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U.S. new-home sales rose to the highest level since the waning days of the housing bubble, underscoring a strong recovery for the housing market as people search out more space while working and schooling at home. Sales of new single-family houses reached an annual pace of 901,000 in July, up almost 14% from the prior month and the highest overall level since December 2006. While growth appears to have eased in other sectors of the economy last month, housing is still going strong. That’s likely to generate positive knock-on effects, starting with construction employment and running through demand for lumber, appliances and furniture.
Good luck finding your dream home. While demand is up, supply is down. The monthly supply of houses available for sale matched the lowest level since 2013. And people’s realization that they can work from anywhere during Covid-19 office shutdowns have led to bidding wars for homes in some remote areas of the West.
WHAT TO WATCH TODAY
U.S. durable goods orders for July are expected to rise 5% from a month earlier. (8:30 a.m. ET)
Video: WSJ explains durable goods, and why investors look beyond the headline number for a better read on business activity. Watch here.
Richmond Fed President Thomas Barkin speaks to the Morgantown Area Partnership at 10 a.m. ET.
Bank of England Chief Economist Andy Haldane speaks at an Edinburgh International Culture Summit webinar at 12 p.m. ET.
A hot housing market appears to be cold comfort for many Americans. Consumer confidence fell for the second straight month in August as households said business and employment conditions had deteriorated over the past month, according to a Conference Board survey. The report cautions that increasing concerns about the economic outlook and financial well-being will likely cause consumer spending to cool in the months ahead. “We suspect that the still-widespread incidence of Covid-19 infections is undermining confidence, and the expiration of federal unemployment benefits is also dampening spirits,” said Oxford Economics economist Kathy Bostjancic.
American Airlines said it would shed 19,000 workers Oct. 1. Together with retirements and temporary leaves of absence, the reductions will make the carrier about 30% smaller than it was in March and is the clearest sign yet of the devastation coming for the airline industry. U.S. airlines have warned employees that more than 75,000 jobs could be cut this fall. Airlines agreed not to let any workers go through the end of September as a condition of the $25 billion they received under a broad economic stimulus package passed in March. Efforts to secure another $25 billion in funds to keep airline workers in their jobs through the end of March 2021 have stalled in recent weeks, as Congress has been unable to reach an accord on a broader pandemic relief package, Alison Sider reports.
High Demand + Limited Supply = Shortages
Best Buy’s online sales surged in the latest quarter as consumers bought laptops, appliances and other items that help them work, learn and cook from home, but executives said product shortages crimped the gains. Consumers have reported shortages or delays trying to order everything from Google’s Chromebooks to Maytag freezers, Dave Sebastian reports.
- Schools are facing a laptop shortage. Districts say many students lack devices to start online instruction due to supply-chain challenges and a surge in demand.
Demand for cans is booming during the coronavirus pandemic, propelling manufacturers to boost capacity to prevent shortages. As bars and restaurants closed across the U.S., consumers rushed to buy large packs of drinks—typically sold in cans—in supermarkets, say executives. Sales of canned food also jumped. That is accelerating a continuing shift in favor of aluminum drinking cans, which were already taking share from glass and plastic bottles, Saabira Chaudhuri reports.
Global trade fell the most in two decades this spring as coronavirus lockdowns disrupted air and sea transport and dealt a blow to the demand for many consumer and investment goods. Trade had already weakened before the crisis, hobbled by geopolitical tensions and fresh tariffs. Coming on top of those disruptions, the pandemic has raised fresh questions about the resilience of supply chains that stretch across the globe and drive a third of world trade, Paul Hannon reports.
Pandemic, Low Oil Prices and a Recession? No Problem
Saudi Arabia is pushing ahead with multibillion-dollar plans to build a spate of new cities despite the coronavirus pandemic and depressed oil prices, betting that projects will kick-start its economic recovery. The developments are all part of Crown Prince Mohammed bin Salman’s plan to diversify the economy away from oil by attracting foreign investment and boosting domestic consumption. The giant projects are designed to spawn industries such as tourism and entertainment that haven’t existed before in cloistered Saudi Arabia, even as those sectors suffer globally under social-distancing guidelines imposed to curb the spread of the virus, Stephen Kalin reports.
WHAT ELSE WE’RE READING
The coronavirus hasn’t crushed big cities. “Real, live, inspiring human energy exists when we coagulate together in crazy places like New York City. Feeling sorry for yourself because you can’t go to the theater for a while is not the essential element of character that made New York the brilliant diamond of activity it will one day be again. You found a place in Florida? Fine. We know the sharp focus and restless, resilient creative spirit that Florida is all about. You think Rome is going away too? London? Tokyo? The East Village? They’re not. They change. They mutate. They re-form. Because greatness is rare. And the true greatness that is New York City is beyond rare,” comedian Jerry Seinfeld writes in The New York Times.
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