Economic Update Archives - Page 4 of 16

February 5, 2022February 5, 2022

Economic update for the week ending February 5, 2022

Stock Markets – The Dow and S&P closed the week higher while the tech-heavy Nasdaq closed sharply lower. Corporate profits have been strong and it seems like the market has priced in higher interest rates. We are not seeing the volatility that we saw in early January. Technology has been a different story and investors have pulled back on the sector in fear that evaluations hit an unrealistic level. A stellar jobs report on Friday was also a mixed bag. It confirmed to investors that the economy was very strong. Despite a surge in COVID cases in January the job gains that month show that the economy is also resilient. On the flip side, with the economy so strong the chance of the Fed raising interest rates quicker and higher becomes greater. Bond yields and mortgage rates rose sharply following the release of the jobs data. The Dow Jones Industrial Average closed the week at 35,089.74, up 1.0% from 34,725.47 last week. It is down 3.4% year to date. The S&P 500 closed the week at 4,500.94, up 1.6% from 4,431.94 last week. The S&P is down 5.6% year to date. The NASDAQ closed the week at 14,098.01, down 2.5% from 14,454.61 last week. It is down 9.9% year to date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.92%, up from 1.78% last week. The 30-year treasury bond yield ended the week at 2.23%, up from 2.07% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The February 3, 2022 Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products were as follows: The 30-year fixed mortgage rate was 3.55%, unchanged from 3.55% last week. The 15-year fixed was 2.77%, down slightly from 2.80% last week. The 5-year ARM was 2.71%, almost unchanged from 2.70% last week. Unfortunately, after the release of the jobs report rates increased on Friday. Next week’s rates will be higher.

U.S. employers added 467,000 new jobs in January – The Department of Labor and Statics reported that 467,000 new jobs were added in January. Economists surveyed had expected a very small increase and possibly a decrease in jobs due to the COVID surge, so this was considered a substantial spike in new jobs. The November and December new jobs numbers were also revised higher. The Labor Department has now revised the job growth in 2021 to 6.7 million new jobs added, an all-time record. The unemployment rate increased slightly to 4% in January, up from 3.9% in December, as more workers entered the workforce. The labor-force participation rate (the share of workers with a job or actively looking for a job) rose to 62.2% in January from 61.9% in December. It remains below the 63.6% level before the pandemic but finally seems to be moving up. Average hourly wages increased to $31.63 per hour, a year-over-year increase of 5.7%.

January 29, 2022January 29, 2022

Economic Update for the week ending January 29, 2022

Stock markets ended the week higher after three straight weeks of losses – The fourth-quarter GDP figure was announced Thursday. The Gross Domestic Product (GDP) is the broadest measurement of the health of the economy. It represents the value of all goods and services produced within the U.S. The fourth-quarter GDP increased 6.9% year-over-year. That was a welcome rebound from a disappointing 2.3% growth figure in the third quarter. For the entire year of 2021, the annualized GDP was up 5.7%, the highest increase since 1984. Reporting of fourth-quarter corporate earnings has begun. Corporate profits are coming in higher than expected. While bond and mortgage rates have risen sharply, investors feel that they are beginning to level out and the expected future increases by the Fed are already built into the current rates. The Dow Jones Industrial Average closed the week at 34,725.47, up 1.3% from 34,265.37 last week. It is down 4.4% year to date. The S&P 500 closed the week at 4,431.35, up .08% from 4,397.94 last week. The S&P is down 7.1% year to date. The NASDAQ closed the week at 14,454.61, up 5% from 13,758.92 last week. It is down 7.6% year to date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.78%, almost unchanged from 1.75% last week. The 30-year treasury bond yield ended the week at 2.07%, unchanged from 2.07% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The January 27, 2022 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 3.55%, unchanged from 3.56% last week. The 15-year fixed was 2.80%, unchanged from 2.79% last week. The 5-year ARM was 2.70%, also unchanged from 2.69% last week.

U.S. Home Sales – The National Association of Realtors reported that existing-home sales totaled 6.21 million in 2021, up 8.3%from the number of homes sold in 2020. That represented the most homes sold in a year since 2006. The median price of a home ended the year 15.8% higher than at the end of 2020. December marked a record 118-straight months of year-over-year increases in the median price paid for a home in the United States. Inventory levels also hit a record low. Inventory levels ended 2021 with 14.2% fewer homes for sale than the number of homes for sale at the end of 2020. There was just a 1.8 month supply of homes for sale on December 31, 2021, an all-time low.

