Publications

U.S. Economic Indicators

The second estimate of Q1 GDP indicates that the U.S. economy expanded at an annualized rate of 3.1%, down slightly from April’s advance estimate of 3.2%. The reading reflects downward revisions in nonresidential fixed investment and private inventories, while exports and consumption spending were revised upward. BEA Report

Initial jobless claims increased 3,000 to 215,000 last week. The four-week moving average fell 3,750 to 216,750. DOL Report

The U.S. Census Bureau Advance Economic Indicators Report shows that the goods deficit widened to $72.1 billion in April from $71.9 billion in March. Meanwhile, wholesale inventories rose 0.7% and retail inventories increased 0.5%. Census Bureau Report

The National Association of Realtors Pending Home Sales Index decreased 1.5% in April (down 2.0% Y/Y).  NAR reports that the outlook is favorable due to rising mortgage applications and consumer confidence. NAR Report

U.S. News

Nick Timiraos reports for the Wall Street Journal that the U.S.-China trade spat is complicating the Federal Reserve’s “wait-and-see” approach to monetary policy, as the trade fight scenario involves assumptions around hard-to-predict geopolitical trends. Fearing miscalibrated monetary policy, Fed officials are unlikely to pre-emptively adjust interest rates. WSJ

U.S. News

The Wall Street Journal reports that the U.S. Treasury Department declined to designate China as a currency manipulator in its latest semiannual report but acknowledged significant concerns about China’s currency practices. The Treasury is closely monitoring China and other countries for signs of intentional currency devaluation to make exports more attractive to U.S. markets. WSJ

According to the Financial Times, China’s state planning body has suggested using rare earth metal exports as leverage in the trade conflict with the U.S. China dominates the global supply of rare earth metals, but currently exports very few directly to the U.S. FT

The Financial Times reports that investors are anticipating the Fed will cut rates twice in 2019, countering the effects of slowing global economic growth exacerbated by the U.S.-China trade war. Although futures prices have been signaling a rate cut for several months, Fed officials have maintained that their next move could be in either direction. FT

U.S. Economic Indicators

The Conference Board’s Consumer Confidence Index rose from 129.2 (revised) in April to 134.1 in May. Consumer Confidence continued to improve after rising in April, driven by employment gains and improved expectations for short-term business conditions. Conference Board Report

The FHFA House Price Index shows that U.S. house prices rose 0.1% in March and were up 4.9% from year-ago levels. Year-over-year house price changes were positive in all nine census divisions. FHFA Report

U.S. News

According to the Financial Times, a new report from the OECD found that U.S. imports from China have declined by 12.0% since the trade war began in the third quarter of 2018. The OECD figures show that U.S. imports from China experienced their largest recorded decline in the first quarter of this year, while the entire volume of global trade fell by an estimated 0.3%. FT

The Financial Times reports that the U.S.-China trade conflict is creating significant economic opportunities for Mexico-based manufacturers of products affected by the trade spat such as auto parts, electronics, and mobile phone components. The total value of Mexican exports to the U.S. recently overtook those from China, despite increased duties on many Mexican agricultural products. FT

U.S. Economic Indicators

New orders of manufactured durable goods fell 2.1% in April after rising 1.7% (revised) in March and are up 2.0% compared to a year ago. Excluding transportation, new orders were virtually unchanged (up 1.9% from last year). Census Bureau Report

U.S. Economic Indicators

Initial jobless claims decreased 1,000 to 211,000 last week. The four-week moving average fell 4,750 to 220,250. DOL Report

New home sales fell 6.9% to a seasonally adjusted annual pace of 673,000 in April, but are 7.0% above the April 2018 rate. The median sales price rose to $342,200 and the inventory of new homes rose to 5.9 months at the current sales rate. Census Bureau Report

U.S. News

The Wall Street Journal reports that minutes from the latest Fed policy meeting suggest officials are still comfortable with their wait-and-see approach and expect current weak inflation to be only temporary. The Fed downgraded its inflation forecast to just under its 2% target in the medium term, but Fed Chairman Jerome Powell pushed back against expectations that the Fed would cut rates in response. WSJ

According to Bloomberg, a new IMF study found that U.S. importers have borne almost all the cost of tariffs imposed on Chinese goods. Some of the tariffs have been passed on to U.S. consumers, while others have been absorbed by U.S. companies through lower profit margins. Bloomberg