Economic Update for the week ending April 2, 2022

The U.S. economy added 431,000 new jobs in March - The Department of Labor and Statistics reported that 431,000 new jobs were added in March. Economists surveyed had expected 490,000 new jobs. The unemployment rate fell to 3.6% in March, down from 3.8% in February. The labor-force participation rate (the share of workers with a job or actively looking for a job) rose to 62.4% in March, up from 62.3% in February. It is still below the 63.6% level before the pandemic but has moved up steadily as more people are returning to the workforce. Average hourly wages, an indicator of inflation increased 5.6% from March 2021.

Stock markets closed higher on Friday to erase losses earlier in the week - Stock markets began the second quarter higher after the worst-performing quarter in two years. The week ended on a positive note with unemployment dropping to historic lows, oil falling below $100 a barrel, treasury bond yields lower, and early indications of strong corporate profits,

  • The Dow Jones Industrial Average closed the week at 34,818.25, down 0.13% from 34,861.24, last week. It is down 4.1% year-to-date.

  • The S&P 500 closed the week at 4,545.86, almost unchanged from 4,543.06 last week. The S&P is down 4.7% year-to-date.

  • The NASDAQ closed the week at 14,261.50, up 0.65% from 14,169.30 last week. It is down 8.8, year-to-date.

U.S. Treasury bond yields - The 10-year treasury bond closed the week yielding 2.38%, down from 2.48% last week. The 30-year treasury bond yield ended the week at 2.44%, down from 2.60% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates – Home mortgage rates continued to increase this week. On March 31, 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 4.67%, up from 4.42% last week.

  • The 15-year fixed was 3.83% up from 3.63% last week.

  • The 5-year ARM was 3.50%, up from 3.36% last week.

Initial Jobless Claims

Initial Jobless Claims rose 14k to 202k for the week ending March 26th vs. the prior revised number of 188k ( 187k orig.). The four-week moving average is at 208.5k vs. the prior read at 212k. Continuing claims, which lag a week, fell -35k to 1.307mln for the week ended March 19th. This is also now a new low print since 1969.

Personal Income

Personal Income rose .5% in February, with personal consumption up only .2%. Within the income numbers, wages and salaries posted a solid contribution of .8%. The personal savings rate remained lower at 6.3%, however, that is a .2% improvement vs. January. Both months' reads are the lowest since December 2013. On the consumption side, the .2% increase included a strong .9% rise in services spending, which is also the biggest gain since July 2021. Nondurables spending fell -.1%, while durables spending fell -2.5%. February's PCE inflation report showed headline consumer prices up .6% MoM, and core prices up .4%, both in-line with expectations. Headline PCE rose from 6.0% YoY to 6.4%, with the core increasing from 5.2% to 5.4%. An initial look into the details shows a little easing in some goods categories offset by a large gain in nondurable goods costs, particularly food and energy items. Services inflation was slightly softer in February.

S&P CoreLogic Case-Shiller HPI

According to the S&P CoreLogic Case-Shiller Index, home prices nationally rose 19.2% YoY in January, up from a prior 18.9% in December. The 10-city composite annual increase was 17.5%, up from 17.1% in the prior month, while the 20-city composite rose 19.1%, up from a prior 18.6% in December. Phoenix, Tampa, and Miami saw the biggest annual gains at 32.6%, 30.8%, and 28.1%, respectively. Washington, D.C., Minneapolis, and Chicago saw the smallest annual gains; however, they are still up double digits from a year ago.

FHFA House Price Index

The latest FHFA House Price Index showed that housing prices rose nationwide in January by 1.6% from the previous month and were up by 18.2% from January 2021 to January 2022. For the nine census divisions, seasonally adjusted monthly changes ranged from .1% in the New England division to 2.2% in the South Atlantic division. The 12-month changes ranged from 13.3% in the Middle Atlantic division to 23.1% in the Mountain division.

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