Here's a short sharp update on the US housing market, consumer confidence, and the direction of the US economy. The US S&P Case Shiller 20 Cities house price index rose 3% year on year in February, and was basically flat month on month. The figures indicate the housing market is still confused somewhat; consolidating before the next move... which could well be more sideways movement.
On a year over year basis (seasonally adjusted), San Francisco (12%), San Diego (7.6%), LA (5.4%), and Washington DC (5.1%) are up the most; while Las Vegas (-14.6%), Tampa (-6%), Seattle (-5.6%), Portland (-4.7%), are the laggards. The US housing market could yet stand to go through a prolonged period of stabilization or consolidation before returning to growth; thus it remains a key vulnerability for the US economic recovery.
Moving on to the other key data point; US consumer confidence showed a slight pick up coming in at 57.9 vs previous 52.5, and consensus for 53.5. On components the expectations index picked up to 77.4 from 70.4 in a promising move, likewise the current conditions index rose to 28.6 from 25.2. The move is also a milestone, being the highest since September 2008, which says a bit.
In terms of implications for outlook, it depends how you read it. There are two obvious ways of looking at it; the first is that both the pattern of house prices and consumer confidence are consistent with a cyclical recovery, and that the recent uptick we are seeing in both of them points to an eventual cyclical economic recovery or rebound.
The other says on both counts we're basically set to see a prolonged period of consolidation and economic healing; consumer confidence remains low and the housing market remains subdued; as people spend less, pay down debt, try to get their jobs back, and rebuild wealth.
It's still hard to say just which one it is yet, but whichever one it turns out to be will have a huge bearing on the medium to long term pattern of growth in the US economy: structural recovery or cyclical recovery? sustainable recovery or a return to the vicious cycle?
Econ Grapher Analytics www.econgrapher.com
Conference Board www.conference-board.org
Standard & Poors www.standardandpoors.com
Article Source: http://www.econgrapher.com/28apr-ushousecon.html
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