Wilting in the Heat: July 18 – 22

Economic activity staggered a bit more this summer. Here are the five things we learned from U.S. economic data released during the week ending July 22. 


Forward-looking data signal rising recession risks. The Conference Board’s Leading Economic Index (LEI) declined for the fourth straight month in June, shedding 0.8 percent for the month and 1.8 percent over the past six months to a reading of 117.1 (2016=100). Only four of the 10 LEI components made positive contributions, led by the interest rate spread, leading credit index, and orders for civilian nonaircraft capital goods. The coincident index inched up 0.2 percent in June and has risen 1.2 percent since the start of the year to 108.6, boosted by nonfarm payrolls, personal income, and manufacturing & trade sales. The lagging index jumped 0.8 percent in June to 113.9. The Conference Board now sees a recession as “now likely” by the end of this year or early next year.

Sales of previously owned homes fell to a two-year low in June. The National Association of Realtors indicates existing home sales declined 5.4 percent to a seasonally adjusted annualized rate (SAAR) of 5.120 million units. Sales were down 14.2 percent from a year ago as they fell to their lowest point since June 2020. Sales fell during the month in three of four Census regions, with sales holding steady in the Northeast. There were 1.260 million homes on the market at the end of June, up 9.6 percent from May and 2.4 percent from a year earlier. Inventories were the equivalent to a still tight 3.0 month supply. The median sales price of $416,000 was up 13.4 percent from a year earlier. The press release warns that “[f]alling housing affordability continues to take a toll on potential home buyers.”

Housing starts slowed in June. Housing starts declined 2.0 percent to a seasonally adjusted annualized rate (SAAR) of 1.591 billion, a nine-month low. The Census Bureau data series was 6.3 percent below year-ago levels. Single-family home starts slumped 8.1 percent to an annualized 983,000 and multi-family units rose 15.0 percent to 568,000. Looking towards the future, the annualized count of issued building permits declined 0.6 percent to 1.695 million units (+1.4 percent versus June 2021). Issued permits fell for single-family homes (-8.0 percent) but surged 13.1 percent for multi-family units. Completions slowed 4.6 percent in June to an annualized 1.365 million (+4.6 percent vs. June 2021). 

Homebuilders’ sentiment turned dark in July. The Housing Market Index plummeted by 12 points to a seasonally adjusted reading of 55. Not since the early days of the pandemic—May 2020, to be specific—has the National Association of Homebuilders had such a low reading. Nevertheless, the HMI remained above a reading of 50, meaning more homebuilders saw the housing market as “good” than “poor.” The HMI fell in all four Census regions, with the measure falling under 50 in both the Midwest and West. The present sales index shed 12 points (to 64) while losing 11 points were indices for expected sales (to 50) and traffic of prospective buyers (to 37). The press release blames the shrinking builder confidence on affordability, which it says “is the greatest challenge facing the housing market.”

Jobless claims rose to a 2022 high in mid-July. The Department of Labor reports that there were a seasonally adjusted 251,000 first-time claims made for unemployment insurance benefits during the week ending July 16. Claims grew by 7,000 from the prior week but remained 173,000 below year-ago levels (and low by historical standards). The 4-week moving average edged up 4,500 to 240,500 (40.7 percent below year-ago levels). Continuing jobless claims jumped by 51,000 during the week ending July 9 to 1.384 million. The four-week moving average of 1,353,250 was 57.4 percent below that of a year earlier. 

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

  • State Employment (June 2022, Nonfarm Payrolls, seasonally adjusted): Vs. May 2022: Payrolls grew in 13 states, decreased in 2 states, and held steady in 35 states and the District of Columbia. Vs. June 2021: Increased in 47 states and the District of Columbia and held steady in 3 states.
  • Treasury International Capital (May 2022, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$132.5 billion (vs. April 2022: +$51.0 billion; vs. May 2021: -$40.6 billion). 

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

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