing managers showed general optimism for slow growth hampered by pressures from interest rates and concerns about costs. The trade group said the index suggested the U.S. economy was growing at an annual rate of 0.8%.

In another sign that the strong labor market may be losing momentum, U.S. employers added jobs in August for the 44th month in a row but at a slower rate. The Bureau of Labor Statistics said payrolls expanded by 142,000 jobs, down 30% from the 12-month pace. The agency also revised June and July job counts downward by 86,000. Hiring of temporary help employees, often an indicator of labor trends, fell to the lowest level since 2020 and was 15% below its peak two years ago. The unemployment rate for August bumped down to 4.2% from 4.3% in July. But a measure of underemployment rose to its highest level in nearly three years.

Kyle Tetting

Adam Baley

Mike Hoelzl

(with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik)

Manufacturing demand rose in July for the fifth time in six months, mostly on the wings of increased commercial aircraft orders. The Commerce Department said durable goods orders rose 9.9% from June, though they fell 0.2% when transportation equipment was excluded. Compared to the year before, orders for long-lasting manufactured items were down 1.4% but up 1.4% excluding transportation. A measure of business investment, core capital goods orders, dipped 0.1% from June but rose 0.5% from July 2023.

Price increases for houses rose to a record level in June, though at a slower pace, according to the S&P CoreLogic Case-Shiller national index. Prices increased 0.2% from May, which had been up 03% from April, adjusting for inflation. Unadjusted, the price index rose 5.4% from June 2023, compared to a 5.9% 12-month gain in May. An analyst with the index noted that house prices continued to far outpace overall inflation – and at a wider gap than usual. The analyst said, adjusted for inflation, home prices have about doubled since 1974 and that lower-priced housing is becoming more expensive at a faster rate than other tiers in most markets.

Amid higher expectations for businesses and increased concerns about jobs and stocks, consumer confidence rose in August, though it stayed within a narrow range that has prevailed since 2022. The Conference Board reported that overall expectations fell below a level associated with recessions for the second month in a row. The business research group said that although consumers continued to complain about prices, their expectations for inflation were the lowest since March 2020. Consumer plans for homebuying reached a 12-year low.

No major releases

Because of brisker consumer spending in the second quarter, the U.S. economy grew at a 3% annual pace instead of an initial estimate of 2.8%. The Bureau of Economic Analysis said it revised the gross domestic product higher mostly because personal consumption – which accounts for about 70% of economic growth – rose at a 2.9% annual rate, up from a prior estimate of 2.3%. The Federal Reserve Board’s favorite measure of inflation, the Personal Consumption Expenditures index, rose at a pace of 2.5%, the slowest pace in more than three years.

The four-week moving average for initial unemployment claims fell for the third week in a row, suggesting continued reluctance by employers to let workers go. According to Labor Department data, new jobless claims reached their lowest level in 11 weeks and remained 36% below the 57-year average. Total claims fell 1.3% from the week before to just under 1.9 million, which was up 3% from the same time last year.

The National Association of Realtors said its pending home sales index sank in July to its lowest level in its 23 years. The trade association said prospects for sales dipped 5.5% from June and 8.5% from July 2023. The index reading was nearly 30% below the baseline on sales activity set in 2001. In a statement, the Realtors chief economist, Lawrence Yun, said: “The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming U.S. presidential election.”

Personal spending rose a healthy 0.5% in July, the Bureau of Economic Analysis reported. The spending increase exceeded the month’s 0.3% gain in personal income, which meant the personal saving rate slowed to 2.9% of disposable income, the lowest since June 2022. The Fed’s favorite measure of inflation rose 2.5% from July 2023, the same pace as June and tied for the lowest rate in three years.

The University of Michigan said its consumer sentiment index rose for the first time in five months in August, as Americans took a slightly dimmer view of current economic conditions but broadly agreed that the long-term outlook had improved. The survey-based measure was 36% above its all-time low, reached in June 2022. It was 2% lower than in August 2023. A university economist noted that sentiment tends to tie closely with political affiliation. Sentiment is considered a bellwether for consumer spending.

Kyle Tetting

Mike Hoelzl

Kendall Bauer

(with Max Hoelzl and Joel Dresang, engineered by Jason Scuglik)

The Conference Board said its index of leading economic indicators fell again in July, but the six-month decline decelerated from the previous six months, no longer signaling recession. The business research group said its index dropped 0.6% from June, led mostly by non-financial indicators. But the six-month reading was down 2.1%, compared to a dip of 3.1% in the previous six months. The Conference Board forecast that the U.S. economy will grow by an annual rate of 0.6% in the third quarter, followed by a 1% growth rate in the last three months of the year.

