Thursday's Scoop: Complacent🌤️

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Insiders, look out for the Weekly Scoop tomorrow.

Here’s what you need to know today to inform your work, spending, and investments…

1. Layoffs picked up last week.

2. Americans keep spending, but they’re trading down to cheaper items.

3. The number of homeowners with more debt than home value keeps climbing.

Unemployment Rate: 3.9%
^{Still near the lowest rate in 50+ years}

Layoffs jumped last week to the highest level in more than eight months. The Labor Department reported that initial jobless claims rose to 231,000, not that far from average but somewhat concerning. This follows the official April jobs report last week, which revealed increasing unemployment and the fewest new hires in six months. The number of people receiving unemployment benefits for consecutive weeks also climbed last week, indicating that finding jobs is growing more challenging. The number of open positions has fallen steadily over the previous several months. Overall, the jobs market is still remarkably healthy, but the last few months have signaled a trend toward more unemployment and slower hiring.

Inflation Rate: +3.5% (YoY), +0.4% (MoM)
^{Policymakers aim for 2% YoY inflation. (March CPI)}

Americans continue spending, but they’re trading quickly to cheaper items. Adobe Analytics revealed that overall e-commerce spending in the first three months of the year was 7% higher than last year's first quarter. Adobe’s Digital Price Index reported a -5.6 % decline over the past year. So, online goods have actually gotten cheaper while in-person goods have climbed. That means the net amount people spent online was even more pronounced. However, they’re trading to more affordable goods more rapidly than usual. Spending growth on the cheapest segment of goods within each spending category dramatically outpaced growth in the most expensive products.

30yr Mortgage Rate: 7.2%
^{That’s up from 6.6% a year ago. (MBA)}
Median Home Price: $393,500
^{That’s up from $375K a year ago. (NAR)}

Falling real estate prices have trapped more homeowners in unmanageable mortgage debt. A new report from real estate data firm ATTOM revealed that 2.7% of homes in the US carry debt balances that are at least 25% higher than the value of their home. This can happen when someone purchases a home at a high price or with a down payment that is too small, and then the home value decreases to below the amount they borrowed from the bank. This can prevent homeowners from selling because they would need to pay the difference back to the lender on top of the money they get from the sale. The problem is more pronounced in Southern states that saw significant real estate investment post-pandemic, with 5-8% of homes underwater. While these rates are increasing, they’re still well below the levels before the pandemic.

The Market: ⬆️ +0.5%
S&P 500: 5,214.08
1Mo: +1% | 1Yr: +27% | 5Yr: +81%

The market pushed higher today as investors celebrated more signs of a slowing economy, hoping that means policymakers are more likely to make borrowing less expensive sometime soon. That seems enough to distract from the fact that the economy is still slowing.