Weekly Economic Update
Last Week and the Economy
- The FOMC maintained interest rates and released updated economic projections.
- Gold prices hit a new record high.
- Existing home sales rose while home building activity slowed.
- Retail sales improved after a sharp drop last month.
Following multiple disappointing weeks, the major stock indices rallied to end last week in the green. The Dow Jones Industrial Average fared the best, rising by 1.20%. The Russell 2k Small Cap Index and S&P 500 also rose by 0.63% and 0.51%, respectively. Additionally, the Nasdaq Composite ended the week 0.17% higher. In international markets, the MSCI-EAFE index also posted a weekly gain of 0.75%.
FOMC Maintains Interest Rates, Updates Projections
The FOMC met on Tuesday and Wednesday to discuss developments in the economy and set a course for monetary policy. They voted at this meeting to hold the Fed Funds Rate steady at a target range of 4.25 – 4.50%, which is the same rate they have maintained since the last reduction in December.
In addition to an interest rate decision, the committee released updated projections for the economy and interest rates. The latest interest rate forecasts held steady from the last estimate in December and show a year-end Fed Funds Rate of 3.9% – indicating about a 0.5% reduction in rates this year.
The committee’s projections for the labor market worsened slightly in the short term with the anticipated year-end unemployment rate rising by 0.1 percentage points to 4.4% while longer-term estimates held steady. Similarly, committee members increased their forecasted inflation rate by 0.2 percentage points to 2.7% for the current year and by 0.1 percentage points to 2.2% for 2026 while longer-term estimates were unchanged.
Federal Reserve Chairman Jerome Powell noted increased uncertainty in the economic outlook due in part to proposed changes to trade policy, fiscal policy, and immigration. These risks were reflected in a steep downward revision to estimated GDP for the current year and real GDP is now expected to grow only 1.7% in 2025.
Gold Prices Set New Record High
Gold prices have been on an upswing this year – rising by more than 15% so far in 2025 as this precious metal is often viewed as a safe haven during times of economic uncertainty. Prices hit a new record on Wednesday, climbing by 0.5% to close at $3,047.80 an ounce after hitting an all-time high of $3,051.99 earlier in the trading day.
Existing Home Sales Rose, New Residential Construction Slowed
The National Association of Realtors [NAR] reported that sales of existing homes rose by 4.2% in February from the previous month but fell by 1.2% from one year ago. NAR Chief Economist Lawrence Yun explained that mortgage rates have not changed significantly, but “more inventory and choices are releasing pent up demand.”
The inventory of available homes has been a barrier to home sales over the past few years, but the latest report showed continued improvement in this area. About 1.24 million homes were on the market in February – up by 5.1% for the month and 17% from one year ago.
While the inventory of existing homes is increasing, a report from the Census Bureau showed that fewer new homes may be entering the market soon. Home builders requested 1.2% fewer residential building permits in February than January and 6.8% fewer than one year ago. Additionally, builders completed 4.0% fewer homes than the prior month and 6.2% fewer than the prior year.
Retail Sales Recovered Some Lost Ground
The Census Bureau released an advance estimate of February retail sales which showed that sales rose by 0.2% for the month and 3.1% from one year ago. Nonstore Retailers reported the largest monthly sales gain at 2.4% while sales at Health & Personal Care stores rose by 1.7%. These gains offset slower monthly sales at Food Service & Drinking Places and Gasoline Stations.
Retail sales are an important indicator of market sentiment as consumers tend to buy less when they are uncertain about the economic outlook or their personal finances. That’s why February’s increase was welcome after a 0.9% downward revision to January retail sales brought the monthly loss to 1.2% – the largest decline since November 2022.
Data Sources for stock and index quotes: Yahoo Finance, WSJ
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Key Economic Data Points
| Data Point | Date | Current | Change from Prior | Next Report |
| Unemployment Rate | 2-2025 | 4.1% | 0.1 | Apr 4th |
| FOMC Target Rate | 3-2025 | 4.25% – 4.50% | 0 | May 7th |
| GDP | Q4-2024 (revised) | 2.3% | -0.8 | Mar 27th |
| PCE Inflation | 1-2025 | 2.5% | -0.1 | Mar 28th |
Data Sources: U.S. Bureau of Labor Statistics, FRED – St. Louis Fed, U.S. Bureau of Economic Analysis
Weekly Quote:
The big money is not in the buying and selling, but in the waiting.
-Charlie Munger, Longtime Vice Chairman of Berkshire Hathaway
The Week Ahead – Economic Data & Events
Monday: SCE Housing Survey
Tuesday: Consumer Confidence, New Residential Sales, Richmond Fed Survey of Manufacturing Activity
Wednesday: Advance Durable Goods, Philadelphia Fed Non-Manufacturing Survey, Corporate Bond Market Distress Index (CMDI), Dallas Fed Energy Survey
Thursday: Advance International Trade in Goods, Gross Domestic Product 3rd Release, NAR Pending Home Sales Index
Friday: Personal Income and the PCE Deflator, Industrial Production and Capacity Utilization, Michigan Consumer Survey
Weekly Reports: Mortgage Applications (Wednesday), EIA Petroleum Status Report (Wednesday), Jobless Claims (Wednesday), EIA Natural Gas (Thursday), Fed Balance Sheet (Thursday), Baker Hughes Rig Count (Friday)
Source: New York Fed
The Week Ahead – S&P 500 Companies Reporting Earnings
Tuesday: McCormick & Company, Incorporated (MKC)
Wednesday: Cintas Corporation (CTAS), Paychex, Inc. (PAYX), Dollar Tree, Inc. (DLTR)
Thursday: Walgreens Boots Alliance, Inc. (WBA)
Friday: Lululemon Athletica Inc. (LULU)
Source: Select Sector SPDRs Earnings Calendar
Weekly Tip:
Attend free events in your area to connect with your community and save money at the same time.
Data Sources for stock and index quotes: Yahoo Finance, WSJ
Join Us for Our Next Meld University Events:
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Speaker: Patricia L. Burris, CFP®
Medicare webinar will cover Medicare enrollment, supplement plans, strategies for maximizing benefits, and 2025 program updates.
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Where: Meld Financial Office
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Last Week's Riddle and Answer
Last Week's Riddle:
I love to dance and twist and prance, I shake my tail, as away I sail, wingless I fly into the sky. What am I?
Last Week's Answer:
A kite flies without wings and dances, twists, prances, and shakes its tail in the air.
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