No significant releases

Minutes from the July meeting of the Federal Open Market Committee showed that members of the Federal Reserve’s policy group observed continued progress toward tamping down the inflation rate to a long-range target of 2%. The FOMC had raised short-term lending rates to cool the economy as inflation reached a four-decade high in mid-2022. The group is scheduled to meet again Sept. 17-18 to consider whether it’s ready to start lowering rates.

The four-week moving average for initial unemployment insurance claims fell for the second week in a row. At 236,000 claims, the average was 35% below the 57-year average, suggesting continued reluctance by employers to let go of workers. The Labor Department reported that 1.9 million Americans claimed jobless benefits in the latest week, down 1.3% from the week before and up 3.7% from the same time last year.

The sluggish real estate market ended a four-month streak of lower sales in July as existing home sales rose 1.3%, according to the National Association of Realtors. Sales reached an annual pace of 3.95 million houses, up 1.6% from June and 2.5% below the rate in July 2023. The trade association said stubbornly low inventory ticked up compared to both the month and the year before. Affordability improved as mortgage rates declined. The median sales price was $422,600, up 4.2% from the year before, the 13th consecutive increase in prices.

Though a fraction of the overall market, the annual rate of new home sales rose 10.6% in July to its fastest pace in 14 months, the Commerce Department reported. The sales pace reached 739,000 houses, which was 4.5% ahead of where it was just before the COVID-19 pandemic. The supply of new houses on the market ebbed to a 10-month low. Meanwhile, the median sales price dipped 1.4% from the year before to $429,800.

Kyle Tetting

Steve Giles

John Sandstrom

(with Max Hoelzl, engineered by Jason Scuglik)

No major announcements

Inflation on the wholesale level rose 0.1% in July and was up 2.2% from the year before, according to the Producer Price Index. The Bureau of Labor Statistics the price for goods increased the most in one month since February, led by a 2.8% gain in gasoline. Services prices, meanwhile, dipped the most since March 2023. The core PPI, which excludes volatile prices for food, energy and trade services, rose 0.3% from June and was up 3.3% from July 2023.

The pace of consumer inflation continued eased in July to its lowest level in more than three years. The Bureau of Labor Statistics said its Consumer Price Index rose 2.9% from July 2023. The rate was still above the Federal Reserve’s long-term target of 2%, but it was the lowest rate since March 2021 and down from a 41-year high of 9.1% in June 2022. Shelter costs accounted for 90% of the 0.2% increase in the index from June, the first monthly gain in three months. The price of gasoline was unchanged after two months of decline. Excluding volatile food and energy costs, the core CPI rose 3.2% from the year before, the lowest since April 2021.

A rebound for car dealers helped boost retail sales in July. Consumers spent 1% more at stores, bars, restaurants and online in June as 10 of 13 retailer categories posted higher sales, the Commerce Department reported. Sales at car dealers rose 3.6% after falling 3.4% in June attributed to software glitches. Adjusting for inflation, total retail sales rose 0.8% in July. Economists watch the retail numbers because consumer spending makes up nearly 70% of U.S. economic activity, as measured by gross domestic product.

The Federal Reserve reported that industrial production dipped in July, citing disruptions from Hurricane Beryl and slower automotive output, possibly tied to seasonal plant shutdowns. Production fell 0.6% overall, the first decline in four months, and was down 0.2% from July 2023. Excluding the auto industry, factory production rose 0.3% from June. Industries’ capacity utilization rate shrank to 77.8%. It has stayed below the long-term average of 79.7% since the end of 2022, suggesting low pressure for inflation.

The four-week moving average for initial unemployment claims fell for the first time in five weeks. An indication of employers’ reluctance to let go of workers, the rolling average was 35% below the long-term average dating back to 1967. Total jobless claims dropped 1.4% from the week before to 1.9 million, which was up 5.3% from the same time in 2023.

The Commerce Department reported on the annual rate of building permits and housing starts for July.

The University of Michigan reported on its consumer sentiment index.

