Last week’s economic reporting included readings on inflation and consumer sentiment along with weekly readings on mortgage rates and jobless claims. Federal Reserve Chair Jerome Powell and Federal Reserve Board members addressed economic expectations resulting from the COVID-19.Chair Powell said that there would be no quick fix for the economy and that the economy would suffer for four to six months until the pandemic slows. He also said that a COVID-19 vaccine would not be a panacea for the virus and said that “ the next few months could be challenging” as the virus spreads at a faster pace.
Inflation Stalls as Pandemic Progresses
The Commerce Department reported no growth in the Consumer Price Index and Core Consumer Price Index in October. The readings for both indices were identical with 0.00 percent growth, 0.10 percent growth expected, and September’s month-to-month growth of 0.20 percent. Medical experts predicted that COVID-19 cases would surge as cooler weather arrived.
The cost of living rose from June to October, but this was a recovery from deep dips in consumer prices as the pandemic took hold. The year-over-year inflation rate slowed to 1.20 percent in October from September’s reading of 1.40 percent. Annual inflation was growing by 2.30 percent before the pandemic.
Mortgage Rates Rise, Jobless Claims Fall
Freddie Mac reported higher average mortgage rates last week as the rate for 30-year fixed-rate mortgages increased by six basis points to 2.84 percent. The average rate for 15-year fixed-rate mortgages rose by two basis points to 2.34 percent and rates for 5/1 adjustable rate mortgages jumped by 22 basis points to 3.11 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Points for 5/1 adjustable rate mortgages averaged 0.40 percent.
First-time jobless claims fell last week to 709,000 filings. Analysts expected 731,000 new jobless claims based on the prior week’s reading of 751,000 initial jobless claims filed. Ongoing jobless claims were also lower last week with 6.79 million continuing claims filed. as compared to the prior week’s reading of 7.22 million ongoing jobless claims filed.
The University of Michigan’s Consumer Sentiment Index posted a lower reading of 77.0 in November as compared to October’s index reading of 81.6 percent and the expected reading of 82.3. The dip in the Consumer Sentiment Index reflected increased consumer concern as covid-19 cases rose.
What’s Ahead for the Week of November 16, 2020
This week’s scheduled economic reporting includes readings from the National Association of Home Builders Housing Market Index, Commerce Department reporting on housing starts, and building permits issued. Data on sales of previously-owned homes will also be reported.
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