Research

Data through May suggest that U.S. international trade growth continues to accelerate. The 3-month moving average of total exports were up 5.6% year over year while imports grew 8.0%.

An annualized services trade surplus of $0.25 trillion and a goods trade deficit of $0.81 trillion net to a total trade deficit of $0.56 trillion.

The petroleum trade deficit has narrowed substantially since 2011, while the trade balance excluding petroleum is near record lows.

Shown below are the major categories of goods and services and their historical levels of imports and exports.

Light vehicle sales in the U.S. slowed again in June to an annualized rate of 16.41 million from 16.58 million in May. While now well down from the cycle high of 18.32 million in December, the current sales rate of around 16.6 million is still relatively strong by historical standards. Sales figures shown below are 3-month moving averages.

Total U.S. construction spending in May was about 3% higher than at pre-crisis peak level in 2006. Nonresidential spending has surpassed its 2008 high while residential spending remains well below its 2006 high.

Dividing the categories into public and private sector construction spending illuminates which areas are most reliant on government funding.

The BEA’s third estimate of U.S. real GDP growth in the first quarter was 1.4% annualized, an increase from the second estimate of 1.2%. Consumption was the largest contributor to growth accounting for 0.8% while government was a drag of -0.2%.

Total real GDP in Q1 was 2.1% higher than Q1 of last year. It is now up 12.5% from it’s pre-crisis peak and 17.5% from post-crisis low.

The bulk of economic growth during the recovery is attributable to the consumption component of GDP.

However, Q1 was the slowest quarter of growth for consumption since Q2 2013.

While consumption has carried the economy, investment has only recently surpassed it’s pre-crisis peak. Net trade and government have not yet recovered to their pre-cris peak levels.

Total nominal GDP has increased 4.08% from a year ago, but once dividing by the GDP price deflator of 1.93%, real GDP has increased by just 2.10%.

Economic growth has historically been consumption driven and remains so.

Consumption has grown to account for more than two-thirds of the economy.

House prices in the U.S. continue steadily rising, with the S&P Case-Shiller index up 5.5% year over year in April. The FHFA’s index, which is derived from transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac, has increased 6.9%.

Sales prices of previously lived in homes reflect a similar trend, while new home sales prices are often too volatile to offer a reliable signal.

All 20 of the major U.S. cities tracked by the Case-Shiller index have experienced year over year gains in house prices. The total National index is now 2.4% higher than it’s pre-crisis peak while the 20-City Composite index has not yet fully recovered.

Looking at each city individually, we can see where housing excess was most prevalent leading up to the financial crisis.

While all 20 cities tracked in the Case-Shiller index have seen gains, prices in Cleveland are up only 3.4% from a year ago.

The FHFA tracks house prices by region rather than city and offers an alternative perspective. Their index shows house prices having increased the most year over year in the Mountain region.

The Pacific experienced pre-crisis housing growth unlike any other region.

New home sales have been accelerating and now exceed a rate of 0.6 million. Sales of previously occupied homes are around a rate of 5.6 million. The relative share of home sales that are new remains well below the 1990 to 2008 trend.

Total housing inventory is around 2.2 million, of which 0.3 million are new and 1.9 million are existing. At current sales rates, there are 5.1 months supply of new homes and 4.1 months supply of existing homes available for sale.

Homes are being sold extremely quickly, with the median new home on the market for only 3.4 months, near historic lows.

Housing starts in the U.S. were at 1.20 million on a rolling annual basis through May. Starts totaled 0.60 million in the South census region, 0.31 million in the West, 0.18 million in the Midwest, and 0.11 million in the Northeast.

Single-family starts totaled 0.81 million and multi-unit starts were 0.39 million, bringing the single-family share of the total to 67.5%.

Housing starts are increasing at the fastest relative pace in the West, up 15.2% year over year.