4/29- Weekly Economic Highlights

4/29- Weekly Economic Highlights

US GDP unexpectedly declined at an annualized rate of 1.4% in the first quarter of 2022, coming off an exceptionally high growth rate of 6.9% in Q421. The economy contracted mostly due to a significant increase in the trade deficit, with more imports than exports as domestic consumer demand remained strong, while lockdowns in China and the war in Ukraine took a toll on global demand for US products.

Consumer confidence came down slightly in April to 107.3 versus 107.6 in March as higher gas prices and inflation worries continued to weigh on overall sentiment, while the strong labor market kept the metric well above its long-run average of around 95. University of Michigan Sentiment improved to 65.7 in April from 59.4 in March as gas prices eased slightly and wage prospects boosted sentiment, but the index is still sitting near the lowest levels since 2011. Personal spending jumped by 1.1% in March, largely driven by an increase in spending on pent-up demand for services such as international travel, restaurants and hotels.

The Personal Consumption Index (PCE) increased to 6.6% in March from 6.3% in the prior month while Core PCE, which excludes food and energy, eased to 5.2% in March from 5.3% in February. While the report was largely in-line with expectations, Core PCE has been running significantly higher than the Fed’s 2.00% long-run target.

The S&P Corelogic Case Shiller 20-City Index showed an impressive 20.2% year-over-year jump in real estate prices in February. The cities with the largest gains were Phoenix, Tampa, Miami, and San Diego with growth rates of 32.9%, 32.6%, 29.7% and 29.1%, respectively. Tight supply and higher mortgage rates are contributing to affordability issues for many prospective buyers.

The Federal Open Market Committee (FOMC) will meet next week and is expected to raise the fed funds target rate by 0.50% to a range of 0.75 – 1.00%. It is also widely anticipated that they will announce plans to start the wind down process of the Federal Reserve’s nearly $9 trillion balance sheet.

Next Week:

ISM Manufacturing, FOMC Meeting, US Employment Report.

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© 2022 Chandler Asset Management, Inc. An Independent Registered Investment Adviser. Data source: Bloomberg and the Federal Reserve. This report is provided for informational purposes only and should not be construed as specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as an indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation, or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest rate, credit, and market risk. Interest rate risk: The value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low-rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market, in general, could decline due to economic conditions, especially during periods of rising interest rates. S&P 500– The S&P 500 is a market value weighted index of 500 large-capitalization stocks. The 500 companies included in the index capture approximately 80% of available US market capitalization. The S&P Corelogic Case-Shiller home price index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the nation.