New home sales rose unexpectedly in May despite rising mortgage rates and an otherwise cooling housing market. The increase was driven by more supply coming online, pushing prices down for the first time since February. Sales increased by 10.7% on the month to 696,000 new homes annualized, after ... READ MORE >
Economics
The middle market economy—often overlooked in the wake of large public companies and emerging Wall Street darlings—is the backbone of U.S. economic growth, accounting for the majority of new U.S. jobs and some 40 percent of the nation’s GDP.
Initial jobless claims remain above pre-pandemic level
New filings for jobless claims exceeded the pre-pandemic level for the third week in a row as labor demand eased while more stories of companies laying off workers made headlines. New claims inched down by only 0.9% last week, to 229,000, from an upwardly revised 231,000 in the prior week, according to ... READ MORE >
The American housing deficit and what it takes to close it
Over the past 15 years, the United States has not built enough houses to keep up with growing demand. The problem intensified during the pandemic as demand skyrocketed because of the shift to working from home and historically low mortgage rates encouraged this move. We estimate that at the end of ... READ MORE >
Midyear update: An economy on knife’s edge as inflation bites
Gradually, then suddenly: That is how Mike Campbell, the protagonist in Ernest Hemingway’s “The Sun Also Rises,” answered the question on how he went bankrupt. It’s also an apt way to think about how the United States goes into a recession. While there are always signs of financial stress and ... READ MORE >
Fuel oil prices reach a tipping point
American households are consuming less gasoline compared to this time last year as fuel costs continue their relentless rise. Now, with the traditional summer driving season underway, these costs have reached a tipping point, forcing many households to reduce their spending on necessities and ... READ MORE >
Changes in Fed policy and their impact on the economy
After more than a decade of disinflation and the threat of deflation, the Federal Reserve is now dealing with persistent inflation resulting from a pandemic-induced supply chain shock, a surge in consumer demand and yet another oil shock. This has resulted in an abrupt shift in policy to restore price ... READ MORE >
Chart of the day: Industrial production hits a record amid signs of a slowdown
Industrial production in the United States hit a record in May, but signs of a coming economic slowdown emerged in the report released on Friday by the Federal Reserve. Production volume overall increased by 0.2% on the month for the fifth straight monthly gain. At the same time, manufacturing ... READ MORE >
Chart of the day: U.S. housing starts and permits plunge
U.S. housing starts and permits plunged in May amid a steep rise in mortgage rates and sour builder sentiment. We expect new housing supply to fall further as mortgage rates continue to rise following the Federal Reserve’s 75 basis-point rate increase on Wednesday, its largest since 1994. Housing ... READ MORE >
Initial jobless claims exceed pre-pandemic level for second straight week
New filings for jobless benefits last week stayed above the pre-pandemic level for the second week in a row, continuing to signal a resurgence in layoffs as economic activity slowed. With more companies announcing layoffs recently, we expect the upward trend in new jobless claims to continue. There ... READ MORE >
Fed announces largest rate hike in nearly three decades as it seeks to restore price stability
The Federal Reserve lifted its federal funds policy rate to a range between 1.5% and 1.75% on Wednesday as it moves to restore price stability over the medium term. We now expect the Fed to hike the policy rate by 50 basis points in July and September and then by 25 basis points at each successive ... READ MORE >