Wednesday's Scoop: Encouraged 🌤️

Hey friend - welcome back to your scoops.

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

1. Employers haven’t hired as many people this year as initially thought.

2. Egg prices are climbing again thanks to bird flu.

3. Mortgage rates keep falling, but not enough to entice home buyers.

Unemployment Rate: 4.3%
^{Relatively low, but up from 50-year lows}

Employers haven’t been hiring as many people as initially reported. The Labor Department drastically revised down its estimate of job growth for the year ending March 2024, reducing the total by 818,000 jobs – the largest downward revision since 2009. This adjustment means monthly job gains averaged only 174,000, far below the previously reported 242,000. Economists consider about 200,000 net new hires per month to indicate a healthy economy. The professional and business services sector saw the most significant cut, losing 358,000 jobs from earlier estimates. This substantial correction raises questions about the accuracy of initial job reports and reinforces growing concerns about an economy that’s not as strong as the macro data makes it seem.

Inflation Rate: +2.9% (YoY), +0.2% (MoM)
^{Policymakers aim for 2% YoY inflation. (July CPI)}

Egg prices are on the rise again, squeezing household budgets. The Bureau of Labor Statistics reported that egg prices surged 5.7% in July, up 19.1% in the past year, far outpacing the broader cost of living inflation of 0.2% in July and 2.9% over the past year. This sharp increase, primarily attributed to ongoing avian influenza outbreaks in Colorado and California, pushed the average price for a dozen large Grade A eggs above $3 for the first time in over a year. While prices are down from their peak of nearly $5 in January 2023, the average cost of a dozen eggs is still 88% higher than three years ago. Experts suggest that future price trends will depend on the spread of bird flu, with consumers potentially seeing some relief in coming seasons less prone to outbreaks.

30yr Mortgage Rate: 6.5%
^{That’s down from 7.3% a year ago. (MBA)}
Median Home Price: $426,900
^{That’s up from $410K a year ago. (Existing Homes, NAR)}

Mortgage rates have dropped significantly, but not enough to entice new home buyers. The Mortgage Bankers Association reported that the average 30-year fixed mortgage rate decreased again last week to 6.50% from 6.54%, down 32 points in the past month and 81 points since last year. Falling rates encouraged many to refinance for a cheaper mortgage. Last week, the number of refinancing applications dropped 15% from the recent surge in demand, but volumes are still 90% higher than a year ago. The low rates haven’t inspired the same action for home buyers. Home purchase applications fell 5% week-over-week and are now 8% lower than last year, reaching their lowest level since February. This cooling suggests that while lower rates offer some relief, affordability remains a significant hurdle in the housing market.

The Market: ⬆️+0.4%
S&P 500: 5,620.85
1Mo: +1% | 1Yr: +28% | 5Yr: +97%

The market climbed today as investors celebrated signs of continued consumer spending from major retailers. Updates from the Labor Department revealed that hiring has been even slower than initially reported this year. Minutes from the last Federal Reserve meeting revealed that policymakers were already nearing a decision to reduce borrowing costs in July, so these continued signs of slowing hiring have raised expectations for an interest rate cut in September.