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The Chicago Fed National Activity Index (CFNAI)
Chicago Fed National Activity Index at 3-Month High. The Chicago Fed National Activity Index in the US increased to 0.66 in January of 2021 from a downwardly revised 0.41 in December. The reading pointed to the strongest activity growth in 3 months, led by improvements in personal consumption-related indicators (+0.35 from -0.06). Meanwhile, production-related indicators contributed +0.28, down from +0.37 in December. The contribution of the sales, orders, and inventories category edged down to +0.02 from +0.05 and employment-related indicators contributed +0.01, down slightly from +0.05 in December. The index’s three-month moving average, CFNAI-MA3, decreased to +0.47 in January from +0.60 in December.
S&P Case-Shiller HPI
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 10.4% annual gain in December 2020, up from 9.5% in the previous month. The 10-City Composite annual increase came in at 9.8%, up from 8.9% in the previous month. The 20-City Composite posted a 10.1% year-over-year gain, up from 9.2% in the previous month. After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.3%, while the 10-City and 20-City Composites both posted increases of 1.2% and 1.3% respectively. In December, 18 cities (excluding Detroit) reported increases before seasonal adjustment, while all 19 cities reported increases after seasonal adjustment.
FHFA - Federal Housing Finance Agency House Price Index
The Federal Housing Finance Agency (FHFA) House Price Index increased 1.1% m/m in December 2020 following an unrevised 1.0% m/m gain in November. This was the seventh consecutive month in which house prices had risen by 1.0% or more. Prior to this seven-month run, this index had risen 1% or more in only five months in the series history dating back to January 1991. Compared to a year ago, house prices were up 11.4%, the highest annual rate of increase in the series history. Over the past seven months, house prices rose 16.6% annualized, also their highest seven-month advance ever.
New Home Sales
Sales of new homes began 2021 right where they left off in 2020, near their highest levels in more than a decade and widely exceeding already optimistic expectations. As an added bonus, already strong numbers from prior months were revised upward, further adding to the afterglow of what was an extraordinary 2020 — which saw the most new home sales since 2006. The factors that drove this rally – low mortgage rates, limited supply of available existing homes for sale and wave of young adults eager to enter the market – remain in place to begin 2021.
New Home Sales increase to 923,000 Annual Rate in January 2021. Sales of new single-family houses in January 2021 were at a seasonally adjusted annual rate of 923,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.3 percent above the revised December rate of 885,000 and is 19.3 percent above the January 2020 estimate of 774,000.
Leading Indicators
The Conference Board Leading Economic Index LEI) for the U.S. increased 0.5 percent in January 2021 to 110.3 (2016 = 100), following a 0.4 percent increase in December and a 0.9 percent increase in November. “While the pace of increase in the U.S. LEI has slowed since mid-2020, January’s gains were broad-based and suggest economic growth should improve gradually over the first half of 2021, As the vaccination campaign against COVID-19 accelerates, labor markets and overall growth are likely to continue improving through the rest of this year as well. The Conference Board now expects the U.S. economy to expand by 4.4 percent in 2021, after a 3.5 percent contraction in 2020.
Jobless Claims
Unemployment claims sink to 3-month low of 730,000.
New applications for U.S. unemployment benefits fell sharply in late February to a three-month low, but the still-high number of layoffs suggests the economy is rebounding slowly from last winter’s record coronavirus onslaught.Initial jobless claims filed traditionally through the states sank by 111,000 to 730,000 in the week ended Feb. 20, the government said Thursday.The steep decline was much bigger than expected, but the claims data has been very erratic and unreliable lately owing to processing snafus, bad weather and other problems. Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims would total a seasonally adjusted 845,000.
Durable Good Orders
U.S. durable-goods orders climb 3.4% in January 2021. U.S. manufacturers in January booked the biggest increase in orders in six months, pointing to an economy that is gaining steam again after a letdown at the end of 2020. Orders for durable goods — products meant to last at least three years — rose 3.4% in January, the government said Thursday. Economists surveyed by Dow Jones and the Wall Street Journal had forecast a 1% advance. Orders for manufacturers have now returned to precrisis levels, reflecting in large part a major shift among consumers toward the purchase of goods such as new cars, houses, appliances, electronics and so forth. Americans are spending a lot less on services.
Wholesale Inventories Advance
Advance Wholesale Inventories. Wholesale inventories for January 2021, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $661.6 billion, up 1.3 percent (±0.4 percent) from December 2020, and were up 0.5 percent (±0.7 percent) from January 2020. The November 2020 to December 2020 percentage change was revised from up 0.3 percent (±0.4 percent) to up 0.5 percent (±0.4 percent).
Real Gross Domestic Product - GDP
Fourth-quarter reading of U.S. economy's recovery rate nudged up to 4.1% to 4%. GDP Rose 4.1% in the Fourth Quarter, While Jobless Claims Dropped Sharply Last Week.THE NATION'S GROSS domestic product increased 4.1% in the fourth quarter, the Bureau of Economic Analysis reported Thursday.The fourth quarter GDP figure was revised upward from the previous estimate of 4%, because of upgrades to residential fixed investment, private inventory investment, and state and local government spending.The upward revision to GDP comes as there is promising news on the labor market.