January 22, 2022January 22, 2022

Weekly Economic Update for Week Ending January 22, 2022

Stock markets suffered deep losses this week – Fears of higher interest rates due to The Federal Reserve’s shift in policy to combat inflation hit stock markets hard this week. Substantial losses were across the board and in all industries. The Dow Jones Industrial Average closed the week at 34,265.37, down 4.6% from 35,911.81 last week. It is down 5.7% year to date. The S&P 500 closed the week at 4,397.94, down 5.7% from 4,662.85 last week. The S&P is down 7.7% year to date. The NASDAQ closed the week at 13,758.92, down 7.6% from 14,893.75 last week. It is down 12% year to date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.75%, almost unchanged from 1.78% last week. The 30-year treasury bond yield ended the week at 2.07%, down from 2.12% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The January 13, 2022 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 3.56%, up from 3.45% last week. The 15-year fixed was 2.79%, up from 2.43% last week. The 5-year ARM was 2.60%, up from 2.57% last week.

2021 marks the most homes sold in 15 years – December California existing-home sales – The California Association of Realtors reported that existing-home sales totaled 426,850 on a seasonally adjusted annualized rate in December. Preliminary figures indicate that 444,520 homes closed escrow in 2021 in California, an increase of 7.9% from the 411,870 homes sold in 2020. That marks the highest number of yearly sales since the subprime lending market in 2006 when virtually anyone that wanted to buy a house could get qualified. The median price paid for an existing home in November was $796,570, up 11% from last December when the median price was $717,930. The annual median price climbed a record 19.3% in 2021. There was a 1.2-month supply of homes for sale in December, which marked the lowest inventory level ever recorded.

January 15, 2022January 15, 2022

Weekly Economic Update for Week Ending January 15, 2022

Economic update for the week ending January 15, 2022

Stock markets down slightly for the week – This week the December CPI number, a key indicator of inflation, showed that consumer prices had risen 7% year-over-year, the largest increase since 1982. The Commerce Department reported that U.S. retail sales dropped 1.9% in December, indicating that higher prices have consumers holding off on some purchases. Higher inflation often equates to higher interest rates. To combat inflation the Federal Reserve has indicated that they intend to hike short-term interest rates this year. They have also indicated that they intend to reduce their balance sheet by dialing back bond and mortgage security purchases. That has already caused long-term mortgage rates to rise. It should be pointed out that interest rates are still near historic lows, but well higher than the all-time low levels in the depth of the pandemic. The Dow Jones Industrial Average closed the week at 35,911.81, down 0.9% from 36,231.66 last week. The S&P 500 closed the week at 4,662.85, down 0.2% from 4,677.03 last week. The NASDAQ closed the week at 14,893.75, down 0.3% from 14,935.90 last week.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.78%, almost unchanged from 1.76% last week. The 30-year treasury bond yield ended the week at 2.12%, almost unchanged from 2.11% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The January 13, 2022 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 3.45%, up from 3.22% last week. The 15-year fixed was 2.62%, up from 2.43% last week. The 5-year ARM was 2.57%, up from 2.41% last week.

Housing sales numbers for December will be out next week. We had a call with the California Association of Realtors on Friday. The housing numbers for December are quite strong. When they release their final numbers next week they will report that more homes sold in 2021 than any year since 2006, which was when sub-prime mortgages allowed virtually anyone to qualify for a home loan. You can get December housing data now from my website for your city or zip code. Just look under market trends to print your report.

Have a great weekend!

