Current-Cast® Report

• Real GDP increased at an annual rate of 4.2% in the second quarter of 2018, according to the “third” estimate by the Bureau of Economic Analysis. In the first quarter of 2018, real GDP increased 2.2%. In the second estimate, released a month ago, the increase in real GDP was also 3.0%.
• Real final sales of domestic product (GDP less change in private inventories) increased 5.4% in the second quarter, in contrast to an increase of 1.9% in the first quarter.
• Real gross domestic income (GDI) increased 1.6% in the second quarter of 2018, compared with an increase of 3.9% in the first quarter.
• The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.9% in the second quarter, compared with an increase of 3.1% in the previous quarter.
• The price index for gross domestic purchases increased 2.4% in the second quarter, compared with an increase of 2.5% in the previous quarter.
• The personal consumption expenditures (PCE) price index increased 2.0%, compared with an increase of 2.5% in the previous quarter. Excluding food and energy prices, the PCE price index increased 2.1%, compared with an increase of 2.2%.
• Corporate profits from current production increased $65.0 billion in the second quarter, after an increase of $26.7 billion in the previous quarter. Profits of domestic financial corporations increased $16.5 billion in the second quarter, in contrast to a decrease of $9.3 billion in the previous quarter. Profits of domestic nonfinancial corporations increased $53.0 billion, compared with an increase of $32.3 billion in the previous quarter. The rest-of-the-world component of profits decreased $4.5 billion, compared with an increase of $3.7 billion in the previous quarter.
• Personal income increased 0.3% in August, the same increase as in the previous month. Personal consumption expenditures increased 0.3% in August, following a 0.4% increase in the previous month. Both real disposable personal income and real personal consumption expenditures increased 0.2% in August. The price index for personal consumption expenditures (headline index) increased 0.1% in August, while the core index held steady.  The price index for personal consumption expenditures (headline index) increased 2.2% from August 2017, while the core index increased 2.0%. 
• State personal income grew 4.2% on average in the second quarter of 2018, after increasing 5.0% in the first quarter, according to the Bureau of Economic Analysis. Increases in earnings, property income, and transfer receipts all contributed to growth in second quarter personal income. The growth in personal income ranged from 1.6% in Washington to 6.0% in Texas.
• New orders for manufactured durable goods increased 4.5% in August, while shipments increased 0.8%. Excluding transportation, new orders increased 0.1%.  Excluding defense, new orders increased 2.6%. Year-to-date, new orders were up 9.2%, and shipments were up 7.3% from the same period a year ago.
• Retail inventories for August were up 0.7% from the previous month, and were up 2.3% from August 2017, according to the U.S. Census Bureau. 
• Wholesale inventories for August were up 0.8% from the previous month, and were up 5.1% from August 2016. 
• The international trade deficit in goods was $75.8 billion in August, up $3.8 billion from $72.0 billion in July, according to the U.S. Census Bureau.  Exports of goods for August were $137.9 billion, $2.3 billion less than July exports. Imports of goods for August were $213.7 billion, $1.5 billion more than July imports.
• The U.S. net international investment position decreased to -$8,638.5 billion (preliminary) at the end of the second quarter of 2018 from -$7,747.3 billion (revised) at the end of the first quarter, according to the Bureau of Economic Analysis (BEA). The $891.2 billion decrease was resulted from a decrease in U.S. assets and an increase in U.S. liabilities. U.S. assets decreased $587.8 billion to $27,063.6 billion at the end of the second quarter, while U.S. liabilities increased $303.4 billion to $35,702.1 billion.
• August new home sales were up 3.5% from the previous month, and were up 2.7% from August 2017 figure. The median sales price of new houses sold was $320.2 thousand, 1.9% above August 2017.
• The Pending Home Sales Index, a leading indicator for the housing sector, decreased 1.8% to a reading of 104.2 in August, according to the National Association of Realtors. The Index was down 2.3% from August 2017.
• U.S. house prices rose 0.2% in July, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI). House prices were up 6.4% from July 2017.
• The S & P Corelogic Case-Shiller National U.S. Home Price Index posted annual increases of 5.5% and 5.9% in July, for the 10-city and 20-city composite indices, respectively. The National Index, covering all nine U.S. Census divisions, increased 6.0% from July 2017.
• The results of Freddie Mac’s Primary Mortgage Market Survey showed average fixed mortgage rates surged to their highest level in over seven years. The 30-year fixed mortgage rate averaged 4.72% for the week ending September 27, up from last week when it averaged 4.65%. A year ago at this time, the 30-year fixed mortgage rate was 3.83%. The 15-year fixed mortgage rate averaged 4.16% for the week ending September 27, up from last week when it averaged 4.11%. A year ago at this time, the 15-year fixed mortgage rate was 3.13%.
• Mortgage applications increased 2.9% from a week earlier, according to data from Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 21st.
• Unemployment rates were lower in August in 13 states, higher in 3 states, and stable in 34 states and the District of Columbia, according to the U.S. Bureau of Labor Statistics. Eleven states had jobless rate decreases from a year earlier and 39 states and the District had little or no change. Nonfarm payroll employment increased in 4 states and essentially unchanged in 46 states and the District of Columbia. Over the year, 35 states added nonfarm payroll jobs and 15 states and the District were essentially unchanged.
• The advance figure for initial claims for unemployment insurance increased 12 thousand to 214 thousand in the week ending September 22. The 4-week moving average was 206.25 thousand, an increase of 0.25 thousand from the previous week’s revised average. The advance number for seasonally adjusted insured unemployment (ongoing) during the week ending September 15 was 1,661 thousand, an increase of 16 thousand from the previous week’s unrevised level. The 4-week moving average was 1,679.25 thousand, a decrease of 12.25 thousand from the previous week’s unrevised average. This is the lowest level for this average since November 10, 1973 when it was 1,673 thousand. 
• The Conference Board’s consumer confidence index, which had improved significantly in August, increased in September. The Index now stands at 138.4 (1985=100), up from 134.7 in August. The Present Situation Index increased slightly from 172.8 to 173.1, while the Expectations Index surged from 109.3 to 115.3.
• The Thomson Reuters/University of Michigan Index of Consumer Sentiment increased to 100.1 in September, from 96.2 in August. This was only the third time the index topping 100 since January 2004. The Index was 95.1 a year ago. The Current Economic Conditions Index increased from 110.3 to 115.2, while the Index of Consumer Expectations increased from 87.1 to 90.5.
• The Federal Open Market Committee decided to raise the target range for the federal funds rate, 25 basis points, to 2.00% to 2.25%. “The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.”

