The National Federation of Independent Business (NFIB) Small Business Optimism Index fell to 88.5 in March. This is the weakest reading since December 2012 as “owners continue to manage numerous economic headwinds,” per Chief Economist Bill Dunkelberg.
What’s the bottom line? The NFIB noted that inflation is back on top as the biggest problem small businesses are facing, as owners are likely feeling the impact of higher oil prices and the stalling progress on reducing pricing pressure. Plans to hire also fell for the fourth straight month. Despite talk of a strong economy, small businesses are still feeling pessimistic.
Initial Jobless Claims fell by 11,000 in the latest week, retreating from a two-month high, as 211,000 people filed for unemployment benefits for the first time. However, Continuing Claims surged higher by 28,000, with 1.817 million people still receiving benefits after filing their initial claim.
What’s the bottom line? Initial Jobless Claims can be volatile from week to week, but their relatively low level suggests that employers are still trying to hold on to their workers. Yet, Continuing Claims are still trending higher near some of the hottest levels we’ve seen since November 2021, as it’s become harder for some people to find new employment once they are let go. This coincides with the New York Fed’s latest Survey of Consumer Expectations. Respondents noted that the mean probability of finding a job within three months of losing one is now at the lowest level in almost three years.
The Producer Price Index (PPI), which measures inflation on the wholesale level, rose 0.2% in March, just below estimates. On an annual basis, PPI rose from 1.6% to 2.1%, but this was better than the 2.2% estimate. Core PPI, which strips out volatile food and energy prices, was in line with forecasts at a 0.2% rise. The year-over-year reading rose from 2% to 2.4%, just above forecasts.
What’s the bottom line? Overall, the monthly PPI readings were tame and better than feared, which was a relief after the hot CPI readings that were reported the previous day. Plus, some of the PPI components are factored into another important consumer inflation measure called Personal Consumption Expenditures (PCE), which is the Fed’s favored measure, and this could potentially lead to a slightly better PCE report when that data is released on April 26.
The latest Consumer Price Index (CPI) showed higher-than-expected inflation in March, with the headline reading up 0.4% from February. On an annual basis, CPI moved in the wrong direction, rising from 3.2% to 3.5%. The Core measure, which strips out volatile food and energy prices, increased 0.4% while that annual reading remained at 3.8% (though it was expected to decline to 3.7%).
What’s the bottom line? March’s hotter-than-expected consumer inflation report continues a trend we’ve seen in recent months, as rising energy and shelter costs have added to pricing pressure. Price stability is part of the Fed’s dual mandate. When inflation became rampant a few years ago, the Fed began aggressively hiking their benchmark Fed Funds Rate (the overnight borrowing rate for banks) to slow the economy and rein in inflation. While inflation has fallen considerably after peaking in 2022, the progress lower has slowed, which could delay the Fed’s timing for rate cuts this year. Given that maximum employment is the other part of the Fed’s dual mandate, a cooling job market with rising unemployment could pressure them to cut the Fed Funds Rate sooner rather than later. However, the overall strength of March’s Jobs Report, including the falling unemployment rate, will likely not add any pressure to their timeline.
Initial Jobless Claims fell slightly in the latest week, with 210,000 people filing for unemployment benefits for the first time. This was a decline of 2,000 from the previous week. Continuing Claims rose by 24,000, with 1.819 million people still receiving benefits after filing their initial claim.
What’s the bottom line? Initial Jobless Claims have hovered between 200,000 and 213,000 each week since the start of February, which is surprisingly low given the high-profile layoff announcements that we’ve seen. Meanwhile, Continuing Claims are trending higher compared to a year ago, showing that it’s become harder for some people to find new employment once they are let go.
You’ll enjoy National Coffee Cake Day on April 7 thanks to this scrumptious and easy recipe courtesy of Allrecipes. Yields 15 servings.
Preheat oven to 350 degrees Fahrenheit. Grease and flour a 9×13-inch baking pan.
To make the streusel topping, combine 1/4 cup all-purpose flour, 2/3 cup sugar and 1 teaspoon cinnamon in a medium bowl. Cut in 1/4 cup cold butter until mixture resembles coarse crumbs. Set aside.
