Last Week’s Economic News in Review December 23, 2020

Housing starts continued their upward trajectory, as did retail sales. Meanwhile, layoffs increased.

Housing Starts

Starts on the construction of private housing in November reached an annual rate of 1.547 million, which was 1.2 percent over October’s rate of 1.528 million, according to last week’s report from the Census Bureau and Department of Housing and Urban Development.

This marked the third straight month of increases for housing starts. Moreover, when compared to the same period a year ago, this was 12.8 percent higher than November 2019’s pace of 1.181 million.

Starts on single-family homes rose to an annual rate of 1.186 million in November, which was 0.4 percent over October’s pace of 1.181 million. Stars on buildings with five units or more grew to a rate of 352,000 in November, which was 8 percent higher than October’s rate of 326,000.

These gains have a while to go, despite the pandemic, according to Ian Shepherdson of Pantheon Macroeconomics.

“Construction activity has not yet fully caught up with the surge in housing activity, leaving room for modest further gains,” Shepherdson wrote in a public statement. “Home sales have peaked, at least for now, though we think a renewed increase is likely next spring.”


Retail Sales

Retail sales saw big gains, with transactions dropped to $546.5 billion in November, a decrease of 1.1 percent from October, the Census Bureau reported last week. While down for the month, when compared to the same period a year ago, November’s sales were 4.1 percent higher than November 2019.

Retail categories that saw significant drops included sales at department stores, which tumbled 7.7 percent; clothing and clothing accessories stores, which fell 6.8 percent; food service and drinking establishments, which declined 4 percent; and electronics and appliance stores, which dipped 3.5 percent.

November’s drop marked the second consecutive monthly decline in retails sales and fell during the holiday season, which put some economists on their guard, given that consumer spending drives 70 percent of the U.S. economy.

“Weak retail sales in the fall, along with a recent increase in unemployment insurance claims, are warning signs for the economy at the end of 2020,” PNC Financial Services Group Chief Economist Gus Faucher wrote in a research note.


Initial Jobless Claims

Speaking of those unemployment claims, initial jobless claims filed by recently unemployed Americans during the week ending December 12th grew to 885,000, a gain of 23,000 claims over the previous week’s 862,000 claims, the Employment and Training Administration reported last week. The increase was unexpected and the highest level in three months.

The four-week moving average, which is considered a more stable measure of jobless claims, rose to 812,500, which was 34,250 claims higher than the preceding week’s average of 778,250 claims.

“Businesses are closing, and as a result, we are seeing job losses mount – and that’s exactly what we were fearful of going into the winter,” High Frequency Economics Chief U.S. economist Rubeela Farooqi told the New York Times. “It’s going to be a challenging few months, no doubt.”

This week, we can expect:

Tuesday – Existing home sales for November from the National Association of Realtors; consumer confidence for December from The Conference Board.

Wednesday – Initial jobless claims for last week from the Employment and Training Administration; durable goods orders for November from the Census Bureau; personal incomes and spending for November from the Bureau of Economic Analysis; consumer sentiment for December from the University of Michigan Surveys of Consumers; new home sales for November from the Census Bureau and Department of Housing and Urban Development.

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Omar Khamisa
Mission San Jose Mortgage
2111 W. March Lane, Suite B100
Stockton, CA 95207
Office: 209-651-2000
Mobile: 510-648-5535
Fax: 209-434-2311
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