Kyle Tetting

Adam Baley

John Sandstrom

(with Max Hoelzl and Joel Dresang, engineered by Jason Scuglik)

The non-manufacturing sector went into expansion mode again in July, according to the ISM Services Index. The survey-based report from the Institute for Supply Management had shown contraction in two of the three previous months. The trade group said supply managers had wait-and-see attitudes toward business activities, pending the presidential election and concerns about tariffs. They generally expected business to be flat or gradually growing with stable supply chains but higher costs.

The U.S. trade deficit narrowed 2.5% in June to $73.1 billion, the Bureau of Economic Analysis reported. Exports rose faster than imports. The value of outgoing goods and services increased 1.5%, led by sales of commercial aircraft and industrial supplies such as oil and gas. Imports rose 0.6% from May, led by pharmaceuticals and semiconductors, with a decline in oil and gas products. Through the first half of 2024, the trade gap expanded 5.6% from the year before with gains of 3.8% in exports and 4.2% in exports. Trade deficits detract from overall economic growth as measured by the gross domestic product.

In a sign of weakening consumer spending, outstanding credit card debt receded in June. The Federal Reserve reported a 1.5% decline in the annual rate of revolving consumer debt outstanding, the second decrease in three months after 36 straight months of gains. The pace of total consumer debt rose 2.1% from May, including a 3.4% increase in non-revolving debt – mostly car financing and student loans. With nearly 70% of U.S. economic growth relying on consumer spending, the drop in credit card debt suggests a lower commitment to buying. Credit card debt grew 1.2% in the second quarter of 2024, the slowest growth since the beginning of 2021.

The four-week moving average for initial unemployment claims rose to its highest level in 13 months, up for the fourth week in a row and the eighth time in nine weeks. The indicator of employer willingness to let workers go stayed 34% below the all-time average, according to Labor Department data. The level was 15% above where it was just before the 2020 COVID pandemic. The total number of claims rose 1.2% from the week before to nearly 2 million, which was up 5.8% from the same time last year.

No major releases

Kyle Tetting

Art Rothschild

Dave Sandstrom

(with Max Hoelzl and Joel Dresang, engineered by Jason Scuglik)

No major releases

The year-to-year change in residential prices slowed in May but continued to outpace inflation overall. The S&P CoreLogic Case-Shiller national home price index rose 5.9% from the year before, compared to a 6.4% gain in April. Month to month, seasonally adjusted prices increased 0.3%, the same as in April. Through the first five months of 2024, though, prices rose 4.1%, the fastest pace in two years. A spokesperson for S&P suggested that home buyers who are waiting for mortgage rates to drop are playing a costly game.

The Conference Board said its consumer confidence index rose slightly in July, though it stayed in a narrow weak range in which it has hovered for two years. The business research group said consumer improved their expectations while marginally lowering their opinions of current conditions. Prices, interest rates and uncertainty continued to cloud consumers’ confidence. Expectations remained at a level associated with economic recession.

Employers’ demand for workers eased slightly in June, with job openings falling to the narrowest gap with the unemployment level in three years. The Bureau of Labor Statistics said openings fell below 8.2 million, down from a peak of 12 million in 2022 yet still above the 7 million registered just before the COVID-19 pandemic. Employers hired the fewest number of workers since April 2020. And the number of workers quitting their jobs was the lowest since February 2021, suggesting lower confidence in finding new work.

Contending that larger inventories are beginning to help the housing market, the National Association of Realtors reported its pending home sales index rose by 4.8% in June. The trade group’s chief economist credited a gradual increase in the number of houses for sale and added, “Multiple offers are less intense, and buyers are in a more favorable position.” Contract signings still lagged 2.6% behind the June 2023 index.

Worker productivity increased at a solid 2.3% annual rate in the second quarter, the Bureau of Labor Statistics reported. The gain came on 3.3% higher output with workers putting in 1% more hours. Year to year, productivity rose 2.7%. Unit labor costs rose at a 0.9% annual rate and rose 0.5% from the year before. In the current business cycle, which began at the end of 2019, productivity has been growing at a 1.6% annual pace, compared to a 1.5% rate during the previous cycle, which started in 2007. The average productivity rate since 1947 is 2.1%.

The four-week moving average for initial unemployment claims rose for the seventh time in eight weeks, reaching its highest level in more than a year. Labor Department data shows that the measure of employers’ willingness to let go of workers was 35% below the all-time average. It was 14% higher than it was just before the COVID-19 pandemic. More than 1.9 million Americans claimed jobless benefits in the latest week, down 1.6% from the week before but up 4.2% from the same time last year.

