Friday Economic Snapshot: Is spring growth coming?
After some volatility, the stock market is once again reaching toward record heights as a growing cohort of economists wonder aloud whether the GDP may actually be revised to show an outright contraction in the first quarter.
That significant nugget doubles down on the impacts of the vortex-heavy winter, but general opinions remain focused on the coming growth throughout the rest of the year. We shall see how that pans out, but fundamentals remain strong in the face of a few headwinds.
Fed Chair Janet Yellen recently shared her thoughts on the current economic outlook, saying she expects unemployment to continue falling, inflation to edge up to 2 percent, steady gains in household net worth and, in general, faster economic growth resuming throughout the year.
In terms of monetary policy, Yellen said “our policy will continue to be guided by the evolving economic and financial situation, and we will adjust the stance of policy appropriately to take account of changes in the economic outlook.”
Translation: there may have been a pause in GDP growth, but as soon as GDP and job growth resumes, the Fed will continue drawing down its stimulating efforts.
The American housing market — formerly referred to as the housing-driven recovery — has become more complicated in recent months. Existing home sales fell 7.5 percent in March, new home sales dropped 13 percent, housing starts decreased nearly 6 percent, there’s lower demand for foreclosed properties and mortgage credit is still generally tight with rates up from last year.
That said, there are fewer distressed sales, the National Association of Home Builders reports builder confidence is improving and California foreclosure starts are at an 8-year low. Between boom and bust, maybe it’s not bad to be somewhere in the middle.
Weekly unemployment claims decreased to 319,000, down 26,000 from the surprisingly high numbers of the previous week. This puts the 4-week moving average at 324,750, an increase of 4,500 from the previous week’s average.
While last week’s numbers were a shocker, the current trajectory of unemployment claims appears healthy enough to suggest future job growth, which would be a major boost to the economy.