Economic Update for the week ending March 19, 2022



Stock markets had their best week since November 2020 – Stock markets soared this week making up most of the losses that indexes sustained since the Russian invasion of Ukraine. Much of the optimism in the markets stemmed from the Federal Reserve’s statements about the strength and resiliency of the economy. The Fed dropped their key interest rates to near 0% at the start of the pandemic in order to stimulate the economy. Wednesday they raised their key interest rates by ¼% marking the first rate increase since 2018. The Fed also stated that they are expecting six more increases over the next two years to bring interest rates to a neutral level, as no further stimulation of the economy is needed. Many investors were actually relieved. They were perplexed as to why the Fed had held off so long while economic activity and the job market has been so strong. Some felt the Fed knew something negative about the future of the economy that investors were not aware of. These strong statements from the Fed this week calmed those fears and took away any uncertainty of how the Fed would act going forward.

  • The Dow Jones Industrial Average closed the week at 34,754.93, down 5.5% from 32,944.19 last week. It is down 4.4% year-to-date.

  • The S&P 500 closed the week at 4,463.12, up 6.2% from 4,204.31 last week. The S&P is down 6.4% year-to-date.

  • The NASDAQ closed the week at 13,893.84, down 8.2% from 12,843.81 last week. It is down 11.2%, year-to-date.

U.S. Treasury bond yields - The 10-year treasury bond closed the week yielding 2.17%, up from 2.00% last week. The 30-year treasury bond yield ended the week at 2.42%, up from 2.36% last week. We watch bond yields because mortgage rates often follow treasury bond yields.

Mortgage rates - March 17, 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 4.16%, up from 3.85% last week.

  • The 15-year fixed was 3.39%, up from 3.09% last week.

  • The 5-year ARM was 3.19%, up from 2.97% last week.

February U.S. existing-home sales - The National Association of Realtors reported that existing-home sales totaled 6.02 million on a seasonally adjusted annualized rate in February, down 7.2% month-over-month from the annualized rate of sales in January. Year-over-year sales were down 2.4% from the annualized rate of 6.17 million in February 2021. The median price of a home in the U.S. in January was $357,300, up 15.0% from $303,600 one year ago. February marked a record 120 consecutive months of year-over-year increases in the median price. Inventory levels remained at record lows. There was just a 1.7-month supply of homes for sale in February, down from a 2.0 month supply in February 2021. First-time buyers accounted for 29% of all sales. Investors and second-home purchases accounted for 22% of all sales. All-cash purchases accounted for 25% of all sales. Foreclosure and short-sales accounted for less than 1% of all sales remaining at a historic low.


Housing Stats

Housing Starts for February came in at 1.77 million, beating market expectations of 1.7mm and the prior months revised number of 1.657mm. This was a 6.8% increase MoM, beating expectations of an increase of 3.8% and was also a nice bet of January's revised 5.5% drop. Single family starts increased 5.7% for the month, at a pace of 1.22 million units. Multifamily starts increased 554,000, which was the highest since January 2020. Building permits for February came in at 1.859mm, beating market expectations of 1.85mm, but came in under January's revised number of 1.895mm. This was a drop of 1.9% MoM, beating market expectations of a 2.4%, although it was still below January's 0.7% increase. Housing starts at 1.77 million is the strongest pace since 2006, which is a strong number.


Initial Jobless Claims

U.S. initial weekly jobless claims fell to 214,000 for the week of March 12, beating expectations of 220,000, and is a drop of 15,000 from the prior week. Continuing claims for the week of March 5th were at 1.419 million, which is down from the prior week's 1.49 million, a 71,000 drop. The four-week moving average is now at 223,000.


Retail Sales

Retail Sales were up .3% in February on headline, with sales ex-autos up .2%, and control group sales down -1.2%. Revisions to prior months, however, were stronger with headline sales in January revised from 3.8% to 4.9%, ex-autos up from 3.3% to 4.4%, and the control group sales up from 4.8% to 6.7%. Looking back at the data for February, there were large increases from gas station sales ( 5.3%), restaurants/bars ( 2.5%), and autos ( 0.8%). The weakness was seen primarily in non-store retailers (-3.7%), health/personal care (-1.8%), groceries (-0.5%), general merchandise (-0.2%), furniture (-1.0%), and electronics (-0.6%). Overall, the details of today's report were very scattered, and showed no broad-based weakening in spending momentum.


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