Weekly Economic Snapshot: Signs of Strength & Softness

by Jen Nash of VettaFi, 1/31/25

Economic indicators provide insight into the overall health and performance of the economy. They are closely watched by policymakers, advisors, investors, and businesses because they help them to make informed decisions about business strategies and financial markets. The SPDR S&P 500 ETF Trust (SPY) rose 1.7% last week while the Invesco S&P 500® Equal Weight ETF (RSP) was up 1.2%.

Last week’s indicators offered updates on the labor market, housing, and consumer sentiment, which highlighted both progress and lingering challenges in the U.S. economy. Financial markets rallied to new highs, That was due to evolving trade policy dynamics and increased expectations for further Fed rate cuts this year. As inflation concerns and employment uncertainty persist, last week’s data shed light on factors shaping economic momentum.

Weekly Unemployment Claims

The number of people who filed for unemployment for the first time rose for a second straight week. Initial jobless claims increased to 223,000—slightly above expectations and up from the previous week’s unrevised figure. The data, current through January 18th, does not yet reflect potential increases from recent weather events such as freezing temperatures and California's fires, which will likely push claims higher in the coming weeks. Given the high volatility of this weekly data, the 4-week moving average (MA) gives a better sense of the overall trend. The 4-week MA was up 750 from the previous week to 213,500, the second-lowest level since April 2024, trailing only the previous week’s figure.

Despite last week’s uptick in unemployment claims, the labor market remains strong. December’s robust jobs report showed 256,000 jobs were added last month and the unemployment rate inched down to 4.1%. However, the latest data combined with the possibility of weather-driven increases, has raised some caution about a potential labor market slowdown. While the initial jobless claims are subject to weekly revisions, they remain an important leading indicator of the broader employment situation. The Fed keeps a close eye on any labor market data, as employment is one of the main factors of monetary policy decisions.

Unemployment Insurance Weekly Claims Report

Existing Home Sales

Existing home sales closed out its worst year since 1995 on a positive note. Sales rose for a third straight month to their highest level since February. They come in at a seasonally adjusted annual rate of 4.24M in December. This represents a 2.2% increase from November and marks the longest streak of monthly gains since late 2021. Despite the total of 4.06 million existing home sales, the solid finish to 2024 suggests a potential turning point for the housing market. December sales were up 9.3% compared to a year ago. That's the third consecutive year-over-year increase and the longest such streak in over three years. Notably, these gains came during the winter months when sales are typically softer.