Stocks ended a turbulent week generally lower as traders digested the latest inflation data and the Federal Reserve’s possible response. Of the major benchmark indexes, only the Dow and the Global Dow managed to eke out gains by the end of last week. Inflation rose by only 0.1% in November, according to the latest data from the Bureau of Economic Analysis (see below). Investors are hoping this is the latest sign that inflationary pressures have peaked, which could influence the Fed to scale back its interest-rate hikes. However, news that China is experiencing another surge in COVID cases could prompt more government-imposed lockdowns, which would impact the global economy. Ten-year Treasury yields advanced the most since early April. The dollar edged lower, while gold prices climbed higher. Crude oil prices increased for the second week in a row, nearing $80.00 per barrel.
Last Week’s Economic News
The final estimate for third-quarter gross domestic product showed the economy accelerated at an annual rate of 3.2%, exceeding expectations.
- Personal income and disposable (after-tax) income rose 0.4% in November, according to the latest data from the Bureau of Economic Analysis. Consumer spending, as measured by personal consumption expenditures, rose 0.1%. Consumer prices edged up 0.1% in November. Prices, less food and energy, increased 0.2%. Since November 2021, consumer prices have increased 5.5%, lower than the 12 months ended in October (6.1%).
The housing sector continued to weaken in November. Sales of existing homes fell for the tenth consecutive month after declining 7.7% in November. Year over year, sales are down 35.4%.
Sales of new single-family homes increased for the second straight month in November, advancing 5.8% above the revised October rate. However, sales are down 15.3% from November 2021. The median sales price of new single-family homes sold in November was $471,200 ($484,700 in October), while the average sales prices was $543,600 ($533,400) in October.
The number of issued building permits and housing starts declined in November from the previous month. Authorized building permits were 11.2% below the October rate and 22.4% under the November 2021 pace. In November, issued building permits for single-family home construction were 7.1% under the October figure. Housing starts in November were 0.5% below the October estimate and 16.4% under the November 2021 rate. Single-family housing starts were 4.1% less than the previous month’s tally. Home completions rose by 10.8% in November and were 6.0% higher than the prior year’s total. In November, single-family home completions were 9.5% above the October rate.
New orders for manufactured durable goods decreased 2.1% in November following three consecutive monthly increases. Excluding transportation, new orders increased 0.2%. Excluding defense, new orders decreased 2.6%. Transportation equipment drove the decrease in new orders, falling 6.3% following three consecutive monthly increases.
Retail prices for regular gasoline continued to slide last week. According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.120 per gallon on December 19.
For the week ended December 17, there were 216,000 new claims for unemployment insurance, an increase of 2,000 from the previous week’s level, which was revised up by 3,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 10 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 10 was 1,672,000, a decrease of 6,000 from the previous week’s level, which was revised up by 7,000.
Eye on the Week Ahead
There is very little economic data released during the week between Christmas and New Year’s Day. In addition, trading is customarily muted as investors take a break while preparing for the new year.
Have a nice week!