|
The Commerce Department reported housing starts increasing by 1.9% in September, representing a seasonally adjusted 1.415 million units over August’s downwardly revised of 1.388 million. Housing starts continue to be a bright spot, outpacing September 2019’s 1.274 million rate by 11.1%. Single-family housing starts in September were at a rate of 1.108 million, representing an 8.5% increase over the revised August figure of 1.021 million. The data suggest that builders are responding to a robust housing demand fueled by record-low interest rates.
The Fed’s October Beige Book delivered a mixed report, characterizing economic growth as “slight to modest”. While housing remained strong, continuing the theme of a demand fueled by low interest rates and limited supply, commercial real-estate was soft with the exception of warehouse space. The report also mentioned limited inventories constraining auto sales. Consumer prices rose modestly, with the notable exceptions of automobiles, appliances, and food, which increased significantly. Employment increased slowly in all Districts, with gains coming from manufacturing firms. Childcare and worker’s health concerns contributed to a tight job market.
The US Index of Leading Economic Indicators rose .7% in September, mainly due to lower unemployment claims and increased housing permits, this follows a 1.4 percent increase in August and a 2.0 percent increase in July. The slower pace of improvement suggests that the U.S. economy may lose momentum as the final quarter of 2020 approaches. The US economy is expected to grow in the fourth quarter, but at a significantly lower rate of 1.5% (annual rate) according to the Conference Board's GDP forecast. In addition, the downside risks to the recovery could increase amid growing new cases of COVID-19 and continued weakness in the labor market.
|
