ECONOMIC DEVELOPMENTS
According to the Bureau of Labor Statistics (BLS), nonfarm payroll employment increased by 115,000 in April, marking the strongest two-month gain since 2024.
- The unemployment rate was unchanged at 4.3%, with the number of unemployed people little changed at 7.4 million.
- Job gains were concentrated in health care +37,000, transportation and warehousing +30,000, and retail trade +22,000, while federal government employment continued to decline (-9,000).
- Since reaching a peak in October 2024, federal government employment is down 348,000, or 11.5%.
- Average hourly earnings rose 0.2% month over month (MOM) and 3.6% year over year, while the labor force participation rate held at 61.8%. February payrolls were revised down by 23,000 and March payrolls were revised up by 7,000, for a combined net downward revision of 16,000.
The Consumer Price Index rose 3.8% year over year in April, up from 3.3% in March, the largest 12-month advance since 2023.
- The Core CPI, which excludes food and energy, rose 0.4% from March and increased to 2.8% year over year (YOY), up from 2.6% in March.
- On a monthly basis, the all-items index rose 0.6%, with energy accounting for over forty percent of the increase as the energy index rose 3.8% and gasoline prices climbed 5.4%.
- The food index rose 0.5% and food at home up 0.7% as grocery prices post largest monthly gain in almost four years.
- Shelter costs rose 0.6%, while airfares advanced 2.8% as higher jet fuel prices prompted airlines to raise fares, keeping inflation pressures broad-based and well above the Federal Reserve’s 2% target.
The Producer Price Index for final demand increased 1.4% month over month in April, the largest advance since March 2022, following a 0.7% rise in March.
- The index rose 6.0% YOY, the largest 12-month increase since December 2022, according to the BLS.
- Final demand for goods prices rose 2.0%, with energy goods jumping 7.8% and gasoline prices climbing 15.6%, while final demand for services prices increased 1.2%, the largest monthly gain in four years.
- The index for final demand for less foods, energy, and trade services rose 0.6% during the month and 4.4% YOY, the largest 12-month advance since February 2023.
Retail sales advanced for a third straight month in April. According to the U.S. Census Bureau, advance estimates of retail and food services sales totaled $757.1 billion, up 0.5% from March 2026 and up 4.9% from April 2025.
- March 2026 sales were revised to $753.4 billion, reflecting a 1.6% gain from the prior month.
- Retail trade sales rose 0.5% MOM and 5.2% YOY, with gains in nine of thirteen categories.
- Nonstore retailers posted strong YOY growth of 11.1%, while food services and drinking places rose 2.7% from April 2025. Receipts at gas stations rose 2.8% as the conflict pushed gasoline prices to their highest levels since 2022.
The housing sector showed modest improvement in April. According to the National Association of Realtors, existing home sales rose 0.2% MOM to a seasonally adjusted annual rate of 4.02 million units.
- Unsold inventory rose 5.8% to 1.47 million units, representing 4.4 months of supply.
- Inventory levels continued to build, reflecting easing supply constraints alongside still-soft buyer demand.
- Affordability pressures from high mortgage rates and stretched home prices continued to weigh on transaction activity.
Real GDP increased at an annualized rate of 2.0% in the first quarter of 2026, according to the advance estimate released by the U.S. Bureau of Economic Analysis, a significant acceleration from the 0.5% pace recorded in the fourth quarter of 2025.
- The acceleration reflected upturns in government spending and exports, along with an acceleration in investment, partly offset by a deceleration in consumer spending.
- Business investment on equipment and structures advanced 10.4%, the fastest pace in almost three years, supported by rapid investment in artificial intelligence.
- The PCE price index rose 4.5% in the first quarter, up from 2.9% in the fourth quarter, while the PCE price index excluding food and energy rose 4.3%, up from 2.7%, signaling renewed inflationary pressures alongside firmer growth.
COLLATERALIZATION
All funds under the control of this office requiring collateralization were secured at rates ranging from 100% to 110%, depending on the type of investment.
