U.S. Economy Forecast for Remainder of 2018

By Nottingham Advisors

Falling unemployment and rising home prices were the two constants in June’s economic data while the rest of the metrics we track were a mixed bag. The third reading for Q1 GDP showed just a 2% annualized growth rate in the first quarter, slightly below expectations.

Rising short-term interest rates and the growing specter of a global trade war are starting to work their way into the data and will likely impact the economy going forward.

The unemployment rate for May edged down to just 3.8%, the lowest reading in nearly 20 years. The underemployment rate dipped to 7.6% while the labor force participation rate fell to 62.7% Average hourly earnings edged up a higher than expected +0.3% and are now up +2.7% YoY. Initial Jobless Claims averaged 221K on the month.

Home Prices Grind Higher

Home prices continued to grind higher as June’s report on April prices showed the S&P CoreLogic CS US home price index up 6.4% YoY. New Home Sales for May surged a better than expected 6.7% while Existing Home Sales were down slightly. Housing Starts for May rose 5.0% MoM while the MBA Mortgage Application index rose 5.1%.