Ho-hum figures in US house prices and consumer confidence showed continued stabilization, and revealed vulnerabilities to the US economic recovery. In this update we look at the S&P Case Shiller house prices index numbers for January, and the Conference Board Consumer Confidence numbers for March. Both stats showed very slight improvements for their respective reported periods, but showed little cause for excitement really.
The Case-Shiller 20 City Composite Index came in virtually flat at 145.34 on a seasonally adjusted basis, up 0.3% from December and down -0.7% from January 2009. On a city by city basis the picture was relatively mixed with the top 3 year on year gains in San Francisco (9%), San Diego (5.9%), Washington (3.5%); with the worst 3 falls in Las Vegas (-17.4%), Detroit (-7.4%), and Tampa (-7.4%).
The figure added to a picture of temporary improvement driven by a drop off in construction, low interest rates, and government incentives. However it is likely that this has just been window of improvement, and there is a chance that prices will - best case move sideways - or see further falls as interest rates inevitably start climbing again; foreclosures rise, and unemployment remains persistently high. Housing is still a key vulnerability for the US economic recovery.
Meanwhile consumer confidence recorded another month of "stabilisation" in March, coming in at 52.5, beating consensus of 51 and February's drop to 46. On components the Present Conditions Index improved to 26.0 from 21.7, and the Expectations Index climbed to 70.2 from 62.9 in the previous month. In a potential slight plus for Non-farm Payrolls on Friday, those saying jobs are "hard to get" fell to 45.8 from 47.3, and those saying jobs are "plentiful" crept up to 4.4 form 4.0.
Lynn Franco, Director of The Conference Board Consumer Research Center noted: "...despite this month’s increase, consumers continue to express concern about current business and labor market conditions. And, their outlook for the next six months is still rather pessimistic. Overall, consumer confidence levels have not changed significantly since last spring."
Basically Consumer Confidence is still treading water at levels well below pre-crisis. There will probably need to be a substantial improvement in employment before consumer confidence can recover (i.e. start making ground instead of stagnating around 50).
Overall the housing and confidence figures show a picture of continued stabilization and consolidation, and raise the question of "where to next?". Consumer confidence will likely eventually begin to pick up as the recovery continues through this year, but will depend to a large degree on the health of the labour market. One positive to take from Consumer Confidence is that the future expectations index is relatively strong. However when you consider housing, the picture is still quite mixed, and this one will be interesting to watch as the year unfolds. The temporary impulses that stopped the gains and helped see a short-term recovery have now started to wane, and the likely course from here is sideways or down. All said the numbers today are pretty ho-hum.
Econ Grapher Analytics www.econgrapher.com
The Conference Board www.conference-board.org
Standard & Poor's www.standardandpoors.com
Article source: http://www.econgrapher.com/31mar-ushouseconcon.html
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