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The Federal Open Markets Committee (FOMC) released the minutes of their July/August meeting, which provide a detailed look at the FOMC’s evaluation of economic conditions and the discussions that led to the decision to leave the prime rate unchanged. The minutes reaffirmed that further gradual rate increases would be consistent with policy goals and quoted odds of 90% for a rate increase in the September meeting. The minutes also forecast economic growth at an above-trend pace over the 2018-2020 period, and that an increased labor force participation rate would push the unemployment rate below the longer-run natural rate. Monetary policy continued to be described as “accommodative”, but many participants noted that the federal funds rate was moving toward a neutral level, and describing monetary policy as accommodative would not be appropriate at that level.
The seasonally adjusted annual rate of new home sales for single family homes hit a 9-month low in July at 627,000, down -1.7% from June, but up +12.8% from 556,000 in July 2017. Over half the sales were in the Southern region (56.6%), with 27.6% of the sales in the West, 12.4% in the Midwest, and 3.3% in the Northeast. On a yearly basis, sales were down in the Northeast (-48.8%), but increased in the West (+18.5%), Midwest (+18.2%), and South (+17.2%). Most homes were priced in the $300,000 – $399,999 range (32%), followed by the $200,000 – $299,999 range (28%), with a median price of $328,700 (+1.8% Y/Y).
A $4.6 billion (-5.3%) drop in new transportation orders drove overall durable goods orders down -1.7% in July, while new orders for June were revised downward to a +0.7% gain. The drop in transportation orders was led by drops in orders for both defense (-34.6%) and nondefense (-35.4%) aircraft, with motor vehicles orders increasing +3.5% for the month and +6.3% for the year. Capital goods orders dropped -5.0% (+9.6% Y/Y), but core capital goods, which exclude both defense and aircraft orders, registered a +1.4% gain, and gained +9.6% for the year.
Wednesday August 29 – GDP, 2018 Q2
Thursday August 30 – Personal Income and Outlays