The Recovery Progresses: July 19 – 23

Business activity continued growing this summer. Here are the five things we learned from U.S. economic data released during the week ending July 23.


The economic recovery continued (but decelerated) in June. The Chicago Fed National Activity Index, a weighted average of 85 economic indicators, lost 17-basis points during the month to reading of +0.07. A zero CFNAI reading means the U.S. economy is growing at its historical rate, so a +0.07 reading means the U.S. enjoyed a slightly above average economic expansion in June. Forty-five of the 85 indicators positively contributed to the CFNAI. Among the four major groupings of indicators, three made positive contributions: employment (+0.09), sales/orders/inventories (+0.06), and production (+0.01). Personal consumption/housing indicators were a drag on the headline index. The CFNAI’s three-month moving average fell by 74-basis to a still positive +0.06.

Forward-looking economic measures say the expansion will endure for some time. The Conference Board’s Leading Economic Index (LEI) added 8/10ths of a point to a reading of 115.1 (2016=100). The LEI was 12.0 percent ahead of year-ago levels. Eight of ten LEI components made positive contributions to the measure, led by the continued improvements in initial jobless claims. The coincident index grew by 4/10ths of a point to 105.5 (+6.7 percent versus June 2020) with all four index components making positive contributions. The lagging index held steady in June at a reading of 105.8 (-3.0 percent versus a year earlier). The Conference Board “forecasts year-over-year real GDP growth of 6.6 percent for 2021 and a healthy 3.8 percent for 2022.”

Existing home sales grew for the first time since the start of year. The National Association of Realtors reports existing home sales edged up 1.4 percent in June to a seasonally adjusted annualized rate (SAAR) of 5.86 million units. The first sales increase since January left transactions a whopping 22.9 percent ahead of their year-ago pace, with double-digit year-to-year percentage gains in all four Census regions. What has been—continues to be—weighing on sales has been the lack of inventory. The 1.25 million homes available for sale at the end of June was up 3.3 percent for the month but was 18.8 percent below year-ago levels and represented a mere 2.6 month supply. The median sales price was up a stunning 23.4 percent from a year earlier to $363,300.

Housing starts rose in June. The Census Bureau estimates housing starts jumped 6.3 percent during the month to a seasonally adjusted annualized rate (SAAR) of 1.643 million units. Starts were 29.1 percent ahead of their year-ago pace. Single-family home starts were up 6.3 percent for the month while those of multi-family units increased 6.8 percent. Looking towards the future, building permitting dropped 5.1 percent to an annualized 1.683 million units. Despite June’s decline, permits remained 23.3 percent above their year-ago levels. Completions declined 1.4 percent during the month to an annualized 1.324 million units (+6.5 percent versus June 2020).

Homebuilder sentiment remained stout in July. The National Association of Home Builders’ Housing Market Index (HMI) lost a point during the month to a seasonally adjusted reading of 80. The HMI has remained a reading of 50—indicative of more homebuilding viewing the housing market as “good” versus as being “poor” —for 14 straight month. The HMI added a point in the Midwest (71) but slipped by two points in the Northeast (72), South (83), and West (84). The index measuring single-family home sales shed a point (to 86) while the prospective sales measure added two points (to 81). The traffic index dropped by six points (to 65, its lowest reading since August). The press release noted that “builders continue to grapple with elevated building material prices and supply shortages.”

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

  • Jobless Claims (Week ending July 17, 2021, First-Time Claims, seasonally adjusted): 419,000, +51,000 vs. the previous week, -979,000 vs. the same week a year earlier). 4-week moving average: 385,250 (-73.0% vs. the same week a year earlier).

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

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