Yellen on case for raising rates, Economic growth remained low in Q2 2016, Cash home sales declined in May
August 26, 2016
Friday – August 26
Fed Chair Janet Yellen spoke at the Fed’s annual economic symposium in Jackson Hole, Wyoming saying that the case for raising rates has strengthened in recent months. Ms. Yellen went on to say that she continues to worry about low business investment and declining productivity. Furthermore, any rate hikes in the future will continue to be data dependent. The chance of a hike to the short-term Fed Funds Rate in September is just 18% with a 53% chance of a hike in December.
Economic growth in the U.S. remained on the low side in the second quarter of 2016, while corporate profits declined. The second reading from second quarter Gross Domestic Product (GDP) rose 1.1%, which was in line with expectations and just below the 1.2% from the initial reading. A key metric within the report showed that consumer spending rose by 4.4%, the largest gain in two years. The inflation gauge rose to 2% on an annual basis.
In housing news, housing data analytics firm CoreLogic reported on Thursday that cash home sales in May declined year-over-year and month-over-month during the first five months of the year. May cash sales made up 30% of total sales in May, down 2.5% from May 2015 and -1.7 from April. Cash sales peaked in January 2011 near 47%, while before the housing crisis the number was 25%. CoreLogic says at the current rate of decline, we could see pre-crisis levels by mid-2018.