January 8, 2022January 8, 2022

Economic Update for the week ending January 8, 2022

Stock Markets – Stock markets rose to record levels on Monday despite a surge in COVID cases. The past seven days have been the highest weekly number of positive cases during the pandemic. New guidance from the CDC shortening quarantine times to five days from ten days was seen by investors as a shift in policy to keep people working due to labor shortages. This has investors feeling that further shutdowns were no longer going to be the policy. This was the best explanation for why stocks were rising while COVID surged. Unfortunately, on Wednesday minutes from the latest Federal Reserve meeting signaled that the Fed would make three rate hikes this year and dial back on bond purchases in order to combat inflation. This news caused interest rates to rise. Bond yields and mortgage rates rose fairly significantly, and stock markets dropped. The Dow Jones Industrial Average closed the week at 36,231.66, down 0.3% from 36,338.30 last week. The S&P 500 closed the week at 4,677.03, down 1.9% from 4,766.18 last week. The NASDAQ closed the week at 14,935.90, down 4.6% from 15,644.97 last week.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.76%, up from 1.52% last week. The 30-year treasury bond yield ended the week at 2.11%, up from 1.90% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The January 6, 2022 Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 3.22%, up from 3.11% last week. The 15-year fixed was 2.43%, up from 2.33% last week. The 5-year ARM was 2.41%, unchanged from 2.41% last week.

U.S. employers added 199,000 new jobs in December – The Department of Labor and Statistics reported that 199,000 new jobs were added in December. Economists surveyed had expected 422,000 new jobs. December marked a second straight month of job gains that were less than half of the number expected. Despite slowing the past two months, 6.4 million new jobs were added in 2021 which was the most jobs added in a year ever. The unemployment rate was 3.9% in December, down from 4.2% in November. The labor-force participation rate (the share of workers with a job or actively looking for a job) stood at 61.9% in December. It remains below the 63.6% level before the pandemic. Average hourly wages rose 4.7% year-over-year.

December 18, 2021December 18, 2021

Economic Update for week ending December 18, 2021

Stock markets were lower last week – Stock markets dropped on fears of higher interest rates following comments from the Federal Reserve. The Fed acknowledged that inflation had hit a 40-year high and that the accommodative loosening of the money supply was no longer needed. They stated that they were going to pull back on their bond-buying program that injects money into the economy and helps keep long term rates down. They also made comments that led investors to believe that there would be three rate hikes on their key overnight rates that currently stand near 0% to keep the economy from remaining overheated. The Dow Jones Industrial Average closed the week at 35,365.44, down 0.6% from 35,970.99 last week. It is up 15.5% year-to-date. The S&P 500 closed the week at 4,620.64, down 2.0% from 4,712.02 last week. It is up 23.0% year-to-date. The NASDAQ closed the week at 15,169.96, down 3.0% from 15,630.60 last week. It is up 17.7% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.41%, down from 1.48% last week. The 30-year treasury bond yield ended the week at 1.82%, down from 1.86% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The December 16, 2021, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 3.12%, unchanged from 3.10% last week. The 15-year fixed was 2.34% up from 2.38% last week. The 5-year ARM was 2.45%, unchanged from 2.45% last week.

November California existing-home sales – The California Association of Realtors reported that existing-home sales totaled 454,450 on a seasonally adjusted annualized rate in November. That marked a month-over-month increase of 4.7% over the seasonally annualized rate of 434,170 in October. Year-to-date sales are up 10.6% from the same period last year. The median price paid for an existing home in November was $782,440, up 11.9% from last November when the median price was $698,980. There was a 1.6-month supply of homes for sale in November, down from a 1.9 month supply of homes for sale one year ago.

Below are regional figures.

February 8, 2021

Economic update for the week ending February 6, 2021

Stock markets ended the week at record highs – Major stock indexes followed their worst week since October with their best week since November. Markets erased all their losses from last week and stocks surged to record highs. Investors jumped back into the market based on many new developments. Those included: another round of stimulus, a drop in COVID cases, improved vaccination numbers, and more of the country lifting some of their business shut-down orders. The Dow Jones Industrial Average closed the week at 31,148.24, up 3.9% from 29,982.62 last week. It is up 1.8% year-to-date. The S&P 500 closed the week at 3,886.83, up 4.6% from 3,714.24 last week. It is up 3.5% year-to-date. The NASDAQ closed the week at 13,856.30, up a staggering 6.0% from 13,070.69 last week. It is up 7.5% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 1.19%, up from 1.11% last week. The 30-year treasury bond yield ended the week at 1.97%, up from 1.87% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The February 4, 2021, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate was 2.73%, unchanged from2.73% last week. The 15-year fixed was 2.21%, unchanged from 2.20% last week. The 5-year ARM was 2.78%, almost unchanged from 2.80% last week.

