Conference Board Leading Economic Index; August, 2022

New York, September 22, 2022…The Conference Board Leading Economic Index® (LEI)for theU.S. decreased by 0.3 percent in August 2022 to 116.2 (2016=100), after declining by 0.5 percent in July. The LEI fell 2.7 percent over the six-month period between February and August 2022, a reversal from its 1.7 percent growth over the previous six months.

“The US LEI declined for a sixth consecutive month potentially signaling a recession,” Ataman Ozyildirim, Senior Director, Economics, at The Conference Board. “Among the index’s components, only initial unemployment claims and the yield spread contributed positively over the last six months—and the contribution of the yield spread has narrowed recently.”

“Furthermore, labor market strength is expected to continue moderating in the months ahead. Indeed, the average workweek in manufacturing contracted in four of the last six months—a notable sign, as firms reduce hours before reducing their workforce. Economic activity will continue slowing more broadly throughout the US economy and is likely to contract. A major driver of this slowdown has been the Federal Reserve’s rapid tightening of monetary policy to counter inflationary pressures. The Conference Board projects a recession in the coming quarters.”

United States individual total debt balances; July 2022

Following from the New York Fed quarterly report on household debt and credit.

Total household debt rose $312 billion, or 2 percent, in the second quarter of 2022 to reach $16.15 trillion, according to the latest Quarterly Report on Household Debt and Credit. Mortgage balances—the largest component of household debt—climbed $207 billion and stood at $11.39 trillion as of June 30. Credit card balances saw their largest year-over-year percentage increase in more than twenty years, while aggregate limits on cards marked their largest increase in over ten years. Transitions into delinquency ticked up but remained very low compared to historical levels.

Mortgage balances shown on consumer credit reports increased by $207 billion during the second quarter of 2022 and stood at $11.39 trillion at the end of June, compared to $10.44 trillion four quarters ago.

Balances on home equity lines of credit (HELOC) increased by $2 billion, a modest increase but one that follows many years of declining balances; the outstanding HELOC balance stands at $319 billion.

Credit card balances saw a $46 billion increase since the first quarter – although seasonal patterns typically include an increase in the second quarter, the 13% year-over-year increase marked the largest in more than 20 years. Credit card balances remain slightly below their pre-pandemic levels, after sharp declines in the first year of the pandemic.

Auto loan balances increased by $33 billion in the second quarter, continuing the upward trajectory that has been in place since 2011.

Student loan balances now stand at $1.59 trillion, roughly unchanged from the first quarter of 2022.

Other balances, which include retail cards and other consumer loans, increased by a robust $25 billion. In total, non-housing balances grew by $103 billion, a 2.4% increase from the previous quarter, the largest increase seen since 2016.

National new home construction metrics; August 2022

September 20, 2022 ‐ The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced the following new residential construction statistics for August 2022:

Building Permits
Privately‐owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,517,000. This is 10.0 percent below the revised July rate of 1,685,000 and is 14.4 percent below the August 2021 rate of 1,772,000.

Single‐family authorizations in August were at a rate of 899,000; this is 3.5 percent below the revised July figure of 932,000. Authorizations of units in buildings with five units or more were at a rate of 571,000 in August.

Housing Starts
Privately‐owned housing starts in August were at a seasonally adjusted annual rate of 1,575,000. This is 12.2 percent (±14.9 percent)* above the revised July estimate of 1,404,000, but is 0.1 percent (±9.6 percent)* below the August 2021 rate of 1,576,000.

Single‐family housing starts in August were at a rate of 935,000; this is 3.4 percent (±10.1 percent)* above the revised July figure of 904,000. The August rate for units in buildings with five units or more was 621,000.

Housing Completions
Privately‐owned housing completions in August were at a seasonally adjusted annual rate of 1,342,000. This is 5.4 percent (±12.1 percent)* below the revised July estimate of 1,419,000, but is 3.1 percent (±10.5 percent)* above the August 2021 rate of 1,302,000. Single‐family housing completions in August were at a rate of 1,017,000; this is 0.4 percent (±12.8 percent)* above the revised July rate of 1,013,000. The August rate for units in buildings with five units or more was 318,000.

CoreLogic analysis of combined rent and house price appreciation for top US metro areas.

Conference Board Employment Trends Index; August, 2022

The Conference Board Employment Trends Index™ (ETI) increased in August to 119.06, up from an upwardly revised 118.20 in July 2022. The Employment Trends Index is a leading composite index for employment. When the index increases, employment is likely to increase as well, and vice versa. Turning points in the index indicate that a turning point in the number of jobs is about to occur in the coming months.

“August’s increase in the Employment Trends Index indicates the labor market is currently still adding jobs at a robust pace,” said Frank Steemers, Senior Economist at The Conference Board. “But with headwinds in the rest of the economy already evident, expect job growth to decelerate for the remainder of the year.”

Steemers added: “In 2023, the labor market may look very different from today. With the US increasingly likely to fall into recession before the end of 2022, the pace of hiring will probably slow and the number of jobs openings will decrease. On the other hand, attracting and retaining workers may continue to be difficult. Labor shortages may continue to be a challenge for businesses, and even if they ease during a coming recession, they could soon reappear after economic activity picks up again. Therefore, employers may try to hold onto their workers.”

