- COVID-19 cases are setting new records in Sun Belt states.
- Auto sales look positive, but momentum is slowing.
- Jobless claims remain high; consumer sentiment dips.
We are once again setting records in daily new cases of COVID-19 in the U.S. Outbreaks in Sun Belt states from California to Florida and up to North Carolina are causing concern. Impacted cities and states are contemplating new stay-at-home orders to contain. We are seeing slowing momentum in the auto market in the back half of June, which may be a combination of the virus spread and low inventory.
The recovery can be seen in new home sales and increased consumer spending in May. Unemployment is not declining quickly. Household incomes are starting to fall as the stimulus payments wane.
Jobless claims remain high: Initial jobless claims were 1.5 million for the week ending June 19, which rounded was no change from the prior week. Continuing claims, which represent people who previously filed and were approved and remain on unemployment compensation, were 19.5 million. That represents 12.8% of February’s job total. Continuous claims declined by about 800,000 from the prior week.
Consumer sentiment drops: Consumer sentiment declined again this week. The final reading on Consumer Sentiment in June from the University of Michigan fell to 78.1 from the preliminary estimate of 78.9 mid-month. Even with the slight decline, sentiment increased from May. The consumer view of buying conditions for vehicles increased again in June to reach the highest level in two years, but the view of prices deteriorated slightly. The trend in consumer sentiment is similar to what we have been tracking in the daily index of consumer sentiment from Morning Consult.
Auto sales look positive: Our leading indicators point to mostly positive trends in the auto market in June, especially in the used market, but we’ve seen slowing momentum for the last two weeks.
Home sales fall: Existing home sales declined for the third straight month in May to the
lowest pace of sales since October 2010. Unlike in April, inventory increased but was still below normal supplies.
Spending rises: Consumer spending increased driven mostly by spending on durable goods and vehicles though spending on non-durable goods and services also rose. The spending increase in May was the largest in the history of the data back to 1959, but it followed the biggest decrease in April.
Income falls: Personal income fell as the impact of CARES act payments in April dissipated. Wages and salaries increased 2.7%, but government payments declined 17%. Unemployment benefit payments increased 182% while “Other” government payments declined 63%. The increase in spending combined with the decline in income led to a decline in the personal savings rate to 23%, but that was still the second highest savings rate in the history of the data. Inflation remains low.
Check back on Smoke on Cars tomorrow for a video that will include updated data.