Americans Are More Optimistic About the Economy

About 28% of Americans view the current economic conditions as good or excellent, according to a new survey by Pew Research.

Economic optimism dropped off when the pandemic hit, falling from 57% of Americans feeling positive in January 2020 to 23% in April. Optimism hasn't recovered to pre-pandemic levels, however it is up. The share of Americans feeling good about the economy today represents a 9% improvement from April 2023.

Survey respondents re🀅ported being most concerned about food and consumer goods prices (72%), followed closely by the cost of housing (64%), and then gas and energy prices (51%). 

The survey of 5,140 adults was c🧸onducted between Jan. 16 and Jan. 21.

-Avery Koop

Look at Interest Costs, Not Overall Debt, Says Treasury Secretary

The National Debt reached a record $34 trillion at the end of the year, but Treasury Secretary Janet Yellen thinks we're focusing on the wrong number.

When asked about whether the 澳洲幸运5开奖号码历史查询:lev♌el of debt and annual de♐ficits is sustainableat the Economic Club of Chicago Thursday, Yellen said the focus should be on the interest costs associated with servicing that debt.

"I do think sometimes if you say a number—the absolute level of our public debt is 34 trillion,—that is a scary number," Yellen said. "But we also have a huge economy."

As of December, servicing the national debt accounted for 18% of federal spending for fiscal year 2024. 𓃲That number has rise🗹n over the past year as the Federal Reserve  to combat inflation.

If interest rates stay much higher for longer the coun🐷try may have to take step𝔉s to make sure that deficits come down, she said.

Janet Yellen Says 'Life Is Still Harder Than it Should Be for the Middle Class"

Treasury Secretary Janet Yellen doubled down on President Joe Biden's economic plan Thursday, framing the day's GDP print in the context of what it means for the middle class.

"President Biden and I believe that GDP growth is not meaningful if it is not shared; if it doesn’t impact the lives of these Americans," Yellen said in an address at the Economic Club of Chicago.

Freddie Mac Mortgage Rates Ticked Up Slightly This Week

The average 30-year, fiꦑxed-rate mortgage ticked up to 6.69% this week, up from 6.60% last week. This time last year, the aver♕age was 6.13%.

Mortgage rates have oscillated under 7% since mid-December after falling from peak rates in late October. The recent drop in mortgage rates has brought some buyers back to the market. But the possibility of a Federal Reserve rate cut—which would push mortgage rates lower—could be looming over potential buyers, o🅰ne economist said.

"While softness in mortgage rates may encourage some buyers to re-enter the market, a notable portion of existing homeowners may opt to postpone their buying and selling plans, and wait for the potential for even lower rates before making decisions about their next residences," wrote Realtor.com Economist Jiayi Xu ahead of the data release.

New Home Sales Jump in December

Since housing pri𝓰ces are coming down, and new home sales are going up.

December sales of newly built h🌟omes came in at a higher-than-expected annual rate of 664,000.

That's an 8% jump from November and 4.4% over December 2022 levels, according to data from the Census Bureau and the Department of Housing and Urban Development.꧋ Economists were anticipating 649,000 new home sales.  

-Terry Lane

New Home Prices Fell For Fourth Consecutive Month

The median new home price was $413,200 in December, its lowest level in two years.

"The December decline in prices reflected builder incentives and a shift in the composition of sales toward less expensive homes," wrote Nancy Vanden Houten, Lead U.S. Economist for Oxford Economics. "The sizes of new homes have been trending lower as builders look to attract buyers with more moderate incomes."

Home builders have been working to meet the demand in a housing market in gridlock over high mortgage rates. People in existing homes are reluctant to leave behind their ๊low interest rates, keeping many existing hous🌊es off the market and putting pressure on builders to construct new homes.

The Federal Reserve's European Counterpart Holds Rates Steady

The European Central Bank (ECB) held rates steady Thursday, as the president of the organization once again alluded to✅ summer rate cuts.

The ECB held the eurozone deposit rate at 4% as the central bank cited wage growth stabilization. This action comes on the heels of the Canadian Central Bank's decision to hold its benchmark rate at 5% yesterday.

Even though inflation has run hot in the U.S., it has actually been a 澳洲幸运5开奖号码历史查询:bright spot in the global economy. Inflation has varied widely across the globe, and in turn, approaches by central banks have been 澳洲幸运5开奖号码历史查询:similar but not quite uniform.

Trade Deficit Narrows as Business Inventories Grow Larger

The 澳洲幸运5开奖号码历史查询:international trade deficit narrowed in December, while business inventories grew larger, according to the Census Bureau’s monthly release of advanced economic indicators.

• Advance international trade in goods showed a deficit of $88.5 billion, down 1.0%, or $0.8 billion, from November’s reading. Exports increased 2.5% over the month while imports were up 1.3%, with trade in automotive vehicles falling in both categories.
• Advance wholesale inventories rose 0.4% to hit $897.7 billion, though wholesalers are still sitting on less inventory than last year, down 2.7% from December 2022. 
• Advance retail inventories increased by 0.8% to reach $803.3 billion in December. Retail inventories were up 5.3% over December 2022 levels. Investors follow inventory levels to gauge whether manufacturing and production will be sustained, potentially impacting employment levels.

-Terry Lane

High Inflation Is Well and Truly Over, According To One Indicator

The Federal Reserve has won its war on inflation, at least according to one important indicator.

