Retail Sales Rose a Bit in May, But April Sales Were Revised Down a Bit…The report showed spending falling the most on gas station purchases and home improvement while rising the most on specialty stores and sporting goods.
What it means— Everyone is looking for the one metric that will make the Fed flip from holding rates steady to walking rates down to 4% or lower.
Instead of one thing, it could be several. Consumers could be tired of high short rates, tired of inflation, and tired of earning more but losing ground in standard of living. Retail sales might be fractionally higher, but they are reported nominally, not after inflation. We’re not better off.
Housing Starts Fell 5.5% in May to the Lowest Level Since 2019… New home construction fell as builders and owners waited out the Fed for the next move, which presumably will be lower.
What it means— This is one area where you might be able to get what you wish for. Residential real estate represents several percentage points of GDP. If builders aren’t building because buyers aren’t buying, then GDP growth should ease. That, in turn, should give the Fed more breathing room to lower rates. There were a lot of “ifs” in those sentences, and so far, nothing has motivated the Fed to move. They will move when Chair Powell is ready. Home prices hit a new high in May. Without more inventory, presumably home prices will remain high as home builders reduce starts and permitting.
Existing-Home Sales Declined 0.7% in May, Are Down 2.8% From This Time Last Year… The median existing-home sale price rose 5.8% over the last year, to a record of $419,300.
What it means— Inventory rose 6.7%, to 1.28 million units at the current pace, even as mortgage rates held steady around 7%. The low volume of sales, high prices, and lofty mortgage rates should be warning signs of a top, but Millennials want to buy. They are hoping for lower rates, but they might be disappointed. Falling mortgage rates could be just gobbled up by higher prices. We don’t know where it will end, but it usually winds down when the financing for mortgages stops. So far, we’re not even close.
Nine Federal Reserve Officers Spoke at Different Venues… From Minneapolis Federal Reserve Bank President Neel Kashkari to Chicago Fed President Austan Goolsbee, the central bank had a lot of personnel on the road.
What it means— If you read the synopses of what several of them said, and they seem consistent. Inflation is going the right way but is not there yet, so it will be just a little longer before rates move. There are millions of would-be home buyers who hope the central bankers would just get started with the cuts.
Citizens of Bulla, a Town in Australia’s Northern Territory, Got Revenge on an Almost 12-ft-long Crocodile: They Ate Him… The residents said the gator had been stalking children and adults and had been lunging out of the water at people. The crocodile also was thought to have taken several dogs. In a “waste not, want not” move, the people decided to have the territorial police shoot the croc and then roast him in the ground.
Data supplied by HS Dent Research
“When the facts change, I change my mind.
What do you do?” ~ John Maynard Keynes
Our plan is “the plan will change.”
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