In a large bowl, combine 2 cups all-purpose flour, 3/4 cup sugar, 2 teaspoons baking powder and 1/2 teaspoon salt. Cut in 1/2 cup cold butter until mixture resembles coarse crumbs. In a separate bowl, whisk together 1 egg and 3/4 cup milk, then stir in 1 1/2 teaspoons vanilla. Pour egg mixture into flour mixture and mix until just moistened.
Spread batter into prepared pan and sprinkle with streusel topping. Bake until a toothpick inserted comes out clean, around 25 to 30 minutes. Cool before slicing and enjoy!
The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices nationwide rose 0.4% from December to January after seasonal adjustment. Home values in January were also 6% higher than a year earlier, with S&P DJI’s Head of Commodities, Brian D. Luke, explaining that this was the “fastest annual rate since 2022.” He added that all 20 cities in their composite index saw annual price increases for the second straight month.
The Federal Housing Finance Agency’s (FHFA) House Price Index did report a slight 0.1% decline in home values from December to January, but on an annual basis prices were 6.3% higher than the previous year. Note that FHFA does not include cash buyers or jumbo loans, and these factors account for some of the differences in the two reports.
What’s the bottom line? Last year was a strong one for appreciation, and the first reports for 2024 show that this trend continues. Home values are expected to remain supported this year, as buyer demand still outpaces tight supply. These indexes show that homeownership continues to provide opportunities for building wealth through real estate.
Pending Home Sales rose 1.6% from January to February per the National Association of REALTORS® (NAR), which is another sign of underlying strength in the housing market given February’s uptick in rates. This report measures signed contracts on existing homes, making it an important forward-looking indicator for closings on these homes, which are measured in the Existing Home Sales report.
What’s the bottom line? NAR’s Chief Economist, Lawrence Yun, noted that the modest sales growth “shows slow and steady progress from the lows of late last year.” He added that a “steady rise in inventory” is also expected this year, which is good news for buyers as we approach the busy spring season.
After two consecutive months of gains, New Home Sales (which measure signed contracts on new homes) inched down 0.3% from January to February. While the media tried to put a negative spin on the report, home sales remaining stable in February shows some strength given that rates moved higher when compared to January. Plus, sales were also 5.9% higher than a year earlier, as the persistent shortage of previously owned homes for sale continued to fuel demand for new construction.
What’s the bottom line? The media also pointed to the decline in the median home price, which was down 3.5% from January and 7.6% from a year ago, to say the report was a miss. But the median home price did not decline because of falling home prices (which continue to hit new highs per Case-Shiller and other indexes), or a growing number of price cuts from builders. In fact, just 24% of builders reported slicing prices in March, down from 36% in December and the lowest share since last July per the National Association of Home Builders.
The median home price represents the mid-price of sales, meaning it’s influenced by the mix of sales in any given month. February’s decline in the median home price stems from the sale of more homes at lower price points. Builders are constructing smaller, more affordable homes to meet buyer demand, and that pushed the median home price lower comparatively.
February’s Personal Consumption Expenditures (PCE) showed that headline inflation rose 0.3% from January, with the year-over-year reading up from 2.4% to 2.5%. Core PCE, the Fed’s preferred method which strips out volatile food and energy prices, rose by 0.3% monthly. The year-over-year reading fell from 2.9% to 2.8%, pushing this important metric one step closer to the Fed’s 2% target and its lowest level in almost three years!
What’s the bottom line? The Fed has been working hard to tame inflation, hiking its benchmark Fed Funds Rate (which is the overnight borrowing rate for banks) eleven times between March 2022 and July 2023. These hikes were designed to slow the economy by making borrowing more expensive, lowering the demand for goods, and thereby reducing pricing pressure and inflation.
The Fed wants to see annual inflation as measured by Core PCE return to its 2% target, though they’ve indicated they won’t “wait to get to 2% to cut rates.” While the latest 2.8% Core PCE reading is much lower than the 2022 peak of 5.6%, progress has been slowing. So, the question remains: When will the Fed think inflation has progressed low enough for them to start cutting the Fed Funds Rate later this year?
