Last Week’s Economic News in Review (January 5th, 2022)

January 5th, 2022

Home prices saw considerable gains, the deficit in goods hit a record high, and layoffs dropped.

Home Prices

Home prices jumped 19.1 percent in October, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index that was released last week.

October’s gain was the fourth-highest reading in the 34 years covered by the data. The other three-highest readers were the months immediately preceding October, according to Craig J. Lazzara, the managing director at S&P DJI.

While October’s increase was substantial, it was down from the 19.7 percent increase that occurred in September. This indicates that the pace of home price growth is slowing.

“The National Composite Index rose 19.1 percent from year-ago levels, and the 10- and 20-city composites gained 17.1 percent and 18.4 percent, respectively,” Lazzara said. “In all three cases, October’s gains were below September’s, and September’s gains were below August’s.”

Goods Deficit

The trade-in-goods deficit increased to $97.8 billion in November, which was up $14.6 billion, or 17.5 percent, from October’s revised $83.2 billion deficit, according to last week’s report from the Census Bureau. This marked a new record, breaking the previous high of $97 billion set in September.

Exports of goods dipped to $154.7 billion in November, which was 2.02 percent down from October’s exports of $157.9 billion. Imports of goods grew to $252.4 billion during the month, which was 4.68 percent above October’s imports of $241.1 billion.

Essentially what is happening is that as the American economy has reopened and rebounded, Americans have been buying more imports, while the rest of the world is lagging in buying our exports. As the world recovers, that ballooning deficit should shrink, but it will take other economies to get there first, and the Delta and Omicron variants aren’t making that easy.

“Looking ahead, we expect the trade deficit to remain historically elevated until pandemic worries ease,” Oxford Economics’ lead U.S. economist Nancy Vanden Houten told MarketWatch.

Initial Jobless Claims

In employment news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending December 25th dropped to 198,000, which was 8,000 claims down from the preceding week’s revised total of 206,000, the Employment and Training Administration reported last week.

The four-week moving average – regarded as a more stable barometer of jobless claims – declined to 199,250 claims, which was 7,250 claims below the previous week’s revised average of 206,500. This marked the lowest level for this average since Oct. 25, 1969, when it was 199,250.

Economists consider any level of first-time claims below 300,000 to indicate a growing job market.

This week, we can expect:

Monday – Construction spending for November from the Census Bureau and Department of Housing and Urban Development.

Thursday – Initial jobless claims for last week from the Employment and Training Administration; factory orders for November from the Census Bureau.

Friday – Payrolls, unemployment and average hourly earnings for December from the Bureau of Labor Statistics; consumer credit for November from the Federal Reserve.

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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
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