Rocket Fuel Newsletter – 09/03/2024
In this edition: Grab your pumpkin spice latte, set your fantasy football lineup, and get ready for another economic season sure to be filled with spooky twists and turns. The weather is changing, and so is the economic outlook – with rising consumer confidence, a shifting job market and a transition from hotel to home.
Fuel Up! 🚀
Optimism On The Rise: August’s Confidence Boost
In August, the Consumer Confidence Index rose to 103.3, up from 101.9 in July, marking the highest level since February (100 is the benchmark). The Present Situation Index, which reflects consumers’ assessment of current business and labor market conditions, improved to 134.4 from 133.1. However, the Expectations Index, which gauges consumers’ short-term outlook for income, business and labor market conditions, saw only a slight increase to 82.5.
Simply put, while overall confidence levels are up, there remains some caution about the future.
Read the latest press release from The Confidence Board here.
From Summer Heat To Autumn Chill: The Shifting Seasons Of The Job Market
As summer transitions into fall, the job market is experiencing its own seasonal shift. In July, unemployment rates rose in 350 out of 389 metropolitan areas compared to the previous year. Just 22 areas saw a refreshing drop in unemployment, akin to the crisp, cool breeze of autumn, while 17 areas remained unchanged, holding steady like evergreen trees.
Meanwhile, the national unemployment rate rose to 4.5%, up from 3.8% last year. Most stayed in the 3% – 8% range, with 30 areas enjoying jobless rates under 3% and eight areas facing rates of 8% or more.
Read the latest Economic News Release from the Bureau of Labor Statistics here.
U.S. GDP Growth Accelerates To 3.0% In Q2, Driven By Consumer Spending And Investment
The U.S. Bureau of Economic Analysis released its second estimate for the second quarter of 2024, showing that real Gross Domestic Product (GDP) increased by 3.0% annually, up from 1.4% in the first quarter. This revision is based on more complete data and reflects an upward adjustment from the initial 2.8% estimate.
The growth was driven by increases in consumer spending, private inventory investment and nonresidential fixed investment, despite a downturn in residential fixed investment. Current-dollar GDP rose by 5.5%, reaching $28.65 trillion.
Corporate profits rebounded, increasing by $57.6 billion after a decline in the first quarter. The report also noted that the price index for gross domestic purchases increased by 2.4%, and the personal consumption expenditures (PCE) price index rose by 2.5%. The next release, including the third estimate of GDP and revised corporate profits, is scheduled for September 26, 2024.
Read the full news release from the Bureau of Economic Analysis here.
Abandoned Hotels And Motels Converted To Affordable Housing
It’s no secret that home affordability is a major issue in the United States; according to research from the National Low Income Housing Coalition (NLIHC), the U.S. has a shortage of over 7 million homes for its citizens with measurably low incomes. Moreover, this trend is clear in all 50 states and major metropolitan areas
NLIHC research suggests that the majority of U.S. states can only offer 40% of their extremely low-income renters affordable housing, leaving the other 60% cost-burdened to their housing.
To bridge this gap, some nonprofits are finding a possible solution to this widespread issue: renovating old, abandoned motels and hotels into affordable housing.
In 2023 alone, motel and hotel conversions into housing units increased housing supply by over 4,500 units, most of which is being used for affordable housing. Aside from sheer volume of units simply available to flip, these properties can be hidden gems for conversion as well when considering two major factors:
- Location: Generally, these buildings are in high density areas, on major roads or close to public transportation.
- Infrastructure: Each room generally already has plumbing and is separated into small apartment style layouts, making them (in many cases) easier to renovate than building something new.
Two prime examples across the U.S. are in Maryland and New Mexico.
In Washington, MD, a nonprofit called LifeStyles is currently renovating the old White House Motel into a development they call Southern Crossings. When construction is complete, they will have created enough fully furnished units for up to 77 low-income residents. Rent will be subsidized between $900 and $1,800, depending on the residents’ income and the size of the apartments.
In Albuquerque, NM, New Life Homes converted an old motel called the Luna Lodge along Route 66 into permanent affordable housing. This project created 14 units of affordable housing for the city out of existing rooms, with another 16 planned.
While these projects have shown promise, conversions like these are not designed to single-handedly solve the lack of affordable homes for low-income Americans; aside from developers’ costs and time to sufficiently flip these properties, other obstacles like zoning laws, historical preservation and community concerns have the potential to stop many of these projects in their tracks. But considering the high volume of old, outdated hotels and motels in and around most major cities, projects like these could be excellent opportunities for local governments – acting in good faith – to begin pragmatically chipping away at such a widespread issue.
Our team headed down to Orlando for the NAMMBA Connect conference to promote and celebrate diversity in the mortgage industry. Thanks to everyone who engaged with us at our booth and watched both Fawaz and Rocket Mortgage General Manager Alpa Lally speak throughout the week!
- Case-Shiller Index Hits Another All-Time High For June
- Consumer Confidence Rises In August
- Pending Home Sales Drop To Lowest Recorded Level
- Jobless Claims Down Slightly
Last week’s 5-Rocket puzzle was a challenge for most, but apparently not to the eight solvers who finished in less than a minute. Congrats to Mike C, whose time of 28 seconds led all solvers on a difficult puzzle!
This week’s puzzle gets 2 Rockets out of 5.
