Eye on the Economy with Adam Perrotta
- Aug 18, 2008
The nation’s economic picture has continued to look troubled as of late, with relief in oil prices being undercut by continued sharp downturns in employment and housing, as well as growing inflation.
The sluggish job market did see a slight uptick last week, as the number of workers filing for unemployment benefits fell slightly from a six-year high. According to the Department of Labor, 450,000 American workers filed initial unemployment claims during the week ending August 9th—down from 455,000 new claims during the previous week, and the first week-to-week drop in claims since early July.
The gains in employment, however, were tempered by more trouble elsewhere in the economy.
The annual inflation rate jumped to 5.6 percent in July, up from 5.0 percent in June and the highest reading in 17 years. Even with the recent easing of oil prices, the biggest driver of inflation remains the cost of energy; household fuel oil and gasoline prices jumped 61 percent and 38 percent, respectively, over last year. If oil prices continue their recent drop, though, inflation could temper. The Federal Reserve will no doubt be keeping an eye on the situation in the run-up to its interest rate meeting next month, and could be tempted to raise rates to prop up the dollar and moderate inflationary pressures.
Meanwhile, single-family home prices continue to plunge, according to a report released last week by the National Association of Realtors. The nation’s median single-family home price dropped 7.6 percent during the three months ending June 30th as compared to the same time last year. Foreclosures were mainly to blame for the decline, as banks sold off repossessed homes at bargain prices. The nation’s Sunbelt markets continued to be the hardest hit by foreclosures, with some metro areas in the West and South seeing as much as a 35 percent year-over-year price decline. In these markets existing home sales jumped as buyers took advantage of the low prices. Apartment owners in these markets could see a decline in rental demand as prices continue to fall.