Last Week’s Economic News in Review September 2, 2020

Last Week’s Economic News in Review

September 2, 2020

New home sales enjoyed a solid rebound, while layoffs declined but remained at historically high levels. Meanwhile, consumers’ outlook worsened.

New Home Sales

Sales of new single-family homes shot up to an annual rate of 901,000 in July, which was 13.9 percent higher than June’s pace of 791,000, according to last week’s joint report from the Census Bureau and Department of Housing and Urban Development.

This was much stronger than the rate of 790,000 that economists had forecasted, and was the highest level for new home sales since 2006. Compared to the same period a year ago, July’s new home sales were 36.3 percent higher than July 2019’s pace of 661,000.

Looking at price, the median price for new homes sold in July fell to $330,600, which was 1.89 percent down from June’s median prices of 337,000.

In terms of inventory, the number of new homes for sale at the end of July came to 299,000, which represented a four-month supply at July’s sales rate.

Initial Jobless Claims

First-time claims for unemployment benefits filed by recently unemployed Americans during the week ending Aug. 22 declined to 1,006,000, a drop of 98,000 claims from the preceding week’s total of 1,104,000, the Employment and Training Administration reported last week.

The four-week moving average – regarded as a more reliable measure of jobless claims – fell to 1,068,000 claims, which was 107,250 claims below the previous week’s average of 1,175,250.

While jobless claims were down, these levels of weekly layoffs remain unprecedented.

“It’s devastating how stubbornly high initial claims are,” Julia Pollak, a labor economist with ZipRecruiter, told the New York Times. “There are still huge numbers of layoffs taking place.”

Consumer Confidence

The COVID-19 economy is starting to wear on consumers. The Consumer Confidence Index dropped from 91.7 in July to 84.8 in August (a baseline of 100 was set in 1985), according to last week’s report from The Conference Board. This marked the second monthly decline in a row.

The Present Situation Index, which measures consumers’ outlook on current income, business and job market conditions, fell from 95.9 in July to 84.2 in August. The Expectations Index, which gauges consumers’ short-term outlook for the economy and their place in it, fell from 88.9 in July to 85.2 for August.

The percentage of consumers stating that business conditions were “good” declined from 17.5 percent in July to 16.4 percent in August, while those reporting they felt business conditions were “bad” grew from 38.9 percent in July to 43.6 percent in August.

“Consumers’ optimism about the short-term outlook, and their financial prospects, also declined and continues on a downward path,” noted Lynn Franco, senior director of Economic Indicators for The Conference Board, in comments accompanying the release. “Consumer spending has rebounded in recent months but increasing concerns amongst consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead.”

This week, we can expect:

  • Tuesday – Construction spending for July from the Census Bureau and Department of Housing and Urban Development; new car and truck sales for August from the auto manufacturers..
  • Wednesday – Factory orders for July from the Census Bureau.
  • Thursday – Initial jobless claims for last week from the Employment and Training Administration reported last week; balance of trade for July from the Census Bureau.
  • Friday – Payrolls, unemployment rate, and average hourly earnings for August from the Bureau of Labor Statistics.


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Omar Khamisa
Mission San Jose Mortgage
2111 W. March Lane, Suite B100
Stockton, CA 95207
Office: 209-651-2000
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