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Friday Economic Update | 1.1.21


Data Updates: 12/28 to 12/31: University of Michigan consumer sentiment (month end), weekly unemployment claims, and STLFSI; 12/21 to 12/24: Existing home sales, CFNAI, private building permits, weekly unemployment claims, and STLFSI; 12/14 to 12/18: Total vehicle sales, industrial production and capacity utilization, retail sales, STLFSI, and weekly unemployment claims; 12/7 to 12/11: NFIB small business optimism, nonfarm job openings, nonfarm hires, STLFSI, weekly unemployment claims, and University of Michigan consumer sentiment; 11/30 to 12/4: NACM credit managers' index, ISM manufacturing, ISM services, STLFSI, weekly unemployment claims, temporary employment, and yield curve.

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Percent from Baseline: 3-Month and 1-Year Trends
Updated 11/19. Next update 11/25.

Here is a graph from the Mortgage Monitor that shows Black Knight's estimate of the mortgage payment to income ratio.

From Black Knight:

• Even with home price growth accelerating, today’s low interest-rate environment has made home affordability the best it’s been since early 2018

• At that time, the housing market was red-hot, with national home price growth at 6.6% and climbing – before rising rates and tightening affordability triggered a pullback in growth rates

• It now requires 20.6% of median monthly income to purchase the same home as it did just over a year ago, the smallest payment-to-income ratio we’ve seen in two years

• Put another way, prospective homebuyers can now purchase a $48K more expensive home than a year ago while still paying the same in principal and interest, a 16% increase in buying power

• Recent history at comparable levels of affordability suggest acceleration in home price growth may well continue in the coming months as this increased buying power puts upward pressure on home prices across the country

Sahm Recession Indicator signals the start of a recession when the three-month moving average of the national unemployment rate (U3) rises by 0.50 percentage points or more relative to its low during the previous 12 months.

This indicator is based on "real-time" data, that is, the unemployment rate (and the recent history of unemployment rates) that were available in a given month. The BLS revises the unemployment rate each year at the beginning of January, when the December unemployment rate for the prior year is published. Revisions to the seasonal factors can affect estimates in recent years. Otherwise the unemployment rate does not revise.


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