Highlight of the Week
Jobless Claims and Layoffs On the Rise
-For the week ending July 2, initial filings for unemployment benefits rose by 4,000, totaling 235,000. Planned layoffs saw a bit of a larger uptick in June, reaching 32,517, up 57% from May. Both of these numbers surpassed recent highs- the number of people filing for unemployment is the highest since Jan. 15, and for planned layoffs, highest since February of 2021.
-Experts say the unemployment rate is still at an unsustainable level of 3.6%, and the Federal Reserve will continue to look for signs that the tight labor market is starting to unwind.
Federal Reserve’s Meeting Minutes Offer Little Outlook
–The Federal Reserve released the minutes from its June 14th and 15th meeting, highlighting the Fed’s firm stance on fighting inflation. According to the minutes, the Fed is ready to do whatever is necessary to tame inflation, even accepting the possibility of a recession.
-Since the Fed’s last meeting, inflation has shown signs of cooling – recent data has shown that consumer spending and economic growth have decreased, but whether it has satisfied the Federal Reserve is up for debate. Many experts believe another 75-basis point rate hike could be in store for July, citing the Fed’s repeated message of curtailing inflation as their top priority.
Mortgage Demand Falls Even As Rates Dip
-For the second week in a row, mortgage rates fell from historic highs, but demand for mortgages hasn’t budged. Average contract interest rates for 30-year fixed-rate mortgages fell from 5.84% to 5.74% this week, but people still struggle with affordability.
-Home purchase applications fell 4% from a week prior and 17% year-to-date as buyers are battling low inventory and historically high mortgage rates. According to Realtor.com, June’s for-sale inventory climbed by 18.7% but is still down 53.2% from June 2019. Buyers will seek more relief before entering the market as fears of a recession loom.