Lasting or Fleeting? June 22 – 26

More data shows business activity partially bounced back in May. Here are the five things we learned from U.S. economic data released during the week ending June 26.


Economic activity picked up a bit during late spring. May’s reading of the Chicago Fed National Activity Index (CFNAI) of +2.61 followed two historically low readings in March and April of -4.67 and -17.89, respectively. The CFNAI is a weighted index of 85 economic indicators where a reading of 0.00 indicates the U.S. economy is expanding at its historical rate. Fifty-seven of the indicators made positive contributions to the index in May, with the remaining 28 doing the opposite. All four major categories of components also moved into positive territory in May: employment (with a +1.53 contribution), production (+0.89), personal consumption/housing (+0.17), and sales/orders/inventories (+0.02). The CFNAI’s three-month moving average improved a bit, adding 85-basis points to -6.65. A moving average under -0.70 typically indicates a recession—the moving average has been below that mark since March.

Personal spending surged in May. The Census Bureau estimates real personal consumption expenditures (PCE) swelled by 8.1 percent during the month following declines in March and April of 6.4 percent and 12.2 percent, respectively. Spending blossomed 28.4 percent for durable goods, 7.9 percent for nondurables, and 5.2 percent on services. Falling in May were the personal income measures (reflecting April’s CARES relief checks). Nominal (non-inflation adjusted) personal income dropped 4.2 percent while nominal disposal income declined 4.9 percent (real disposable income sank 5.0 percent). The savings rate remained inflated at +23.2 percent (although this reflects a drop from April’s +32.2 percent reading). Relative to a year earlier, personal spending was off 9.8 percent while disposable income was up 8.2 percent.

Existing home sales slowed while new home sales gained in May. Sales of previously owned homes falling 9.7 percent during the month to a seasonally adjusted annualized rate (SAAR) of 3.910 million units. The National Association of Realtors’ measure has plummeted over the past three months and was 26.6 percent below its year-ago mark. Sales fell by double-digit percentages during the month in three of four Census regions, with sales off by “only” 8.0 percent in the South. Home inventories expanded 6.2 percent to 1.550 million units, the most since last November and the equivalent to a 4.8 month supply. The median sales price of $284,600 was up 2.3 percent from a year earlier. NAR notes that their data series tracks closed transactions in May and “reflect[s] contract signings in March and April – during the strictest times of the pandemic lockdown and hence the cyclical low point.”

New home sales rose 16.6 percent in May to a seasonally adjusted annualized rate (SAAR) 676,000. The Census Bureau measure, which tracks contract signings but not necessarily closings, was 12.7 percent ahead of its year-ago pace. Sales surged by double-digit percentages in three of four Census regions, with the outlier being the 6.4 percent decline in the Midwest. All four Census regions enjoyed positive 12-month comparables. There were 318,000 new homes on the market at the end of May, down 2.2 percent for the month, off 5.4 percent from May 2019, and the equivalent to a 5.6 month supply.

Durable goods orders rebounded in May. The Census Bureau reports new orders for manufactured goods surged 15.8 percent during the month to a seasonally adjusted $194.4 billion. This followed two double-digit percentage monthly declines and left year-to-date orders 13.6 percent below that of the comparable five months in 2019. Transportation orders jumped 80.7 percent, boosted by automobiles and aircraft. Net of transportation goods, core durable goods orders gained 4.0 percent, with increases for every major segment. Civilian capital goods orders net of aircraft—a proxy for business investment—rose 2.3 percent after declines in March and April of -1.3 percent and -6.5 percent, respectively.

Consumer sentiment improved a bit in June (at least during the first half of the month). The University of Michigan’s Index of Consumer Sentiment ended the month at a reading of 78.1, up 5.8 points from May. The index, however, pulled back by 8/10ths of a point from the preliminary June reading reported a few weeks ago, leaving the measure 20.1 points below its year-ago level. The current conditions index added 4.8 points to a reading of 87.1 (June 2019: 111.9), while the expectations index rose by 6.4 points to a reading of 72.3 (June 2019: 89.3). The press release noted that the index jumped in the Northeast (where new COVID infections have slowed) but grew far more slowly in the South (where the virus has been spreading at a faster rate).

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending June 20, First-Time Claims, seasonally adjusted): 1,480,000 (-60,000 vs. the previous week, +1,256,000 vs. the same week a year earlier). 4-week moving average: 1,620,750 (+634.2% vs. the same week a year earlier).
  • Gross Domestic Product (Q1 2020-2nd estimate, Seasonally Adjusted Annual Change From Previous Quarter): -5.0% vs. Q4 2019 (1st estimate: -5.0% vs. Q4 2019).
  • FHFA House Price Index (April 2020, Purchase-Only, seasonally adjusted): +0.2% vs. March 2020, +5.5% vs. April 2019.

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

Comments are closed.

Blog at

Up ↑

%d bloggers like this: