October economic data signals modest growth, while inflation continued to concern consumers. Here are the five things we learned from U.S. economic data released during the week ending November 24.
Below-average economic expansion in October. The Chicago Fed National Activity Index (CFNAI) plummeted 47 basis points to -0.49. A CFNAI reading between zero and -0.70 indicates that the U.S. economy expanded slower than its historical average. A mere 24 of the CFNAI’s 85 components positively contributed to the index, with the other 61 being drags. All four major component categories also made negative contributions: production (with a contribution of negative 33 basis points), employment (-0.10), sales/orders/inventories (-0.04), and personal consumption/housing (-0.02). The CFNAI’s three-month moving average fell by 22 basis points to -0.22, its lowest reading since last December.
Forward-looking economic measures continued to wobble. The Conference Board’s Leading Economic Index (LEI) dropped 0.7 percent to a reading of 103.9 (2016=100). The LEI has declined 3.3 percent over the past six months. Only two of ten LEI measures—building permits and new orders for consumer goods—positively contributed to the index. The Coincident Economic Index (CEI) held steady at 110.8 during the month (+0.8 percent over the past six months). Three of four CEI components made positive contributions, with industrial production being the exception. The Lagging Economic Index (LAG) inched up 0.1 percent to 118.6 (+0.3 percent over the past six months). The Conference Board anticipates a “very short recession” with the U.S. economy expanding by “just 0.8 percent” next year.
Existing home sales fell to a 13-year low in October. The National Association of Realtors reports sales of previously-owned homes declined 4.1 percent to a seasonally adjusted annualized 3.79 million units. Sales were down 14.6 percent from a year earlier. Sales dropped during the month in three of four Census regions (sales were flat in the Midwest), with double-digit declines in all four regions compared to October 2022. Inventories grew a slight 1.8 percent to 1.15 million homes, the equivalent to a scant 3.6 month supply. The median sales price of $391,800 was up 3.4 percent from a year earlier. The press release links the sales slump “to the persistent lack of housing inventory and the highest mortgage rates in a generation.”
Consumers remained in a funk in November. The University of Michigan’s Index of Consumer Sentiment declined 2.5 points to a seasonally adjusted 61.3 (1966Q1=100). The measure has declined for four consecutive months but remained 8.1 percent above year-ago levels. The current conditions index lost 2.3 points to 68.3 (November 2022: 58.7), while the expectations index declined by 2.5 points to 56.8 (November 2022: 55.5). Consumers anticipate prices to rise well above the Federal Reserve’s two-percent target. Predicted one-year inflation was +4.5 percent (up from October’s +4.2 percent) and five-year inflation was +3.2 percent (its highest point since 2011).
Durable goods orders slowed in October. New orders for manufactured durable goods dropped 5.4 percent to a seasonally adjusted $279.4 billion. The Census Bureau also points out that durable goods orders over the first ten months of 2023—$2.849 trillion—were up 4.0 percent from a year earlier. Transportation goods orders plummeted 14.8, thanks to civilian aircraft’s 49.6 percent decrease. Net of transportation goods, core durable goods orders were off 0.2 percent in October with the 10-month total up a modest 0.7 percent over the comparable 2022 months. Shipments slowed 0.9 percent to $284.5 billion, with shipments thus far in 2023 up 3.6 percent over last year. Both unfilled orders ($1.357 trillion) and inventories ($525.1 billion) increased 0.3 percent during the month.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending November 18, 2023, First-Time Claims, seasonally adjusted): 209,000, -24,000 vs. the previous week, -10,000 vs. the same week a year earlier). 4-week moving average: 220,000 (+4.6% vs. the same week a year earlier).
- FOMC Minutes
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What We Learned About the U.S. Economy Last Week 