It was a light week for U.S. economic data. The Conference Board’s Leading Economic Index gained just 0.1 percent in December. The interest rate spread between 10-year Treasury bonds and the fed funds rate continues to keep the index in positive territory. The recently squirrely unemployment insurance claims data was the biggest negative contributor in December. The Coincident and the Lagging Indexes were both positive.
Existing home sales increased in December by 1.0 percent to hit a 4.87 million unit rate. It is a relief to see the gain in December, following the drop in November. However, existing homes sales remain below the July/August high rate of 5.39 million units.
Initial claims for unemployment insurance for the week ending January 18 increased by 1,000 to hit 326,000. Initial claims have been volatile since the early October federal government shutdown. Initial claims in the range of 300,000 to 350,000 are consistent with improving labor market conditions. Continuing claims, at 3,056,000 for the week ending January 11, remain high for a mid-cycle economy. It looks like Congress will not resurrect federal support for extended benefits, which expired at the end of 2013. States are rolling back to normal benefits. Continuing claims will drop as a result.
For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly012414.