The U.S. economy has been growing at a strong pace in 2018 with second quarter Gross Domestic Product at a robust 4.1%. This week, Target CEO said, “We’re currently benefiting from a very strong consumer environment, perhaps the strongest I’ve seen in my career.” Retailers have recently reported the strongest sales in over a decade. Consumer spending makes up two-thirds of economic activity and as Americans spend money, economic growth should continue.
The Federal Housing Finance Agency reports that home prices rose 1.1% in the second quarter of 2018 in its House Price Index (HPI), as low inventories continue to push prices higher. House prices were up 6.5% from the second quarter of 2017 to the second quarter of 2018. On a monthly basis, prices were up 0.2% from May to June. The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.
Fed Chair Powell spoke at the Fed sponsored Jackson Hole Economic Symposium today, which was eagerly anticipated this week. Mr. Powell said that gradual rate hikes seem appropriate and he expects strong economic growth to continue. The Federal Reserve will do whatever it takes on inflation but there are no clear signs of it accelerating above its target range of 2%. Mr. Powell went on to say that the U.S. economy does not seem to be showing signs of overheating. Most people who want jobs can find them.
