This week is a case of good news, bad news. Good news is that the economy is proving to be resilient and the housing market strong. The downside of this situation is that inflation continues to persist, a factor that is pushing mortgage rates higher. The robust housing market is also causing inventory to be tight and making home buying challenging for some.
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So, speaking of a resilient economy, here’s what’s looking good. Last week, the final report on Q1 GDP (gross domestic product) showed a shocking upward revision to 2 percent growth in the economy, a vast difference from the 1.3 percent previously reported and more evidence against an impending recession. Analysts are also saying this puts the likelihood at 100 percent of the Fed raising its key interest rate during its next meeting.
Jobs data last week was also strong, especially in the private sector. ADP’s report on private sector job growth reported a shockingly high 497,000 new jobs, more than double the expectation.
As for what I’m watching this week…
The very important Consumer Price Index (CPI) comes out mid-week. Core prices in June are expected to slow to a comparatively modest 0.3 percent on the month versus May’s 0.4 percent. Overall prices are also expected to rise 0.3 percent with annual rates slowing sharply at the headline level, to 3.1 from 4.0 percent, and also for the core, to 5.0 from 5.3 percent.
The following day we get a look at wholesale price inflation with the Producer Price Index. Producer prices in June are expected to rise 0.2 percent on the month versus a 0.3 percent fall in May. The annual rate in June is seen at plus 0.5 percent versus May’s plus 1.1 percent.
As for the housing market, CoreLogic’s latest report on Home Price Growth showed annual appreciation in home prices fell 1.4 percent in May, the lowest level seen in 11 years. Single-family home price growth slowed for the 12th consecutive month. The report also showed declines in many Western States reflecting migration from less-urban areas where people moved during the pandemic to Northeastern and Southeastern metro areas.
