Inflation In Line With Expectations
The biggest economic report released last week was the inflation data, and it was in line with expectations, causing little reaction. Beyond that, there were few significant surprises, except that second quarter economic activity received a small upward revision. As a result, mortgage rates ended last week slightly higher, but remain near the lowest levels of the year.
Fed Target Remains Out of Reach
Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator. In July, core PCE, which excludes food and energy to reduce short-term volatility, was up 2.6% from a year ago. This was the same annual rate of increase as last month and the lowest level since March 2021. While far below its recent peak, it stubbornly remains above the Fed’s target of 2.0%.
Consumer Spending Rises
With inflation in focus, the monthly report on consumer confidence published by the Conference Board has been receiving more attention lately, since it may provide hints about upcoming changes in spending habits. The most recent reading showed a modest increase to a six-month high. However, labor market conditions deteriorated for the sixth straight month, with the largest number of consumers reporting difficulty finding a job in over three years.
GDP Rebound in Q2
Gross Domestic Product (GDP) is the broadest measure of economic activity. During the second quarter of 2024, U.S. GDP rose at a revised annualized rate of 3.0%, up from 2.8% for the initial reading released last month. The increase was mostly due to stronger consumer spending, which received a large upward revision from 2.3% to 2.9%. This data reflects the period from April to June, and investors are watching closely to see if consumer spending is now slowing.
Mortgage Rates for the week of 9-03-2024