The manufacturing sector contracted in July for the fourth month in a row and the 20th time in 21 months, according to the Institute for Supply Management. The trade group’s index, based on surveys of purchasing managers, showed the weakest signs of the industry since November. In issuing the report, the ISM said, “Demand was weak again, output declined, and inputs stayed generally accommodative.”

The Commerce Department said construction spending declined in June for the second month in a row, dipping 0.3% from the seasonally adjusted annual pace in May. Housing, which accounted for 44% of all construction spending, pulled back 0.4%, led by a downturn in single-family residences. Year to year, total construction spending was 6% ahead of the June 2023 pace. Spending on residential building – again led by single-family structures – rose 7% from the year before. n increased 80% from June 2022.

U.S. employers added 114,000 jobs in July, according to the employment situation report from the Bureau of Labor Statistics. Next to April, it was the fewest jobs added in 43 consecutive months of gains as signs of a weaker labor market appeared. The unemployment rate rose to 4.3%, and the U-6 underemployment rate reached 7.8%, both the highest since October 2021 and higher than their levels just before the COVID-19 pandemic. Employment in temporary help services – often a harbinger of job conditions – hit its lowest level in 23 years.

A deep drop in demand for commercial aircraft and parts sank factory orders in June. The Commerce Department reported that total orders declined 3.3% from May and were down 0.1% from June 2023. Excluding volatile orders for transportation equipment, orders rose 0.1% for the month and were up 1.6% from the year before. Core capital goods orders, a proxy for business investments, rose 0.9% from May and were up 0.3% from June 2023.

Kyle Tetting

Steve Giles

Kendall Bauer

(with Max Hoelzl and Joel Dresang, engineered by Jason Scuglik)

No major releases

The National Association of Realtors reported continued declines in existing home sales in June but said conditions are slowly shifting to a buyers’ market. The median sales price hit a record high for the second month in a row, reaching $426,900. The trade group said the annual rate of sales slipped 5.4% from May to under 3.9 million houses. Inventory rose to a supply of 4.1 months’ worth at current sales rates – the highest since May 2020. The Realtors said the higher inventory has meant sellers are starting to receive fewer bids, and more buyers are insisting on home inspections and appraisals.

The annual rate of new home sales fell in June, dropping to the slowest pace since November. The pace was down 13% from the level heading into the COVID-19 pandemic four years ago. The Commerce Department reported that the inventory of unsold new houses rose to the highest rate since October 2022. The median price of new houses was $417,300, nearly the same as the year before.

U.S. economic growth accelerated in the second quarter of 2024, exceeding analyst expectations. According to an advance report on gross domestic product from the Bureau of Economic Analysis, the economy expanded at an annual rate of 2.8% from the first three months of the year, doubling the 1.4% pace in the first quarter. Faster growth was attributed to increased consumer spending and businesses investing more in their operations and building inventory. The PCE inflation index rose 2.6% from the second quarter of 2023, the same pace as in the first quarter and the lowest in three years.

The four-week moving average for initial unemployment claims rose for the sixth time in seven weeks, suggesting a marginally weaker labor market. Data from the Labor Department showed the moving average was still 35% below the 57-year average, but it was up 13% from just before the pandemic. In the latest week, nearly 2 million Americans claimed jobless benefits, up 8% from the week before and up 3% the same time last year.

Manufacturing demand declined in June for the first time in five months, with durable goods orders plummeting 6.6% from May. A steep fall in orders for commercial aircraft accounted for much of the setback. Excluding transportation, orders rose 0.5%. Compared to June 2023, total orders were down 2% but rose 1.3% excluding transportation. The Commerce Department reported that core capital goods orders, a proxy for business investment, rose 1% from May and increased 0.3% from June 2023.

The Bureau of Economic Analysis said consumer spending – which accounts for about two-thirds of GDP – rose 0.3% in June, down from a 0.4% gain in May. Spending outpaced personal income, which rose 0.2% in June. Adjusting for inflation, spending rose 0.2%, led by consumption of services, particularly international travel. The personal consumption expenditures index, which the Fed follows for inflation, rose 2.5% from June 2023, tied with February for the lowest inflation rate since early 2021. Two years ago, the PCE index reached a four-decade high of 7.1%.

Often a pre-cursor to spending, consumer sentiment sank a little more in July. The University of Michigan said its survey-based index declined insignificantly from June and has been in a holding pattern. While high prices are dampening the mood of consumers, election uncertainty could generate more volatility. For the second month in a row, consumers’ expectations for inflation dropped.