Money Talk Podcast, Friday Dec. 24, 2021
Landaas & Company newsletter December edition now available.
Advisors on This Week’s Show
with Max Hoelzl, Joel Dresang, engineered by Jason Scuglik
Week in Review (Dec. 20-24, 2021)
Significant Economic Indicators & Reports
The Conference Board’s index of leading economic indicators rose 1.1% in November, advancing from gains of 0.8% in October and 0.3% in September. The business research group said the surge in COVID-19 cases as well as inflation and ongoing supply-chain disruptions pose challenges to continued economic growth. At the same time, the group projected strong annualized increases for gross domestic product, including 6.5% in the fourth quarter and 2.2% in the first quarter of 2022.
No major announcements
The U.S. gross domestic product grew at an annual pace of 2.3% in the third quarter of 2021, according to a final estimate by the Bureau of Economic Analysis. The growth rate for the economy was up from 2.1% in the previous estimate. It rose at a 6.7% clip in the second quarter. Consumer spending rose at a higher rate than previously estimated. Measured year to year, the economy grew 4.9% and was 1% above where it left off 2019, just before the pandemic. The Federal Reserve’s favorite measure of inflation showed a 4.3% increase since the third quarter of 2020, more than double the Fed’s long-range target of 2%.
The Conference Board said its consumer confidence index rose in December, suggesting continued economic expansion into 2022. The business research group said attitudes toward current conditions remained strong and the near-term outlook strengthened as concerns about inflation and COVID-19 declined from November’s survey.
Existing home sales rose 1.9% in November to an annual rate of 6.5 million houses, the National Association of Realtors said. The sales pace picked up for the third month in a row, though it was still 2% lower than the year before. The trade group said anticipation of higher mortgage rates helped drive November sales. Inventory declined 10% from October to 1. 1 million houses for sale, which was 13% lower than the year before. The median sales price of $353,900 was up 14% from November 2020, marking the 117th consecutive year-to-year increase.
The four-week moving average for initial unemployment claims rose for the first time in 11 weeks but remained near the lowest level in 52 years. Data from the Labor Department showed the moving average at 206,250 new applications, 44% below the long-term average and down from a record 5.3 million in April 2020. In all, 2.1 million Americans were claiming jobless benefits in the latest week, down 13% from the week before and down from 21 million the year before.
By far the biggest driver of the U.S. economy, consumer spending rose 0.6% in November, outpacing a 0.4% gain in personal income. The Bureau of Economic Analysis reported that personal consumption reached 11% above its pre-pandemic peak. The Fed’s favorite inflation gauge showed a 5.7% increase from November 2020 – the highest rate since 1982. Excluding volatile prices for fuel and food, the core index increased to 4.7%, the highest since 1989.
The Commerce Department said the annual pace of new home sales rose 12.4% in November, though it still was down 14% from the year before. The volatile indicator was about where it was before the pandemic and on par with sales in mid-2007, before the Great Recession. The supply of new houses on the market remained around six months’ worth. The median price rose 19% from the year before to $416,900. Only 10% of the new houses sold were completely built, vs. 14% in November 2020.
The Commerce Department said orders for durable goods rose 2.5% in November, the sixth increase in seven months. The indicator for manufacturing demand surpassed the pre-pandemic level by 16%. Commercial aircraft and automotive led the increase, but even excluding transportation equipment, orders rose 0.8% from October and were nearly 17% above their year-ago level. Core capital goods orders, a proxy for business investments, rose 0.1% for the month and were up 16.5% from the year before.
The University of Michigan’s consumer sentiment index rose in December as households in the lowest third of incomes anticipated raises in 2022. The reading of 70.6 was up from 67.4 in November but shy of the 80.7 posted in December 2020. A university economist said about one in four consumers surveyed said inflation was eating away at their living standards. The economist said it was too early to tell how much the omicron variant of COVID-19 would affect consumer spending.
Markets and government offices closed for Christmas
MARKET CLOSINGS FOR THE WEEK
- Nasdaq – 15170, down 460 points or 2.9%
- Standard & Poor’s 500 – 4621, down 91 points or 1.9%
- Dow Jones Industrial – 35367, down 604 points or 1.7%
- 10-year U.S. Treasury Note – 1.40%, down 0.09 point