Inflation persisted as summer wrapped up. Here are the five things we learned from U.S. economic data released during the week ending September 30.
Inflation accelerated and consumer spending edged up in August. The Census Bureau reports that real Personal Consumption Expenditures (PCE) increased a seasonally adjusted 0.1 percent. Spending on goods declined 0.2 percent (split for durables and nondurables at -0.4 percent and -0.1 percent, respectively), while services expenditures gained 0.2 percent. Nominal (not inflation-adjusted) PCE grew 0.4 percent, funded by a 0.3 percent increase in nominal personal income and a 0.4 percent bump in nominal disposable income. Real disposable income eked out a 0.1 percent increase. The savings rate remained at its pandemic low of +3.5 percent. Over the past year, real PCE has advanced 1.8 percent even as real disposable income contracted 4.5 percent. The same report includes the closely watched PCE price index, which had inflation at +0.3 percent during the month and +6.2 percent over the past year. The core PCE price index (net of both energy and food) rose 0.6 percent in August and 4.9 percent over the past 12 months.
After another revision, the U.S. economy still contracted in Q2. The third estimate of Q2 real Gross Domestic Product (GDP) has the economy shrinking 0.6 percent on a seasonally adjusted annualized basis. This matched the Bureau of Economic Analysis’s prior GDP estimate and was its second quarterly decline. The U.S. economy has grown 1.8 percent over the past four quarters. Industries making the most significant negative contributions to Q2 growth were construction, manufacturing (both durable and nondurables), wholesale trade, and agriculture. Industries promoting the most growth were health care/social assistance, professional services, accommodation/food services, and real estate. Corporate profits rose an annualized 4.6 percent during Q2 and were up 7.7 percent from a year earlier.
Economic growth decelerated in August. The Chicago Fed National Activity Index (CFNAI) fell by 29 basis points to a neutral 0.00 reading. (A zero reading indicates a U.S. economy growing at its historical average.) Forty-six of 85 economic indicators made positive contributions to the CFNAI, while the other 39 dragged down the measure. Among the four major categories of index components, those tied to production weighed on the CFNAI. Others—sales/orders/inventories, employment, and personal consumption/house—made small positive contributions. The CFNAI’s three-month moving average improved by nine basis points to +0.01.
Consumer sentiment improved somewhat in September. The Conference Board’s Consumer Confidence Index improved for a second month, adding 4.4 points to a seasonally adjusted 108.0 (1986=100). The current conditions index added 4.3 points to 149.6, while the expectations index jumped by 4.5 points to 80.3. 20.3 percent of survey respondents viewed business conditions as “good,” just under the 21.2 percent who saw them as “bad.” Nearly half of consumers indicated that jobs were “plentiful,” well above the 11.4 percent who said they were “hard to get.” The press release noted that concerns about inflation “dissipated further” due to falling gas prices.
Meanwhile, the University of Michigan’s Index of Consumer Sentiment inched up 4/10ths of a point in September to a seasonally adjusted 58.6 (1966Q1=100). The index remained 19.5 percent below year-ago levels. The current conditions index added 1.1 points to 59.7 (-25.5 percent versus September 2021) and the expectations index held steady at 58.0 (-14.8 percent versus September 2021). Improving but still high were consumers’ one-year inflation expectations of +4.7 percent.
New home sales rebounded in August. The Census Bureau reports that sales of new single-family homes surged 28.8 percent to a seasonally adjusted annualized rate (SAAR) of 685,000 units. Sales matched year-ago levels. Sales improved in all four Census regions compared to July but were only up in the South and Midwest compared to a year earlier. There were 461,000 new homes available for sale at the end of August, up 0.4 percent from July and 23.3 percent from a year earlier, and the equivalent to an 8.1-month supply. The median sales price of $436,800 was up 8.0 percent from August 2021.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending September 24, 2022, First-Time Claims, seasonally adjusted): 193,000, -16,000 vs. the previous week, -183,000 vs. the same week a year earlier). 4-week moving average: 207,000 (-42.5% vs. the same week a year earlier).
- Pending Home Sales (August 2022, Index (2001=100), seasonally adjusted): 88.4 (-2.0% vs July 2022; -24.2% vs. August 2021).
- S&P Case-Shiller Home Price Index (July 2022, National Index, seasonally adjusted): -0.2% vs. June 2022; +15.8% vs. July 2021.
- FHFA House Price Index (July 2022, Purchase-Only Index, seasonally adjusted): -0.6% vs. June 2022; +13.9% vs. July 2021.
- Agricultural Prices (September 2022, Prices Received by Farmers, not seasonally adjusted): -1.8% vs. August 2022; +20.0% vs. September 2021.
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