“Macroeconomic Snapshot: Jobless Claims Drop, Retail Sales Disappoint, and Housing Market Slows”

The latest economic indicators paint a mixed picture of the US economy, with some positive signs but also areas of concern. Let’s dive into the key data points to understand the current state of the macroeconomy and end-use markets.

First, let’s look at the labor market. The number of new jobless claims fell slightly to 238,000, indicating a relatively stable job market. However, continuing claims increased, suggesting that some individuals are still facing challenges in finding employment. The insured unemployment rate remained unchanged at 1.2%, reflecting a steady but not robust labor market.

In terms of retail sales, there was a modest increase of 0.1% in May, which fell short of expectations for a larger gain. Excluding autos, retail sales actually declined by 0.1%. This indicates that consumer spending may be slowing down, which could have implications for overall economic growth.

Business inventories rose by 0.3% in April, with builds in retail, wholesale, and manufacturing sectors. Business sales also increased by 0.3%, maintaining a steady inventories-to-sales ratio. These data points suggest that businesses are still optimistic about future demand, despite some recent challenges.

The housing market, however, is showing signs of weakness. Housing starts fell by 5.5% in May, reaching the slowest pace since June 2020. Builder confidence also declined, indicating concerns about affordability and mortgage rates. This could have a ripple effect on related industries and overall economic growth.

On a positive note, industrial production rebounded in May, with a 0.9% increase, the highest monthly gain in ten months. Most major industries saw production gains, signaling potential strength in the manufacturing sector. Capacity utilization also rose to the highest rate this year, indicating increased efficiency in production processes.

Looking ahead, economic forecasters expect moderate growth in GDP, consumer spending, and business investment. However, concerns about higher borrowing costs and election uncertainty could dampen business investment in the near term. Industrial production is expected to strengthen in the coming years, while housing starts may remain flat before picking up in 2025.

Inflation remains a key concern, with expectations for a gradual slowdown in consumer price growth. The Federal Reserve is closely monitoring inflation trends and may consider rate cuts to support economic growth. Oil prices are on the rise, driven by expectations for the summer driving season, while natural gas futures remain stable.

Overall, the US economy is facing a mix of challenges and opportunities. While some sectors are showing resilience, others are experiencing slowdowns. It will be important to monitor key economic indicators closely to assess the trajectory of the economy and make informed decisions moving forward.

For more in-depth analysis and data, ACC members can access additional resources through ACCexchange. Stay tuned for weekly economic updates and insights on the evolving economic landscape.