Money Talk Podcast, Friday July 3, 2020
Landaas & Company newsletter July edition now available.
Advisors on This Week’s Show
(with Max Hoelzl and Joel Dresang, engineered by Jason Scuglik)
Week in Review (June 29-July 3, 2020)
SIGNIFICANT ECONOMIC INDICATORS & REPORTS
Demand for existing houses rose 44.3% in May following declines of 20.8% in April and 21.8% in March. Contract signings rebounded as more states began to relax precautions taken for the COVID-19 pandemic. Based on its pending home sales index, the National Association of Realtors projected sales of 4.93 million houses in 2020, which would be down less than 10% from the 2019 pace. The trade association forecast 2021 sales to grow to 5.35 million.
The year-to-year rise in housing prices continued to accelerate gradually in April, according to the S&P CoreLogic Case-Shiller home price index. The 20-city composite index showed a 4% price increase from the year before, up from 3.9% in March. An analyst with the survey called the broad, modest price gains “remarkably stable.” The trend suggests a steady demand for housing amid low mortgage rates and a limited inventory of houses for sale.
The Conference Board reported a rise in consumer confidence in June, with less pessimism despite continued perceptions of weak economic conditions. Confidence is a key component of consumer spending, which generates about 70% of U.S. economic activity. “Faced with an uncertain and uneven path to recovery, and a potential COVID-19 resurgence,” an economist with the business research group said, “it’s too soon to say that consumers have turned the corner and are ready to begin spending at pre-pandemic levels.”
The Institute for Supply Management reported that its manufacturing index signaled expansion in June for the first time since the pandemic. Based on surveys of purchasing managers, the index had its biggest one-month jump in readings since August 1980. The trade group said survey respondents had 1.3 encouraging comments for every note of caution.
The annual pace of construction spending declined in May for the third month in a row. According to the Commerce Department, outlays for building projects dropped nearly $85 billion or 5.8% since peaking in February. Without adjusting for inflation, the annual rate of construction spending dropped to $1.356 trillion, the lowest since last June.
The U.S. economy continued to rebound in June with job gains and lower unemployment, the Bureau of Labor Statistics reported. Employers added 4.8 million jobs following the addition of 2.7 million positions in May. Payrolls still remained 14.7 million jobs or 9.7% short of the peak level reached in February. Meanwhile, the unemployment rate fell to 11.1% in June from 13.3% in May and a record 14.7% in April. February’s rate reached 3.5%, a 50-year low.
The four-week moving average for initial unemployment claims fell for the 10th week in a row, remaining historically high because of job losses related to the pandemic. The Labor Department said 31.5 million Americans received unemployment insurance benefits, including COVID-19 relief. That compared to 16 million beneficiaries the year before. Weekly claims remained above 1.4 million, seven times the filings 12 months earlier.
Global commerce continued to struggle amid the pandemic in May as the U.S. trade deficit widened by 9.7% to $54.6 billion, according to the Bureau of Economic Analysis. Larger deficits slow overall economic growth, as measured by gross domestic product. The trade gap grew because exports declined faster than imports. Imports fell by 0.9% from April. Exports decreased 4.4% to their lowest level since August 2009. U.S. exports to European Union countries fell to the lowest mark since early 2006.
The Commerce Department said factory orders rose 8% in May following declines of 13.5% in April and 11% in March. Year-to-year demand for U.S.-made manufactured goods fell broadly by 10.3%.
Markets closed to observe Independence Day
MARKET CLOSINGS FOR THE WEEK
- Nasdaq –10208, up 450 points or 4.6%
- Standard & Poor’s 500 – 3130, up 121 or 4%
- Dow Jones Industrial – 25828, up 813 points or 3.2%
- 10-year U.S. Treasury Note – 0.67%, up 0.03 point