·      Housing starts in August were up 9.2% from the previous month, and were up 9.4% from a year ago. Building permits were down 5.7% from the previous month, and were down 5.5% from August 2017.

·      August existing home sales held steady at an annualized rate of 5,340 thousand units. The August figure was 1.5% below the August 2017 figure. There were 1,920 thousand homes for sale at the end of the month. This represents a supply of 4.3 months at the current sales rate, compared to 4.1 in August of 2017. The median sales price of existing houses sold was $264.8 thousand, 4.6% above August 2017.

·      The housing market index of National Association of Home Builders (NAHB) and Wells Fargo held steady at 67 in September. The Index was 72 in January, and 64 in September of 2017.

·      The results of Freddie Mac’s Primary Mortgage Market Survey showed average fixed mortgage rates rose for the fourth consecutive week. The 30-year fixed mortgage rate averaged 4.65% for the week ending September 20, up from last week when it averaged 4.60%. A year ago at this time, the 30-year fixed-rate averaged 3.83%. The 15-year fixed mortgage rate averaged 4.11%, up from last week when it averaged 4.06%. A year ago at this time, the 15-year fixed-rate averaged 3.13%.

·      Mortgage applications decreased 1.8% from a week earlier, according to data from Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 7th.

·      The current account deficit decreased to $101.5 billion in the second quarter, from $121.7 billion in the first quarter, according to the U.S. Bureau of Economic Analysis. The deficit decreased to 2.0% of current-dollar gross domestic product (GDP) from 2.4% in the first quarter.

