- U.S. GDP decreased at an annual rate of 32.9%
- The U.S. Consumer Confidence Survey fell to 92.6 in July from 98.3 in June
- Home prices in the 20-city composite increased 3.7% in May from the prior year, according to the Case-Shiller Index
Top Three Market Headlines
U.S. GDP Posts Record Downturn: According to The Bureau of Economic Analysis advance estimate released on Thursday, real U.S. GDP decreased at an annual rate of 32.9% in Q2 2020. The steep decline, the largest contraction in U.S. history, came as states imposed lockdowns in March and April across the country, hurting consumer (-34.6%) and business (-27%) spending. Only Federal government spending recorded an increase while personal consumption, exports, private inventory investment, nonresidential and residential fixed investment, and state and local government spending all decreased. Many forecasters predict a recovery during the second half of 2020 that depends on the country’s capacity to control the pandemic.
Consumer Sentiment Dips in July after Spending Rose in June: The Bureau of Economic Analysis (BEA) reported last Friday that personal consumption expenditures (PCE), a measure of consumer spending for all goods and services, rose 5.6% in June from May, as the economy continued to reopen in June. However, since then, consumer optimism has deteriorated as U.S. COVID-19 cases have risen along with unemployment claims, following several months of declines. The Conference Board, a private research group, stated last week that its index of consumer confidence contracted from 98.3 in June to 92.6 in July. The short-term outlook of business conditions over the next six months also declined, illustrating the sensitivity of U.S. consumer demand to news surrounding the coronavirus outbreak.
Housing Market Shows Strength: Data released last week indicated that the U.S. housing market continues to show strength in spite of high unemployment and the uncertainty of COVID-19. Home prices across 20 key metropolitan areas increased in May at a 3.7% annual rate, according to the S&P CoreLogic Case-Shiller National Home Price Index. Additionally, U.S. sales of existing homes in June stunningly rose 20.7% from the prior month, with pending home sales up 16.6% over the same timeframe. The housing market, already a bright spot for the U.S. economy, could receive a further boost with the 30-year average fixed-rate mortgage dipping down to 2.99% last week.