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Weekly economic review & outlook
Home sales storm back in June

JUL. 27, 2020

You Need to Know

Week in review

Homes sales spiked during June

New and existing sales each posted outsized gains for June as strong post-lockdown homebuyer demand and low mortgage rates boosted activity.

Leading indicators recover further

The LEI jumped again for June as labor market readings continued to rebound, although the way forward could be slowed by a recent surge in virus infections.

Week Ahead

Forecasts

Q2 GDP will show a near-record decline

With the economic shutdown through all of April and some of March and May, the decline in GDP for Q2 will come close to the biggest drop during the Great Depression.

FOMC will stand pat on rates

Per recent comments, the FOMC will not be changing rates this week or anytime soon; but Fed policymakers could discuss their various avenues for economic support should the economy weaken due to renewed spread of COVID-19.

Durable goods should see another month of recovery

The durable consumer goods component of the industrial production index showed record growth in June, suggesting that orders likely jumped last month. However, the expected increase will be tempered by another slow month for Boeing. Taken together, we project durable goods orders to be up by a strong 8.5 percent for June.

Amid further re-opening, consumer spending likely to show strong growth in June

June was the first month without large-scale economic shutdowns since February. This spurred another month of record job gains which increased disposable income and likely declined the personal saving rate from an unsustainably high 23 percent in May. Consequently, we expect that consumer spending rose by 4.3 percent in June.

Existing home sales soared by 20.7 percent in June as homebuyers rushed back into the housing market post-lockdown. Aside from the extreme lows for April and May, the 4.72 million unit annualized sales pace was still the weakest since September 2012 as low inventories of homes on the market and continued virus concerns dampen sales. Still, given the surge in demand over the past few months, it looks increasingly likely that the bottom in housing activity for this economic downturn is in the rear-view mirror.

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