August’s increase in the Employment Trends Index was driven by positive contributions from four of eight components. From the largest positive contributor to the smallest, these were: Initial Claims for Unemployment Insurance, Percentage of Respondents Who Say They Find “Jobs Hard to Get”, Real Manufacturing and Trade Sales, and Number of Employees Hired by the Temporary-Help Industry.

The Employment Trends Index aggregates eight leading indicators of employment, each of which has proven accurate in its own area. Aggregating individual indicators into a composite index filters out “noise” to show underlying trends more clearly.

Conference Board commentary on August, 2022 jobs report.

Commentary on today’s U.S. Bureau of Labor Statistics Employment Situation Report by Frank Steemers, Senior Economist, The Conference Board

Today’s jobs report showed solid job growth, with 315,000 jobs added in August 2022, after an increase of 526,000 jobs in July. Labor shortages are still a major problem for employers while employees are benefiting from increased job opportunities and more bargaining power. Nonetheless, with broad-based gains in jobs, but also still very elevated inflation, the Fed will likely feel comfortable with another 75 basis points interest rate hike. With the Fed expected to further raise interest rates and economic activity already slowing, job growth is likely to decelerate over the next months.

The unemployment rate ticked up to 3.7 percent in August 2022, from 3.5 percent in July, as more people actively looked for work. This was represented by the labor force participation rate increasing to 62.4 percent in August, up from 62.1 percent in July.

Job gains were widespread with most industries adding jobs. Leisure and hospitality added another 31,000 jobs. More jobs were gained in professional and business services (68,000), health care and social assistance (61,500), retail trade (44,000), and manufacturing (22,000).

Wage growth remains elevated (5.2 percent higher compared to a year ago). Recruitment and retention difficulties are high with the number of job openings (11.2 million) and quits (4.2 million) still very elevated. The labor market is very tight and this continues to be a problem for employers as labor supply remains muted. While labor force participation for those aged 25 to 54 increased to 82.8 percent in August, it remains below its prepandemic rate of 83 percent from February 2020. For workers aged 55 and over, participation further declined in August and it remains even more subdued—38.6 percent in August 2022 compared to 40.3 percent prepandemic.

Economic activity is expected to further cool towards the end of the year with job growth likely to soon follow a similar downward trend. While job gains are currently still positive, The Conference Board projection for a short and mild recession before yearend may lead to the labor market shedding some jobs during 2023. However, job losses could be muted since companies may try to hold on to their workers. Labor shortages may not go away, or otherwise reappear shortly after a recession. In addition, some businesses are still short-staffed, so slowing economic activity and a decline in business demand would result into fewer job openings, but not necessarily translate into layoffs. Currently, the unemployment rate is projected to remain below 4.5 percent in 2023.

Conference Board Consumer Confidence Index; August, 2022

The Conference Board Consumer Confidence Index® increased in August, following three consecutive monthly declines. The Index now stands at 103.2 (1985=100), up from 95.3 in July. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—improved to 145.4 from 139.7 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—increased to 75.1 from 65.6.

 
“Consumer confidence increased in August after falling for three straight months,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index recorded a gain for the first time since March. The Expectations Index likewise improved from July’s 9-year low, but remains below a reading of 80, suggesting recession risks continue. Concerns about inflation continued their retreat but remained elevated.”

“Meanwhile, purchasing intentions increased after a July pullback, and vacation intentions reached an 8-month high. Looking ahead, August’s improvement in confidence may help support spending, but inflation and additional rate hikes still pose risks to economic growth in the short term.”

Bureau of Labor Statistics metrics; 1Q/22

BLS reported the following for Wake County, comparing 1Q/22 with 1Q/21;

Percentage change in employment ranked 56 out of the 356 largest counties by population in the United States.

Percentage change in average weekly wage ranked 157 out of the 356 largest counties by population in the United States.

National new home sales metrics; July, 2022

New Home Sales
Sales of new single‐family houses in July 2022 were at a seasonally adjusted annual rate of 511,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 12.6 percent (±16.9 percent)* below the revised June rate of 585,000 and is 29.6 percent (±10.9 percent) below the July 2021 estimate of 726,000.

Sales Price
The median sales price of new houses sold in July 2022 was $439,400. The average sales price was $546,800.

For Sale Inventory and Months’ Supply
The seasonally‐adjusted estimate of new houses for sale at the end of July was 464,000. This represents a supply of 10.9 months at the current sales rate.

Conference Board Leading Economic Index, July 2022

New York, August 18, 2022…The Conference Board Leading Economic Index® (LEI)for theU.S. decreased by 0.4 percent in July 2022 to 116.6 (2016=100), after declining by 0.7 percent in June. The LEI was down by 1.6 percent over the six-month period from January to July 2022, a reversal from its 1.6 percent growth over the previous six months.

“The US LEI declined for a fifth consecutive month in July, suggesting recession risks are rising in the near term,” said Ataman Ozyildirim, Senior Director, Economics, The Conference Board. “Consumer pessimism and equity market volatility as well as slowing labor markets, housing construction, and manufacturing new orders suggest that economic weakness will intensify and spread more broadly throughout the US economy. The Conference Board projects the US economy will not expand in the third quarter and could tip into a short but mild recession by the end of the year or early 2023.”