·      The net worth of households and nonprofits rose to $106.9 trillion at the end of second quarter of 2018, compared with $104.7 trillion at the end of the first quarter, and $98.8 trillion at the end of second quarter of 2017.

·      Domestic nonfinancial debt expanded at a seasonally adjusted annual rate of 4.8% in the second quarter of 2018, compared with an annual rate of 7.5% in the previous quarter.

·      Domestic nonfinancial debt outstanding was $50.7 trillion at the end of the second quarter of 2018, of which household debt was $15.4 trillion, nonfinancial business debt was $14.8 trillion, and total government debt was $20.5 trillion.

·      The advance figure for initial claims for unemployment insurance decreased by 3 thousand to 201 thousand in the week ending September 15. This is the lowest level for initial claims since November 15, 1969 when it was 197 thousand.

·      The 4-week moving average was 205.75, a decrease of 2.25 thousand from the previous week’s revised average. This is the lowest level for this average since December 6, 1969 when it was 204.5 thousand.

·      Real gross domestic product (GDP) increased in 312 out of 383 metropolitan areas in 2017 according to the Bureau of Economic Analysis. Real GDP for U.S. metropolitan areas grew 2.1% in 2017, led by growth in professional and business services; wholesale and retail trade; and finance, insurance, real estate, rental, and leasing. The percent change in real GDP by metropolitan area ranged from negative 7.8% in Enid, Oklahoma to 12.1% in Odessa, Texas.

·      The September 2018 Empire State Manufacturing Survey indicated that business activity continued to grow strongly in New York State, according to the Federal Reserve Bank of New York. The headline general business conditions index was 19.0 in September, lower than the August figure of 25.6.

·      The Philadelphia FED business outlook survey for September indicated that manufacturing activity continued to grow. The index for current manufacturing activity in the region increased 11 points to a reading of 22.9. 

·      The Conference Board index of leading economic indicators increased 0.4% in August, following a 0.7% increase in the previous month. In the six-month period ending August 2018, the leading economic index increased 2.5% (about a 5.0% annual rate). The coincident index increased 0.2%, the same increase as in the previous month. The coincident economic index grew by 1.2% (about a 2.3% annual rate) in the six-month period ending in August.

·      Advance estimates of retail and food services sales for August were up 0.1% from the previous month, and were up 6.6% from a year ago, according to the U.S. Census Bureau. Excluding motor vehicle & parts, retail sales were up 0.3% from the previous, and were up 7.3% from a year ago. Year-to-date, retail sales were up 5.7% from the first eight months of 2017.

·      Total manufacturing and trade sales for July increased 0.2% from June, following a 0.3% increase in the previous month, according to the U.S. Census Bureau. Inventories increased 0.6%, following a 0.1% increase in the previous month. The total business inventories/sales ratio was 1.34 in July, compared with 1.39 a year ago.

·      Total Industrial production increased 0.4% in August, the same increase as in the previous month. Total industrial production in August was 4.9% above its level a year earlier. The rate of capacity utilization increased 0.2 percentage point to 78.1%, 1.7 percentage points below its 1972-2017 average.

·      Import prices decreased 067% in August, according to the U.S. Bureau of Labor Statistics, following a 0.1% decrease in the previous month. Prices for imports increased 3.7% from August 2017. The price index for exports decreased 0.1% in August, after a 0.5% decrease in the previous month. Prices for exports advanced 3.6% over the past year.

·      The producer price index for total final demand decreased 0.1% in August, after holding steady in the previous month.  The index for final demand less foods, energy and trade increased 0.1%, after a 0.3% increase in the previous month. The producer price index for final demand increased 2.8% from August 2017 to August 2018, while the index for final demand less foods, energy and trade increased 2.9%.

·      The consumer price index increased 0.2% in August, the same increase as in the previous month. The core index increased 0.1%, following a 0.2% increase as in the previous month. The consumer price index increased 2.7% for the 12-month period ending in August, while the core index rose 2.2%.

·      Real average hourly earnings for all employees increased 0.1% from July to August. This result stems from 0.4% increase in average hourly earnings, combined with a 0.2% increase in the consumer price index for all urban consumers.