“Core” in🍒flation, which excludes prices for food and energy, ran at 2% in the fourth quarter, as measured by personal consumption expenditures (PCE). The measure of consumer prices is published by the Bureau of Economic Analysis along with quarterly data on🥂 the gross domestic product (GDP).

It was the second quarter in a row that core inflation has stayed at the Fed’s target rate.

While core inflation leaves out some of the most important prices in household budgets, economists view it as a better indicator of the trajectory of inflation since it’s not influenced by food a🐽nd gas prices, which can swing up and down wildly.

Including those prices, inflation was even tamer, running at 1.7% in the fourth qu𝐆arter, down from 2.6% in the third.

Despite being pessimistic that the Federal Reserve will lower rates in the first quarter o⭕f the year (see below), economists were optimistic about the PCE reading.

“We have confirmation of ‘job done’ on inflati𝓰on,” said James Knꦓightley, chief international economist at ING, in a commentary.

Strong GDP Reading Likely Discourages Federal Reserve to Cut Interest Rates

Investors are optimistic that the Federal Reserve will cut rates soon, but today's GDP reading likely put that action off a little longer, according to a few economists.

"The momentum in growth gives the Fed latitude to hold rates higher for longer," wrote economists at Morgan Stanley Thursday morning.

Market participants are almost evenly split on whether the Fed will cut rates at its March meeting. There is a 47% chance the group will cut rates based on prices for fed funds futures, according to CME Group's FedWatch tool.

"Market expectations for the Federal Reserve to cut interest rates as early as March are premature," wrote Ryan Sweet, chief U.S. economist at Oxford Economics. "Though GDP is backward-looking, the strength of real final sales to domestic purchasers—the engine of the economy—highlights the resiliency of the economy."

It's Getting More Expensive to Ship Things as Tumult Continues Near the Red Sea

An index measuring how much it costs to ship a 40-foot container jumped 5% this week as 澳洲幸运5开奖号码历史查询:fighting near the Red Sea continues.

Drewry’s World Container Index is up 94% compared with the same week in 2023 and is the highest since October 2022. The $3,964 freight rate is also alm🌳ost triple the pre-pandemic average.

The index is compiled by supply chain advisors at Drewry and is based on s♏pot container freight rates for eight major trade routes.

Although we've just started the year, the complications near the Red Sea have pushed the year-to-date average $690 higher than the 10-year average that encapsulates the elevated shipping costs during the supply chain issues of the pandemic.

Energy markets have 澳洲幸运5开奖号码历史查询:felt the impact of these supಞply chain snarls and economists expect the disruption to impact Europe and Asia morౠe than the U.S.

Durable Goods Orders Flat on Lower Transportation Shipments

澳洲幸运5开奖号码历史查询:Durable goods orders were flat in December, undershooting more positive expectations from analystsꦬ as transportation orders were lower than the month prior. 

After reaching an all-time high in June with $301.3 billion in new orders, the reading has sea-sawed. This month’s flat result followed a 5.5% increase in November and a 5.1% decline in October.

Transportation equipment shipment and orders were slightly lower in December than in November, likely contributing to the flat reading. 澳洲幸运5开奖号码历史查询:Commercial planes have significant weigh🦩t in the survey that tallies new orders reported by domestic manufacturers for long-lasting items. 澳洲幸运5开奖号码历史查询:Durable goods can include anything from computer equipment to furnituꦛre to farm tractors.  

-Terry Lane

GDP Increase "Meaningfully Stronger" Than Economists Expected

Mark Zandi, chief economist at Moody's Analytics, said the fourth quarter GDP increase was "meaningfully stronger" than he expected.

And he's not alone. A survey of economists by Dow Jones Newswires and the Wall Street Journal showed expected GDP to grow at a 2% annualized rate in the fourth quarter. Meanwhile, some individual fore🎐casts were as low as 1.5% ꦍlike in the case of BMO Economics.

Moody's, for their part, had forecast 2.2% growth.

"Not only did consumers spend and businesses invest more, as anticipated, but unexpectedly trade and inventories added to growth," Zandi wrote on social media platform X. "But despite the robust growth, inflation was tame. The core consumer expenditure deflator was 2% on the nose in the 2nd half of the year. The Fed’s target. Strong growth and low inflation. Feels very good."

Durable Goods Stagnant in December

Durable goods orders were 𝄹flat for December, with manufactur๊ers reporting $295.6 billion in orders, just $0.1 billion more than in November. Economists expected durable goods orders to rise by 1.5%.

Initial Jobless Claims Jump 25,000

Initial jobless claims, a volatile 澳洲幸运5开奖号码历史查询:weekly measure of the labor market, showed 214,000 people filed to receive unemployment insurance benefits in the week ending January 20. That's 25,000 more than the prior week's revised l🐼evel of 189,000.

The four-week moving average, the preferred measure of economists because it is seen as less volatile, was 202,250, 1,500 less than the previous week's revised average.

GDP Growth Slows to 3.3% in the Fourth Quarter

The inflation-adjusted Gross Domestic Product, a measure of U.S. economic growth, slowed to an annual rate of 3.3% in the fourth quarter, down from a 4.9% rate in the third, the Bureau of Economic Analysis said Thursday.

The reading was far more than the 2% forecasters had expected, according to a survey of economists by Dow Jones Newswires and the Wall Street Journal.