This Week's State Of The Economy - What Is Ahead? - 22 January 2021

By: Taro Chellaram /Wells Fargo Economics & Financial Report/Jan 23, 2021

This Week's State Of The Economy - What Is Ahead? - 22 January 2021

U.S. - Housing Remains at the Forefront of the Recovery

  • Housing starts jumped 5.8% during December. Single-family starts soared 12%, while multifamily starts dropped 13.6%. Total starts are running at a 1.67 million-unit pace, the strongest pace since 2006. Existing home sales rose 0.7% to a 6.76 million-unit pace in December. Mortgage applications for purchase are up 14.7% over the year as of January 15.
  • The NAHB Housing Market Index fell to 83 in January. Builder confidence remains exceptionally high, but the index has slipped in recent months alongside rising material prices and the latest COVID surge. Initial jobless claims fell to 900K during the week ended January 16. Despite the drop, new filings remain elevated, which means another negative print for payrolls in January is possible.

 

Global - Mixed Fortunes for the Global Economy

  • This past week saw some reports showing mixed fortunes for key international economies. China reported another solid GDP increase in Q4, while for full-year 2020 GDP rose 2.3%, the only major global economy to enjoy positive growth last year. Elsewhere, Japan and Mexico appear to be experiencing a steady rather than especially strong rebound, while Eurozone PMI surveys hint at a renewed contraction across the region in late 2020 and early 2021.
  • For now, central banks are sitting on the sidelines. The European Central Bank held monetary policy steady and, with regard to its asset purchases, said that it might not use its full envelope of asset purchases, but equally that its purchase program could be re-calibrated. The Bank of Canada kept policy unchanged, though hinted at an eventual tapering in bond purchases as confidence in the economic recovery improves, while the Bank of Japan held monetary policy unchanged at its meeting this week.



November 2020 Economy At A Glance

U.S. gross domestic product (GDP) grew 7.4 percent, or $1.3 trillion in Q3, adjusted for inflation.

This Week's State Of The Economy - What Is Ahead? - 29 January 2021

Economic data came in largely as expected this week and suggest continued economic recovery.

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The latest hiring data are an encouraging sign that the U.S. economy is withstanding the global slowdown and continued trade-related uncertainty.

This Week's State Of The Economy-What Is Ahead?

How will Fed rates-cut and Trump 10% tariff on $300 Billion Chinese Goods countered by Chinese currency devaluation against Dollar, affect inflation and economic slowdown in US economy?

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Financial markets were looking for validation that January\'s unexpected strength was not a fluke and that the downward slide in economic momentum experienced late last year had stabilized.

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The FOMC hiked the federal funds rate by 25 bps on Wednesday amid continued strength in the labor market and elevated inflation.

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Over the past year, the housing market has become white-hot.

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The COVID-19 coronavirus hammered financial markets this week and rapidly raised the perceived likelihood and magnitude of additional Fed accommodation.

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The re-opening of the country is getting underway, with all 50 states starting to roll back restrictions.

This Week's State Of The Economy - What Is Ahead? - 02 July 2021

We added 850,00 jobs in June, but much of that was State governments school districts in some parts of the Country reopening just in time for summer break.


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