The American economy lost momentum in the second quarter, according to the latest Market Minute Write-up report from the California Association of Realtors (CAR), with growth slipping to an annual rate of 1.5%, well below the 2.1% economists had forecast.
The reading, drawn from Commerce Department figures cited in the association’s report, marks a step down from the first quarter’s 2.1% pace. The report notes that consumer confidence, construction activity and housing demand are all showing signs of strain.
Citing Conference Board data, the association’s report points to a third straight monthly decline in how Americans view current business conditions. The Consumer Confidence Index fell to 90.8 in July. Dana Peterson, the board’s chief economist, said consumers expect little improvement over the next six months.
The report also tracks a slowdown in construction spending, which slipped 0.1% in June to a seasonally adjusted annual rate of $2,166.5 billion, missing the 0.2% gain economists had projected. Homebuilding bore much of the weakness, with single-family construction down 3.3% from a year earlier as the association’s report notes the average 30-year mortgage rate climbed to 6.66%, its highest level in a year.
According to the CAR report, the Federal Reserve left interest rates unchanged for a fifth straight meeting, though three regional bank presidents dissented in favor of a hike, the first three-way dissent in the same direction since 2016. New Fed Chair Kevin Warsh cited elevated inflation tied partly to energy shocks stemming from the conflict in Iran.
The report also notes that consumer spending held up better than the broader numbers suggest, aided by larger tax refunds. With oil prices climbing and mortgage costs still elevated, the report suggests the pace of growth could remain modest over the second half of the year.