U.S. employers added 49,000 jobs in January – The Department of Labor and Statics reported that 49,000 net new jobs were added in January. While that was a disappointing number, it certainly is a turnaround from December when the economy lost 227,000 jobs. The unemployment rate dropped to 6.3% in January, from 6.7% in December. To date, the U.S. has 9.9 million fewer employees employed than in February 2020, before the pandemic, when the unemployment rate was at a 50-year low. Economists believe that the unemployment rate would be closer to 10% if not for so many disappointed workers leaving the job search. Fortunately, it is widely believed that jobs will begin to recover quickly as more people are vaccinated, COVID-19 cases continue to drop, and more of the economy reopens.

Home sales figures won’t be released for two more weeks. Our preliminary numbers point to the highest number of sales for any January since the California Association of Realtors began keeping records in the 1940s. We will have some preliminary figures next week with official figures the following week. Listings, sales, and prices are strong. Stay tuned!

February 4, 2021

Economic Update For The Month Ending January 31, 2021

Stock markets hit record highs before dropping at the end of January to end the month lower – Stock market indexes reached record-high levels in January, only to lose all of their gains in the last week of the month. Markets suffered their worst week since October as investors digested comments by the Fed, a disappointing fourth-quarter GDP report, increasing job losses, and a pullback in consumer spending. The Fed shocked investors early in the week when they made comments suggesting that their key overnight rates would remain at or near zero percent for an extended period which could last years after the pandemic is over. This suggested that the Fed has data that the impact of the pandemic on the economy would last longer than investors believed. On Friday a preliminary GDP report revealed that the economy contracted for the first time since the financial crisis, and suffered its largest yearly contraction since 1946. Retail and service sales reports showed that consumers had pulled back on purchases for goods and services in the fourth quarter, reversing a historic 33% quarter-over-quarter increase in the third quarter. Business investment, and residential real estate were sectors that surged in 2020, according to the GDP report. Job losses also increased in December and January as much of the country instituted more restrictions on business, including some states re-issuing stay-at-home orders. Fortunately, it’s widely believed that the $900 billion in stimulus from the CARES Act 2 that will be distributed in the first quarter of 2021 will increase consumer spending and grow the economy. Investors remain optimistic and expect the effects of the stimulus, the drop in COVID cases nationwide which has led to a loosening of restrictions and reopenings, increased vaccine disbursement, and future stimulus to continue to revive the economy, and boost hiring. The Dow Jones Industrial Average ended the month at 29,982.62, down 2.0% from 30,606.48 on December 31. The S&P 500 closed the month at 3,714.24, down 1.1% from 3,230.78 at the end of December. The NASDAQ closed the month at 13,079.69, up 1.4% from 12,888.28 on December 31, 2020.

U.S. Treasury Bond Yields dropped sharply in 2020 – The 10-year U.S. treasury bond yield closed the year at 1.11%, up from 0.93% On December 31, 2019. The 30-year treasury yield ended the year at 1.87%, up from 1.65% on Dec. 31, 2019. We watch bond yields because mortgage rates follow treasury bonds.

The U.S. Economy lost 140,000 jobs in December – Jobs data is reported on the first Friday of every month. This is the data for December. The Department of Labor Statistics reported that 140,000 non-farm jobs were lost in December. This marked the first month of net job losses since April. As COVID-19 cases continue to spike, most states and local governments have entered more restrictive shutdowns. This has caused another round of layoffs. The unemployment rate in December was 6.7%.

Mortgage Rates – The January 28, 2021, Freddie Mac Primary Mortgage Survey reported that the 30 year fixed rate mortgage average was 2.73%, up from 2.67% on December 28, 2020. The 15-year fixed was 2.20%, up from 2.17% last month. The 5-year ARM was 2.80%, up from 2.71% at the end of December.

Home sales data is reported on the third week of each month for the previous month. These are December’s results.

2020 marked the highest number of U.S. existing-home sales since 2006 – The National Association of Realtors reported that the number of homes sold in December was 22.2% above the number of homes sold last December. Despite the pandemic, 2020 marked the highest number of homes sold since 2006. The median price paid for a home in December was $309,800, up 12.9% from $274,500 in December 2019. With new listings surging, but not able to keep pace with buyer demand, inventory shrunk to record low housing supplies in 2020. There was just a 1.9 month supply of homes for sale in December, down from a 3.0 month supply one year ago.

