The U.S. economy accelerated in the second quarter as consumers ramped up spending and businesses invested more in equipment, but persistent sluggish wage gains cast a dark shadow over the growth outlook. Gross domestic product increased 2.6% in the second quarter, which included a boost from trade. The growth rate in Q1 2017 came in at 1.4%.
About 209,000 jobs were added to the U.S. economy in July, which beat expectations. The unemployment rate returned to a 16-year low of 4.3%, according to the Labor Department. The U6 unemployment rate, which measures the share of discouraged, part-time or underemployed workers in the economy, was 8.6%, higher than the unemployment rate of 4.3%.
Bars and restaurants provided the biggest boost of job creation for the month of July with 53,000 jobs filled. Meanwhile, professional and business services contributed 49,000 jobs according to the Bureau of Labor Statistics. If there was a blemish in the month's numbers, it came from the distribution of jobs to lower-income sectors. Job creation was strongly skewed toward part-time work, which gained 393,000 positions. To the contrary, full-time positions fell by 54,000.
Wage growth remained sluggish in July as average hourly earnings increased by 0.3% month-on-month—as expected—and 2.5% year-on-year (compared with a forecast of 2.4%).
The National Association of Realtors reported home sales at a seasonally adjusted annual rate of approximately 5.52 million homes during the month of June. This was a decrease of 1.8% from May 2017 and an increase of 0.7% from June 2016. The median home price increased to $263,800 in June 2017, which was up 4.5% from May and up 6.8% from June of last year. The median home price has increased by approximately $16,200 in the past year alone. There was a 4.3-month supply of housing inventory in June, which was up 2.4% from May. The total number of available homes for sale decreased by 6.5% compared to June of last year.
Energy prices continued to follow recent trends, marginally decreasing in June roughly $0.047 per gallon (-2.12%) to $2.30 per gallon in July. The year-over-year increase in gas prices was $0.06 per gallon (0.2%) more as summer fuel prices neared similar levels in 2016. WTI futures reached an average of $47 per barrel in May, and Brent futures neared $49 during the same timeframe. U.S. production continued to increase as current crude oil prices allow domestic energy companies to remain profitable while ramping up production. Lagging global demand for oil will leave expected normal trading prices for crude oil to fall in between $40 to $50 per barrel. Early data suggests August will continue to follow the trend of decreasing energy prices despite seasonal expectations.
To read about the state of the used vehicle market in the U.S., download a free copy of the August Used Car and Light-Duty Truck Guidelines Report.