Economic News Update for Week of May 25th


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The Conference Board’s index of leading U.S. economic indicators, designed to forecast turning points in the business cycle, edged up 0.1% in April, a modest increase that shows the economy is still inching forward. The better-than-expected performance was the first month that the index increased, following five straight monthly declines.

Inflation at the wholesale level increased just 0.2% in April after surging 1.1% in March, the Labor Department reported May 20. Although the increase was lower than analysts expected, core wholesale inflation - which excludes food and energy prices - rose 0.4%, double what economists had predicted. The rise in core inflation reflected gains in a number of areas, including a 0.7% increase in prescription and over-the-counter drug prices, a 0.4% hike in prices for passenger cars and a 1.8% spike in commercial furniture.

There were several new reports on the home and mortgage fronts. Sales of existing homes fell 1% to 4.89 million units on an annual basis, matching the all-time low in January, the National Association of REALTORS® said May 23. The median price for an existing home dropped 8%, compared with a year ago, to $202,300. The backlog of homes rose in April to a 10.7 months’ supply, the highest inventory since June 1985.

On the plus side, home price affordability is dramatically improving, according to the National Association of Home Builders. Its Housing Opportunity Index, released May 20, showed that 53.8% of all new and existing homes sold nationwide in the first quarter of 2008 were affordable to families earning the median household income of $61,500. That’s the most affordable homes have been since the three-month period that ended June 30, 2004.

Meanwhile, interest rates on 30-year mortgages fell to their lowest level in five weeks, Freddie Mac said May 22, 2008.

Weekly jobless claims by newly laid-off workers fell by 9,000 to their lowest level in four weeks, the Labor Department said May 22. Economist had expected an increase.

Economic news due out this week includes new home sales on May 27 and durable goods orders on May 28.




*Economic data compiled from gov’t reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo economic calendar