Last week’s scheduled economic reporting included readings on consumer prices, retail sales, and the University of Michigan’s preliminary Consumer Sentiment Index. Weekly readings on mortgage rates and jobless claims were also released.
Consumer Price Growth Slows in August
According to the Consumer Price Index, consumer prices grew by 0.30 percent in August compared to July’s consumer price growth pace of 0.50 percent. Core consumer prices, which exclude volatile food and fuel sectors, also slowed in August to a pace of 0.10 percent compared to July’s reading of 0.30 percent growth. Furthermore, used-car prices fell for the first time in six months but remained 32 percent higher year-over-year. Inventories of new and used cars were lower due to supply chain problems caused by the pandemic.
Nonetheless, August’s Consumer Price Index rose by 5.30 percent year-over-year. Similarly, the Core Consumer Price Index grew by 4.00 percent year-over-year in August, which was unchanged from July’s year-over-year consumer price growth. Analysts expressed mixed opinions about how quickly inflation will slow. Still, Federal Reserve Chairman Jerome Powell noted that the Fed expects inflation to slow to the Fed’s targeted pace of 2.00 percent within the next year. Federal Reserve policymakers also expect materials and labor shortages to ease as the post-pandemic recovery continues.
Retail Sales Rise in August
Moreover, retail sales rose by 0.70 percent in August and surpassed negative projections and July’s reading of -1.80 percent. According to analysts, inflation accounted for some of the increased sales. However, consumers were spending despite the spreading Delta variant of the Coronavirus. That said, overall, retail sales rose by 1.80 percent when automotive sales were excluded. Note, shortages of new and used cars dragged down the pace of retail sales.
Mortgage Interest Rates, Jobless Claims
In other news, Freddie Mac reported little change in mortgage interest rates last week. Rates for 30-year fixed-rate mortgages averaged two basis points lower at 2.86 percent. Rates for 15-year fixed-rate mortgages also dropped by seven basis points to 2.12 percent on average. In contrast, rates for 5/1 adjustable rate mortgages rose by nine basis points to an average of 2.51 percent. Last but not least, 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 fell to 0.10 percent on average as well.
This week’s readings noted that initial jobless claims rose to 332,000 first-time claims filed compared to the previous week’s reading of 312,000 initial claims filed. But be that as it may, continuing claims fell with 2.67 million ongoing jobless claims filed compared to the prior week’s reading of 2.85 million ongoing claims filed.
Finally, the University of Michigan released its preliminary Consumer Sentiment Index for September and reported a one-point increase in September’s index reading of 71.0. Analysts forecasted a reading of 72.0 based on the August reading of 70.3.
What’s Ahead for the Week of September 20, 2021
This week’s scheduled economic reporting includes readings from the National Association of Home Builders. The Federal Reserve’s Open Market Committee will release its post-meeting statement, and Fed Chair Jerome Powell will give a press conference. Commerce Department readings on housing starts and building permits will be released along with weekly readings on mortgage rates and jobless claims.
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