·      The advance figure for initial claims for unemployment insurance decreased a thousand to 204 thousand in the week ending September 8th. This is the lowest level for initial claims since December 6, 1969 when it was 202 thousand. The 4-week moving average was 208 thousand, a decrease of 2 thousand from the previous week’s average. This is the lowest level for this average since December 6, 1969 when it was 204.5 thousand.

·      The results of Freddie Mac’s Primary Mortgage Market Survey showed average fixed mortgage rates jumped over the past week to a level not seen in over a month. The 30-year fixed mortgage rate averaged 4.60% for the week ending September 13, up from the previous week when it averaged 4.54%. A year ago at this time, the 30-year fixed-rate averaged 3.78%. The 15-year fixed mortgage rate averaged 4.06%, up from last week when it averaged 3.99%. A year ago at this time, the 15-year fixed-rate averaged 3.08%.

·      Mortgage applications decreased 1.8% from a week earlier, according to data from Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 7th.

·      The Thomson Reuters/University of Michigan Index of Consumer Sentiment, preliminary, for September increased to 100.8, from 96.2 in August. This was the second highest level since 2004. The Current Conditions Index increased to 116.1 in September, while the Index of Consumer Expectations increased to 91.1.

·      Total non-farm payroll employment rose by 201 thousand in August, following an increase of 147 thousand in the previous month, according to the U.S. Bureau of Labor Statistics. Private-sector payrolls increased by 204 thousand in July, while government employment decreased by 3 thousand. Job gains occurred in professional and business services, health care, wholesale trade, transportation and warehousing, and mining. The average monthly gain in employment was 196 thousand per month over the prior 12 months.

·      The unemployment rate held steady at 3.9% in August. The unemployment rate was 4.4% in August 2017.

·      The number of unemployed decreased by 46 thousand to 6.234 million. The number of long-term unemployed (those jobless for 27 weeks or more) decreased by 103 thousand to 1.332 million and accounted for 21.5% of the unemployed. Over the year, the number of long-term unemployed has declined by 403 thousand.

·      The labor force participation rate decreased by 0.2 percentage point to 62.7% in August.

·      The average workweek of all employees on private nonfarm payrolls was unchanged at 34.5 hours.

·      In August, average hourly earnings of all employees on private nonfarm payrolls increased by 10 cents to $27.16. Over the past 12 months, average hourly earnings were up 2.9%.

·      Second quarter productivity increased 2.9% (seasonally adjusted annual rate) in the non-farm business sector, following a 0.3% increase in the previous period. Hourly compensation rose 1.9%, while unit labor costs decreased 1.0%. From the second quarter of 2017 to the second quarter of 2018, labor productivity increased 1.3%, reflecting increases in output and hours worked of 3.5% and 2.2%, respectively.

·      The advance figure for initial claims for unemployment insurance was 203 thousand in the week ending September 1, a decrease of 10 thousand from the previous week. This is the lowest level for initial claims since December 6, 1969 when it was 202 thousand. The 4-week moving average was 209.5 thousand, a decrease of 2.75 thousand from the previous week’s average. This is the lowest level for this average since December 6, 1969 when it was 204.5 thousand.

·      New orders for manufactured goods decreased 0.8% in July, while shipments increased less than 0.1%. Excluding transportation, new orders were up 0.2% in July, and shipments were up 0.4%. Year-to-date manufacturers’ new orders were up 8.3%, while shipments were up 7.5%.

·      Sales of domestic cars decreased 6.2% in August, while total light vehicle sales decreased 0.6%. Total vehicle sales were 16.6 million units in August, at a seasonally adjusted annual rate, compared to 16.5 million in August of 2017.

·      The results of Freddie Mac’s Primary Mortgage Market Survey of September 6th showed average fixed mortgage rates moving higher. 30-year fixed-rate mortgage averaged 4.54% for the week ending September 6^th, up from last week when it averaged 4.52%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.78%.

·      Mortgage applications decreased 0.1% from a week earlier, according to data from Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending August 31st.