Initial Jobless Claims Fall to 547,000… For the second consecutive week, less than 600,000 people filed for initial jobless benefits.
What it means— Before the pandemic, the record high for initial jobless claims was about 680,000, which happened during the Great Financial Crisis. At the start of the pandemic shutdown, initial jobless claims shot to almost 10 times that number, reaching 6.149 million in early April 2020, and didn’t fall below one million until last August. We finally saw initial claims fall below the previous high last month, and now we’ve registered two weeks below 600,000. We’re still at three times the normal pre-pandemic level of 200,000, but we’re getting there.
A record number of small businesses reports difficulty filling job vacancies, and wages are growing. All of this points to a tighter employment market, which the government is exacerbating with its weekly $300 unemployment bonus payments. It’s time to verify jobless claims.
Existing Home Sales Fall 3.7%, to 6.01 Million Annualized Rate… Existing home sales dipped to the lowest level since last August, with sales down in all four geographical regions.
What it means— The problem isn’t a lack of buyers, it’s a lack of inventory. While existing home sales are 12.3% higher than this time last year, inventory is down 28.2% to a measly 2.1 months’ supply. The imbalance between supply and demand shows up in prices paid. The median sale price shot up 17.2% over the last year to a record $329,100. First-time buyers made up 32% of purchasers last month, down from 34% last March and well off the historical average of 40%. All these factors point to the same thing, lack of affordability, which likely will keep more first-time home buyers on the sidelines.
New Home Sales Jump 20.7% Over Last Month, to 1.02 Million Annualized Rate… This is the fastest pace since mid-2006.
What it means— Winter? What winter? After building—and selling—went into the deep freeze during the arctic blast in February, new home sales shot higher last month, resuming their upward trend, and there’s more fuel in the tank. Not only are new home sales zooming, but the building backlog (homes sold but not yet built) is also expanding. The number of homes in the backlog sat between 150,000 and 200,000 from 2015 through 2019, and then briefly dipped lower last spring before taking off. There are now 342,000 homes in the backlog, which, like new-home sales, is a level we haven’t seen since 2006. While comparisons to the housing market in the mid-2000s might bring back bad memories, there are major differences. Home buyers are putting down significant down payments, and this time we’re trying to satisfy demand for primary housing, not fuel a bubble built on speculation.
Bankrupt Hertz Global Holdings Proposes Giving Some Value to Stockholders… The car company filed a plan to give shareholders warrants entitling them to 4% of the restructured business.
What it means— The pandemic taketh away, and the pandemic giveth. Last year, Hertz went under as the economic lockdown put all travel in the deep freeze. For unknown reasons, millions of retail investors bid up the share price of the defunct company, with the value topping $5 per share, even though the firm clearly reported that liabilities exceeded assets. As Hertz prepares to exit bankruptcy, the nation is facing a shortage of rental cars. Fleet managers sold 40% of their inventory to survive the past year, which now leaves travelers scrambling for cars as the economy reopens. The situation resulted in a bidding war for Hertz’ assets, which gave the firm just enough value in its bankruptcy plan to throw the equity investors a bone.
This likely won’t make whole anyone who bought shares last year at $5. Recently, the shares more than quadrupled, but that only took the price from $0.40 to $1.70. At least it’s more than zero, which is what most shareholders receive when a company goes bankrupt.
Data supplied by HS Dent Research
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