California existing home sales – The California Association of Realtors reported that existing, single-family home sales totaled 509,750 on an annualized basis in December. That represented a year-over-year increase of 28% from the 398,370 annualized rate of homes sold in December 2019. It was the highest number of monthly home sales in 15 years, and the most homes ever sold in December. Home sales are homes that closed escrow. Pending home sales are new contracts signed. Those are at near-record levels as well. For the entire year, 411,870 homes sold, up 3.5% from 397,960 homes sold in 2019. That number is pretty incredible considering home sales were down almost 30% at the end of June. There was a record number of sales in the second half of the year. The median price paid for a home in California was $717,930, up 16.8% from the median price of $659,380 last December. Inventory levels were lower than one year ago. There was just a 1.3-month supply of homes for sale in December, down from a 2.5-month supply one year ago. The current supply of homes was almost unchanged from September and October, as a record number of new listings were taken in November but sold quickly. Below please find a graph of regional statistics for Southern California.

October 26, 2020

Economic Update for the week ending October 24, 2020

Stock markets moderately lower this week – Stocks markets closed slightly lower this week following three weeks of health gains. Third-quarter corporate profits began to be reported. They were stronger than expected. Investors watched for another round of stimulus to be agreed upon, but despite several deadlines, nothing was accomplished. The good news is that investors are convinced one will be passed, but it could be after the election when it will be safer for congresspeople to compromise without the fear of losing votes. The Dow Jones Industrial Average closed the week at 28,335.67, down 0.9% from 28,608.31 last week. It’s down 0.7% year-to-date. The S&P 500 closed the week at 3,465.39, down 0.5% from 3,483.81 last week. It’s up 7.3% year-to-date. The NASDAQ closed the week at 11,548.58, down 1.1% from 11,671.56 last week. It’s up 28.7% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 0.85%, up from 0.76% last week. The 30-year treasury bond yield ended the week at 1.64% up from 1.52% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – The October 22, 2020, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 2.80%, unchanged from 2.81% last week. The 15-year fixed was 2.33%, almost unchanged from 2.35% last week. The 5-year ARM was 2.87%, almost unchanged from 2.90% last week.

The California Association of Realtors reported that existing, single-family home sales totaled 489,590 on an annualized basis in September. That represented a month over month increase of 5.2.% from August and a staggering year over year increase of 21.2% from the number of homes sold in September 2019. Usually, because of seasonal adjustments, home sales begin to cool in September, but this September marked the highest monthly number of homes sold in over a decade. The median price paid for a home in California was $712,430, up 17.6% from the median price last September. Inventory levels were lower than one year ago. There was just a two month supply of homes for sale in September. On a regional level, the median price paid for a home was sharply higher than one year ago. The year-over-year increases were as follows: LA County’s median price was $747,380, up 12.7% from last September. Ventura County’s median price was $787,500, up 19.5% from last September. Orange County’s median price was $915,000, up 10.2% from last September.

The National Association of Realtors will be releasing data next week. The U.S. numbers will be included in next week’s report.

October 12, 2020

Economic update for the week ending October 10, 2020

Stock markets had their best week in three months – It was a strange week on Wall Street. Stocks opened the week higher as Treasury Secretary Mnuchin has begun to bridge the gap between democrats and republicans on another round of stimulus. Stocks dropped midweek after President Trump announced that there would not be a stimulus bill passed until after the election. The following day he announced that a deal was close, and the White House increased their stimulus package from $1.6 trillion to $1.8 trillion. The House had approved a package for $2.2 trillion. Investors feel that a deal is close and stocks rallied on the prospect of approximately $2 trillion added to the economy. The Dow Jones Industrial Average closed the week at 28,586.90, up 3.3% from 27,681.71 last week. It’s down 0.2% year-to-date. The S&P 500 closed the week at 3,477.13, up 3.8% from 3,384.44 last week. It’s up 7.6% year-to-date. The NASDAQ closed the week at 11,579.94, up 4.6% from 11,075.02 last week. It’s up 29.1% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 0.79%, up from 0.70% last week. The 30-year treasury bond yield ended the week at 1.58%, up from 1.48% last week.

Mortgage rates – The October 8, 2020, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 2.87%, unchanged from 2.88% last week. The 15-year fixed was 2.37%, unchanged from 2.36% last week. The 5-year ARM was 2.89%, unchanged from 2.90% last week.

September home sales figures should be released either at the end of next week or the beginning of the following week. Those results will appear in upcoming updates.