US ECONOMY & POLITICS

Home-Price Growth Hit Record in March – Wall Street Journal, 5/31/2022

• Home-price growth rose to a new record in March as robust home-buying demand outweighed the limited supply of homes for sale.
• The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 20.6% in the year that ended in March, up from a 20% annual rate the prior month.
• March marked the highest annual rate of price growth since the index began in 1987.
• The Case-Shiller index, which measures repeat-sales data, reports on a two-month delay.
• Inventory has risen since March but remains below typical levels.
• A separate measure of home-price growth by the Federal Housing Finance Agency also released Tuesday found a 19% increase in home prices in March from a year earlier.
• The median existing-home price rose 14.8% in April from a year earlier, the National Association of Realtors said, to $391,200, a record high in data going back to 1999.

US Consumer Confidence Drops to Three-Month Low on Inflation – Bloomberg, 5/31/2022

• US consumer confidence dropped in May to the lowest since February, underscoring the impact of decades-high inflation on Americans’ economic views.
• The Conference Board’s index decreased to 106.4 from an upwardly revised 108.6 reading in April, data out Tuesday showed.
• The median forecast in a Bloomberg survey of economists called for a decline to 103.6.
• Consumers expect prices to rise at a still-elevated 7.4% rate in the next year, the report showed.
• Plans to buy automobiles, homes and appliances all declined in May.
• A gauge of current conditions dropped to 149.6, suggesting consumers had a weaker assessment of the labor market.
• The Conference Board’s expectations index — which reflects consumers’ six-month outlook — fell to 77.5.
• The share of consumers who said jobs were “plentiful” decreased to 51.8%, the lowest in a year.
• Still, consumers stayed generally upbeat about the labor market six months from now.

Fed’s Waller backs 50 bps rate hikes until “substantial” reduction in inflation – Reuters, 5/31/2022

• The U.S. Federal Reserve should be prepared to raise interest rates by a half percentage point at every meeting from now on until inflation is decisively curbed, Fed Governor Christopher Waller said on Monday, underscoring tensions at the central bank about how aggressively to tighten policy as it battles to bring down high inflation.
• “I am advocating 50 (basis point hikes) on the table every meeting until we see substantial reductions in inflation. Until we get that, I don’t see the point of stopping,” Waller said following a speech to the Institute for Monetary and Financial Stability in Frankfurt, Germany, having earlier confirmed he wants that size of rate hike at the next “several” meetings.
• Waller, on the hawkish wing like Bullard, said he wants to see the central bank raising its policy rate above neutral – the level that neither stimulates nor constrains economic growth – by year end.
• The neutral rate is seen around 2.5%, according to the median of Fed policymaker estimates made at the March meeting.
• One policymaker though, Atlanta Fed President Raphael Bostic, said last week that he was in favor of a “pause” at the September meeting to allow time to assess the impact of the Fed’s moves on the economy and inflation.

US Home Sellers Cutting Prices Hits Highest Level Since 2019 – Bloomberg, 5/31/2022

• The number of home sellers lowering prices has reached the highest level since October 2019, the latest sign that the housing market is slowing from its once-frenzied pandemic pace.
• Nearly one in five sellers dropped prices during the four week period ended May 22, Redfin said in a report Thursday.
• Other measures of how hot the market is, including a house’s time on market and the percentage of homes selling above listing price, have also plateaued.
• “The picture of a softening housing market is becoming more clear, especially to home sellers who are increasingly turning to price drops as buyers become more cost-conscious under higher mortgage rates,” Daryl Fairweather, Redfin’s chief economist, said in a statement.

U.S. wheat crop hit by dry winter then soggy spring, adding to global tightness – Reuters, 5/31/2022

• There are two wheat crops in the United States: spring wheat planted now, and winter wheat planted in autumn that will be harvested soon. Both are in trouble.
• The problems with the spring wheat planting faced by farmers come after drought hit the winter wheat crop in Kansas, the top growing state.
• The U.S. winter wheat harvest potential there has fallen by more than 25% due to severe drought. Kansas farmers may abandon thousands of acres of wheat in fields this year, instead of paying to harvest the drought-scorched grain.
• Back in North Dakota, it is too much water that is the problem. An historic April blizzard left the state’s expansive, pothole-dotted fields under more than 3 feet (1 m) of snow in some areas, triggering floods as the deluge melted.
• U.S. farmers have only seeded 49% of their intended spring wheat acres as of May 22, matching 2014 for the slowest pace since 1996, according to U.S. Department of Agriculture data.
• In North Dakota, which produces about half of U.S. spring wheat, growers have planted just 27% of their crop, the second slowest pace in four decades.

Most Student-Loan Borrowers Made No Payment During US Freeze – Bloomberg, 5/31/2022

• A majority of borrowers who together hold about $400 billion in federal student debt made no payment on their loans in the pandemic era, taking full advantage of a freeze put in place at the onset of the Covid-19 crisis.
• Data from the Federal Reserve show that 60% of borrowers who qualified for forbearance didn’t make a single payment from August 2020 through December 2021.
• The US central bank, in a paper published Friday, suggested that some of these 11.5 million borrowers may not be able to resume paying once the freeze is lifted.
• Since the second half of 2021, credit-card balances increased at a faster pace for the group of student-debt holders who made no payment during the pandemic. Their debt balances at the end of last year were slightly higher than two years earlier, according to the Fed data.
• Delinquency rates on their credit cards, as well as auto and mortgage debts also rose in the second part of the year.

