As expected, the Fed raised their key interest rate at their meeting last week. Fed Chair Powell commented after the announcement that they will be monitoring conditions and will raise again in September if conditions warrant. We’ll see. He said they’ll be watching the inflation numbers and two jobs reports that come out in the meantime.
So, while we don’t know exactly what those reports are going to look like, what we do know is that the economy remains resilient as we continue to skirt recession but have yet to meet the criteria most economists use to classify one. The economy continues to grow at nearly 2 percent with a growing jobs market and unemployment at 3.6 percent.
We do know that historically the Fed likes to see inflation rates hover between 1-2 percent, and right now, the rate is 4.6 percent, so more rate hikes look likely.
As for what I’m watching this week…
We’ll get the all-important Jobs Report on Friday with some of the precursor reports mid-week. First is the ADP Report on private job creation. Forecasters see ADP’s July employment number at 185,000. This would compare with June growth in private payrolls reported by the Bureau of Labor Statistics of 149,000.
As for the government’s main Jobs Report that comes out on Friday…a 200,000 rise is the call for new job growth in July versus 209,000 in June which was very near expectations. Average hourly earnings – wage inflation – in July are expected to rise 0.3 percent on the month for a year-over-year rate of 4.2 percent; these would compare with 0.4 and 4.4 percent for the last three reports. July’s unemployment rate is expected to hold unchanged at 3.6 percent.
In housing market news, construction spending for June came in a touch cooler than expected at 0.5 percent growth following May’s 0.9 percent increase that benefited from a sharp jump in residential spending.
Interestingly the National Association of Realtors reported a drop in the number of existing homes purchased by foreign buyers to a level not seen since 2009. The amount of foreign investment in existing homes dropped almost 10 percent to $53.3 billion. Foreign purchases accounted for 84,600 residential real estate transactions out of the 5.03 million total transactions that closed in 2022.
Have a great rest of your week, and please note that we are on summer vacation next week, and your Weekly Update will return on August 16th.
