Monday, August 29, 2016

Fifth Consecutive Monthly Increase in Personal Income

Personal income increased 0.4% ($71.6 billion) in July, according to the Bureau of Economic Analysis, up from a 0.3% increase in June. Personal consumption expenditures also increased, rising 0.3% or $42.0 billion. Real disposable income – personal income less personal taxes – increased 0.4% after rising 0.2% in June.

The personal savings rate – personal savings as a percentage of personal income – was 5.7%, up from the June rate of 5.5%.

The increase in personal income was primarily due to a rise in personal wages and salaries, which rose $43.3 billion in July, up from a $41.7 billion increase in June.

The price index for PCE was unchanged in July. Excluding food and energy, the index increased 0.1%.

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Friday, August 26, 2016

Yellen: Case for Increasing Fed Funds Rate ‘Has Strengthened’

As the U.S. economy continues to expand, Federal Reserve Chairman Janet Yellen said in a Friday speech that she anticipates gradual increases in the federal funds rate over the next few years. She added that the Federal Open Market Committee expects to see continued moderate growth in real GDP, additional strengthening in the labor market and inflation rising to 2 percent over that timeframe.

Yellen cautioned, however, that any decision to raise interest rates would be dependent on the degree to which incoming data continues to confirm the FOMC’s outlook. “As ever, the economic outlook is uncertain, and so monetary policy is not on a preset course,” Yellen said. “Our ability to predict how the federal funds rate will evolve over time is quite limited because monetary policy will need to respond to whatever disturbances may buffet the economy.”

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Consumer Sentiment Slipped in August

Consumer Sentiment slipped 0.2 points in August to 89.8, according to the University of Michigan Consumer Sentiment Index.

The Current Economic Conditions Index fell 2 points to 107.0, while the Index of Consumer Expectations rose 1.1 point to 78.7.

“Less favorable personal financial prospects were largely offset by a slight improvement in the outlook for the overall economy,” said Richard Curtin, Chief Economist of UM Surveys of Consumers. “Importantly, long term inflation expectations fell to the lowest level ever recorded, with near term inflation expectations anchored to that same low level. Just as low inflation has provided strong support for real income gains, low interest rates have increasingly become the sole driver of large discretionary expenditures.

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Second Quarter GDP Revised to 1.1%

Real GDP for the second quarter of 2016 grew at an annual rate of 1.1%, according to the Bureau of Economic Analysis’s revised estimate, down slightly from the advance estimate of 1.2%. The general picture of economic growth remained the same, as revisions to GDP components were small.

The change in GDP reflected downward revisions for government spending, private inventories and net exports, partially offset by upward revisions for nonresidential fixed investment and PCE.

The revision to government spending was due to lower state and local government investment in structures, while the revision to inventory investment reflected downward revisions to construction, mining and utilities, which were partially offset by an upward revision to wholesale trade.

Net exports were revised based on an upward revision in goods imports. In contrast, stronger than expected consumer spending on motor vehicles and parts increased PCE’s contribution to GDP.

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Thursday, August 25, 2016

Durable Goods Orders Rose in July

New orders for manufactured durable goods rose 4.4% to $228.9 billion in July, following a 4.2% decrease in June, according to the U.S. Census Bureau. Orders for transportation equipment drove the increase, rising 10.5% to $78.9 billion.

New orders excluding defense increased 3.8% on the month, as orders of nondefense capital goods rose 10.2% to $71.6 billion.

Shipments of manufactured durable goods increased 0.2% to $232.9 billion, after rising 0.5% in June.

Inventories of manufactured durable goods rose 0.3% to $383.0 billion, following a 0.1% June decrease. July’s increase followed six consecutive months of decreases.

Read the Census release.
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Wednesday, August 24, 2016

Existing-Home Sales Fell in July

Existing-home sales fell 3.2% to a seasonally adjusted annual rate of 5.39 million in July, according to the National Association of Realtors (NAR). Year-over-year sales fell for the first time since November 2015, down 1.6% from last July. The annual sales rate fell 13.2% in the Northeast, 5.2% in the Midwest and 1.8% in the South. Sales in the West rose 2.5%.

“Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month,” said NAR Chief Economist Lawrence Yun. “Furthermore, with new condo construction barely budging and currently making up only a small sliver of multi-family construction, sales suffered last month as condo buyers faced even stiffer supply constraints than those looking to purchase a single-family home.”

Total housing inventory increased 0.9% to 2.13 million homes available for sale, while the median existing-home price moved up 5.3% from a year ago to $244,100.

Distressed sales comprised 5% of sales in July, the lowest share since NAR began tracking them in 2008. Four percent of sales were foreclosures and 1% were short sales. On average, foreclosures and short sales sold for discounts of 18% and 16% respectively.

Read the NAR release.
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Tuesday, August 23, 2016

New Home Sales Surged in July

New single-family home sales rose to a seasonally adjusted annual rate of 654,000 in July, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The July rate was 12.4% above the revised June rate of 582,000 and 31.3% above the July 2015 estimate.

Sales grew in most regions, rising 40.0% in the Northeast, 18.1% in the South, and 1.2% in the Mid-West. Sales were unchanged in the West.

The median price of a new home was $294,600, down 5.1% from June. The average price was $355,800, an increase of less than 1.0% from the previous month.

At the end of July there was an estimated supply of 4.3 months at the current sales rate, down from a 4.9 month supply in June.

Read the Census/HUD release.
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