EUROPE & WORLD

Eurozone Inflation Hits Fresh High as More Energy Sanctions Loom – Wall Street Journal, 5/31/2022

• Inflation in the eurozone reached an annual 8.1% in May, underlining the growing cost to households of Russia’s invasion of Ukraine and of the sanctions European governments have imposed in response.
• The data from the European Union’s statistics agency marked a sharp acceleration from the 7.4% rate of inflation recorded in both April and March. Consumer prices rose at the fastest pace since records began at the start of 1997.
• Energy prices in May were 39.2% higher than a year earlier.
• Food prices also rose at a faster pace, as did prices of manufactured goods and services.
• Germany’s statistics agency said inflation in the eurozone’s largest member hadn’t been this high since late 1973 and early 1974, amid a severe shortage of oil.
• The European Commission expects real wages to fall by 2.2% across the eurozone this year.
• In France, where widespread use of nuclear power has kept energy prices in check, real wages are seen falling by just 0.2%.
• But in Germany, which relies heavily on Russian natural gas, real wages are expected to fall by 2.7%.

Bombed Bridges, Closed Ports Keep Ukrainian Grain From a World That Needs It – Wall Street Journal, 5/31/2022

• Across Ukraine, farmers are navigating mines, traversing bombed bridges and risking dangerous maneuvers at overworked ports to circumvent a Russian blockade and get their grains to a world desperate for them.
• But for all their efforts, Ukraine’s strained infrastructure has little hope of being able to handle the 30 million metric tons of corn, wheat and sunflower oil that is expected after harvesting starts in June, farmers and government officials said.
• Less than half of that harvest is likely to be exported, they added, depriving the world of over 8% of all cereal exports and threatening to further stoke food prices and exacerbate shortages.
• Russia’s seizure of Ukrainian ports and blocking of ships around the Black Sea has closed the route that almost all of Ukraine’s grain would usually take. That has pushed crops across roads and rail to Ukraine’s western borders or down the Danube to be loaded onto ships in Romania.
• Kyiv estimates that 8,900 miles of roads and 300 bridges have been destroyed.

China’s Economic Downturn Shows Signs of Easing – Wall Street Journal, 5/31/2022

• Economic activity in China declined for a third straight month in May, though at a slower pace than in April, according to surveys of businesses and factories.
• China’s official manufacturing purchasing managers index rose to 49.6 in May, China’s National Bureau of Statistics said Tuesday, from April’s 47.4—the lowest in more than two years.
• It beat the 48.9 reading economists polled by The Wall Street Journal were expecting.
• A separate gauge of activity in services and construction also improved, rising to 47.8 in May from 41.9 in April.
• Shanghai, for more than two months under a lockdown that has brought daily life and economic activity almost to a standstill, is due to begin a phased exit Wednesday. But less-severe restrictions remain in place in cities including Beijing and Tianjin.

GSK Bolsters Vaccine Business With $3.3 Billion Deal for Affinivax – Wall Street Journal, 5/31/2022

• GSK agreed to pay up to $3.3 billion to acquire vaccine maker Affinivax, in a deal that would hand the British pharmaceutical giant a new vaccine technology targeting common bacterial diseases such as meningitis and pneumonia.
• The British pharmaceutical company, formerly known as GlaxoSmithKline, said it would pay $2.1 billion upfront to buy the Boston-based company, with a further $1.2 billion in what it called milestone payments if Affinivax meets certain goals.
• The Affinivax technology was developed by doctors at Boston Children’s Hospital. Its most-advanced candidate targets 24 different types of Streptococcus pneumoniae, a family of bacteria behind diseases such as meningitis, pneumonia and sepsis, in a single shot.

Inflation Weighs on India’s Economic Growth – Wall Street Journal, 5/31/2022

• India’s economy grew 4.1% in the fourth quarter compared with the same period last year, as rising inflation restrained a more robust recovery from its recession during the pandemic.
• On Tuesday, India reported gross domestic product growth for the full fiscal year of 8.7% over the previous year, as well as the figure for the quarter that ended March 31. India’s central bank cut its forecast in April for the current fiscal year to 7.2% from 7.8%.
• India’s consumer-price index hit 7.79% in April, the fourth-straight month in which inflation has exceeded the 6% threshold of tolerance set by the central bank. The increase prompted the central bank to raise its key interest rate earlier this month for the first time in nearly four years.
• In May, India invoked a rare ban on wheat exports to help tame domestic prices. That is likely to further strain global supplies since the country is the world’s second-largest wheat grower, behind China.
• The scarcity of food has stoked protests in the Middle East and Sri Lanka, leading to the recent resignation of that country’s prime minister.
• In sub-Saharan Africa, inflation is forecast to hit 12.2% this year and 9.6% in 2023, the first time since 2008 that average regional inflation will reach such high levels, according to the International Monetary Fund.

Factmonster – TODAY in HISTORY

• The first U.S. Copyright Law was enacted, protecting books, maps, and other original materials. (1790)
• The hull of the Titanic was launched in Belfast. At the ceremony, a White Star Line employee claimed, “Not even God himself could sink this ship.” (1911)
• South Africa became an independent republic. (1961)
• Nine people are dead after an Israeli navy commando attacks a flotilla of cargo ships and passenger boats on their way to Gaza to provide aid and supplies for the area. (2010)