Pending Home Sales
Contracts to buy U.S. previously owned homes fell in January 2021 amid a continued shortage of houses available for sale.The National Association of Realtors (NAR) said on Thursday its Pending Home Sales Index, based on contracts signed last month, dropped 2.8% last month to 122.8. Economists polled by Reuters had forecast pending home contracts, which become sales after a month or two, would be unchanged in January. Pending home sales have been out of alignment with existing home sales, which have been fairly solid. The NAR has blamed the misalignment on the different sample sizes for the data. Compared to a year ago, pending home sales increased 13.0% in January. Monthly contracts declined in the Midwest, Northeast and West. They inched up in the South.Demand for housing is being driven by Americans seeking more space for home offices and schooling as the year-long COVID-19 pandemic drags on. Momentum could, however, ebb in the near term after winter storms severely disrupted activity in Texas and large parts of the densely-populated South region this month.
Mortgage Applicattions
Weekly mortgage application volume drops 11% as rates spike and Texas power outages hurt demand.
Total mortgage application volume fell 11.4% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.The average contract interest rate for 30-year fixed-rate mortgages increased to 3.08% from 2.98% last week.
The severe winter weather caused a more than a 40% drop in purchase and refinance applications in Texas last week, the Mortgage Bankers Association said.
Mortgage rates have increased in six of the last eight weeks, with the benchmark 30-year fixed rate last week climbing above 3% to its highest level since September 2020,” said Joel Kan, an MBA economist. “As a result of these higher rates, overall refinance activity fell to its lowest level since December 2020.
Mortgage rates have increased in six of the last eight weeks, with the benchmark 30-year fixed rate last week climbing above 3% to its highest level since September 2020,” said Joel Kan, an MBA economist. “As a result of these higher rates, overall refinance activity fell to its lowest level since December 2020.
Consumer Sentiment UM
The US University of Michigan Consumer Sentiment Index fell 2.2 points (2.8%) from its January 2021 level to 76.8 in the final February 2021 reading. This was 0.6 point higher than the mid-February 2021 reading, indicating that consumers were modestly more optimistic in the latter half of the month. The February decline was led by lower expectations regarding the next year.
Consumer Confidence
The Conference Board Consumer Confidence Index improved again in February 2021, after increasing in January. The Index now stands at 91.3 (1985=100), up from 88.9 in January. The Present Situation Index—based on consumers' assessment of current business and labor market conditions—climbed from 85.5 to 92.0. However, the Expectations Index—based on consumers' short-term outlook for income, business, and labor market conditions—fell marginally, from 91.2 last month to 90.8 in February. After three months of consecutive declines in the Present Situation Index, consumers' assessment of current conditions improved in February
U.S. Trade in Goods
The U.S. merchandise-trade deficit widened in January as imports climbed to ... February 26, 2021. US Goods-Trade Deficit Widens as Imports Surge to a Record. U.S. Goods-Trade Deficit Widens as Imports Surge to a Record. Total trade rose to $354 billion, highest since October 2018. The U.S. merchandise-trade deficit widened in January 2021 as imports climbed to a record high, signaling a continuing recovery in demand from American consumers. The deficit grew to $83.7 billion from $83.2 billion in December, according to Commerce Department data released Friday. Economists in a Bloomberg survey had called for an $83 billion shortfall in January. Imports rose 1.1% to $218.9 billion, while exports increased 1.4% to $135.2 billion, the highest since February 2020.
Fixed Mortgage Rates
Stock investors are trying desperately to interpret what a rise in bond yields means for the stock market.
Since February 10th, 10-year Treasury yields — which are not inflation adjusted — have moved from 1.13% to as high as 1.61%, a rise of 48 basis points, the highest level in a year. (One basis point equals 0.01%)Fear of inflation is causing investors to speculate the Federal Reserve may have to shift policy sooner than expected, by either reducing bond purchases or even raising rates at some point. That would be a negative for stocks. The Dow was down 559 points on Thursday.
Personal Income
Personal income leaps 10% in January thanks to stimulus, but inflation still in check. Personal income rose 10% in January, versus the 9.5% Dow Jones estimate. The increase was largely attributable to government stimulus checks and enhanced unemployment benefits. A fresh round of government stimulus checks sent personal income up to its biggest monthly gain since April 2020 though inflation remained tame, the Commerce Department reported Friday. Personal income jumped 10% after a 0.6% increase in December. That was even higher than the 9.5% Dow Jones estimate. The gain came from the issuance of $600 stimulus payments that Congress approved for millions of Americans, along with enhanced unemployment benefits. Consumers took those checks and spent them quickly, sending retail sales surging and pushing overall expenditures up 2.4% for the month, a touch below the estimate of 2.5%. The slightly softer-than-expected spending data came amid a burst in the personal savings rate to 20.5%, or $3.93 trillion. That was the highest level since May 2020.
Consumer Spending or Real PCE
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Core PCE Price Index January 2021 - Inflation
Core PCE inflation was up 1.5% in January 2021 year over year, in line with estimates and still well below the Fed’s 2% target. The personal consumption expenditures price index, which is the Federal Reserve’s preferred inflation gauge, rose 0.3% for the month, slightly ahead of the 0.2% expectation but was up just 1.5% year over year, matching Dow Jones estimates. That number was the same both for the headline rate and the core, which excludes volatile food and energy prices.In September, the Fed even adopted an official policy in which it would allow inflation to run hotter than 2% for a period before raising rates |