Initial Jobless Claims were relatively flat in the latest week, with 210,000 people filing for unemployment benefits for the first time. This was a decline of 2,000 from the previous week. Continuing Claims rose by 4,000, with 1.807 million people still receiving benefits after filing their initial claim.
What’s the bottom line? Initial Jobless Claims remain tame and continue to suggest a surprisingly low level of layoffs despite the high-profile downsizing announcements we’ve seen. Yet, Continuing Claims are trending higher compared to a year ago, showing that it’s become harder for some people to find new employment once they are let go.
Baseball is back! These ballpark inspired Honey Roasted Peanuts courtesy of The Spruce Eats are sure to be a homerun every time.
Preheat oven to 325 degrees Fahrenheit. Line a baking sheet with aluminum foil and spray with cooking spray.
Add 2 tablespoons unsalted butter, 1/3 cup honey, 1 teaspoon vanilla, 1/4 teaspoon cinnamon, and 1 teaspoon kosher salt to a microwave safe bowl and microwave until the butter is melted, about 45 seconds. Stir until liquid is smooth. Add 1 pound raw (or roasted unsalted) peanuts to butter mixture and stir until they’re evenly coated.
Pour peanuts onto prepared baking sheet and spread them into an even layer. Bake for 20 minutes, stirring every 5 minutes to get an even roasting. Remove peanuts from oven once they’re golden brown; stir to distribute any honey that has dripped onto the baking sheet.
Sprinkle 1/4 cup granulated sugar and 1 teaspoon salt on top and stir. Enjoy warm or cold.
Housing Starts saw a big rebound in February, with both single-family and multi-family construction improving from January’s slump. When compared to a year ago, however, single-family starts were up 35.2% while multi-family starts were down 35.9%. This suggests that we’re seeing a shift from multi-family to single-family construction, which is welcome news as this is where supply is needed around much of the country. Single-family Building Permits also reached their highest level in a year, up 29.5% when compared to February 2023, signaling that the numbers for future supply are also favorable. We also saw a big boost in completions, and if the current pace continues, this will add a further boost to much-needed supply.
What’s the bottom line? Danushka Nanayakkara-Skillington, NAHB’s Assistant VP for Forecasting and Analysis, confirmed that “single-family housing is poised for a good year in 2024 with starts and permits on an upward trend.” Chair Carl Harris added, “The solid level of single-family production in February tracks closely with rising builder sentiment, and with mortgage rates expected to moderate further this year, this will provide an added boost for single-family building.”
Existing Home Sales jumped 9.5% from January to February to a 4.38-million-unit annualized pace, reaching their highest level in a year per the National Association of REALTORS® (NAR). This report measures closings on existing homes in February and likely reflects people shopping for homes in December and January, when rates were improved from last fall’s peak.
What’s the bottom line? Inventory increased 5.9% from January, with NAR’s Chief Economist Lawrence Yun noting that “additional housing supply is helping to satisfy market demand.” Rising inventory is certainly a step in the right direction to help improve the persistent tight housing supply we’ve seen across the country. However, the 1.07 million homes available for sale at the end of February is still below healthy levels at just a 2.9 months’ supply of homes at the current sales pace. Yun added that “more supply is clearly needed to help stabilize home prices and get more Americans moving to their next residences.”
Confidence among home builders broke above the key breakeven threshold of 50 and into positive territory for the first time since last July, per the National Association of Home Builders (NAHB). Their Housing Market Index climbed three points to 51 in March, which was also the fourth consecutive monthly gain. Any score over 50 on this index, which runs from 0 to 100, signals that more builders view conditions as good than poor. All three index components posted gains this month, with current and future sales expectations both well into expansion territory at 56 and 62, respectively. The gauge judging buyer traffic also moved higher.
What’s the bottom line? The persistent lack of previously owned homes for sale, strong buyer demand, and rates below last fall’s peak have pushed builder confidence higher. NAHB Chair Carl Harris explained, “Buyer demand remains brisk and we expect more consumers to jump off the sidelines and into the marketplace if mortgage rates continue to fall later this year.”
