US Economy News Today: Inflation Slows In April, Coming In As Predicted For First Time This Year

view original post

Mortgage Demand Rides Interest Rate Waves Once Again

9 minutes ago

Demand for mortgages rose again last week, coming on another dip in borrowing costs for home loans, according to data from the Mortgage Bankers Association (MBA).

For the week ending May 10, applications for mortgages increased by 0.5% compared with the previous week. The drop comes as the 30-year, fixed-rate mortgage dropped to its lowest level in more than a month to 7.08%, according to the MBA.

Lower interest rates for home loans helped drive up refinancing activity, while home purchase applications were lower this week.

“While the downward move in rates benefits prospective homebuyers, mortgage rates are still much higher than they were a year ago, while for-sale inventory remains tight,” said Joel Kan, MBA vice president and deputy chief economist. 

-Terry Lane

Retail Sales Were Flat In April As Consumers Slow Spending

41 minutes ago

Consumer spending appeared to slow down in April, coming in relatively unchanged compared with March’s downwardly revised levels and below economists’ forecast. 

The Census Bureau reported that April retail sales were $705.2 billion, just above the adjusted March totals. Economists were expecting a 0.4% increase in sales this month. The drop is a noteworthy reversal in consumers’ spending trends, as several retail sales reports over the past year have delivered better-than-expected results.

The lower retail sales numbers were spurred by a slowdown in car buying, as auto dealers reported that sales were lower by 0.8%.

E-commerce businesses lost ground this month as nonstore retail sales were lower by 1.2%, though online sales were higher when compared with April last year. Gas station sales were up by more than 3% as the index is not adjusted for inflation, while clothing, electronic and appliance stores also increased sales in April. 

-Terry Lane

Inflation Takes a Step Back in April

58 minutes ago

The cost of living as measured by the Consumer Price Index rose 3.4% over the year in April, down from a 3.5% increase in March, according to data from the Bureau of Labor Statistics Wednesday. That matched economists’ predictions and was the first time this year that price growth came in as expected. For the first three months of the year, inflation surprised coming in hotter than expected.

On a monthly basis, the index rose 0.3%, a tick lower than the 0.4% monthly increase the previous month, driven largely by increasing energy prices. 

This is a step back in the right direction for the Federal Reserve, which is waiting for confidence that inflation is sustainably moving toward its 2% annual goal.

High inflation has been tough on household budgets not only because of steeper prices for things like gas and groceries but also because it’s forced the Federal Reserve to delay cutting its benchmark interest rate. The decades-high interest rate has made borrowing through loans such as mortgages and credit cards more expensive.