{"id":1486,"date":"2019-03-29T10:44:43","date_gmt":"2019-03-29T14:44:43","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1486"},"modified":"2019-03-29T10:44:43","modified_gmt":"2019-03-29T14:44:43","slug":"march-consumer-confidence-february-income-and-new-home-sales","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1486","title":{"rendered":"March Consumer Confidence, February Income and New Home Sales"},"content":{"rendered":"\n

KEY DATA:<\/strong> Confidence: +4.6 points\/\nFeb. Income: +0.2%; Jan. Income: -0.2%; Jan. Spending: +0.1%\/ New Home Sales:\n+4.9%; Prices: -3.6%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe consumer started the year in the doldrums\nbut a pick up in confidence may lead to better spending in the months to come.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Households have not been happy with the\nworld and they showed it through declining confidence and weak spending.  Hopefully, that may be changing.  First of all, confidence rebounded in March. <\/em><\/strong> The University of Michigan\u2019s Consumer\nSentiment Index jumped with both the current conditions and expectations\ncomponents rising solidly.  Maybe the\nmost important data in the report was a rise in expected income changes.  Lower and middle-income households expect\ntheir wages and salaries to increase at a faster pace and that could trigger\ngreater spending.<\/em><\/strong><\/p>\n\n\n\n

We have the March confidence numbers, but only the\nJanuary and February income and spending number and they are not that great.  Income rose moderately in February but was\ndown in January. There were no components that were strong and wage and salary\ngains were mediocre.<\/em><\/strong>  Meanwhile, consumption\nrose only modestly in January after having cratered in December.<\/em><\/strong>  (The government shutdown has messed up the\ntiming of the data releases.)  With\nvehicle sales soft in February, I don\u2019t expect the February consumption numbers\nwill be very good either.  <\/em><\/strong>In\nother words, even if spending rebounds in March, as the rise in confidence\nseems to indicate, first quarter consumption should be quite modest.  And that points to a weak first quarter GDP\nnumber.<\/p>\n\n\n\n

But then there is the weakest link, housing.  New home sales rebounded sharply in February\nand the January sales pace, which was initially estimated to be pretty tepid,\nwas revised up significantly.<\/em><\/strong>  That\nconfirms the huge jump in existing home demand in February.  It looks like the housing market may be coming\nback<\/em><\/strong>.  With mortgage rates down\nin March and prices leveling out, we could see continued improvement in this\nkey sector.  Still, the gains were in\nlimited to two regions, the Northeast and Midwest, so let\u2019s wait and see if\nweather was a critical factor in the improvement. MARKETS AND FED POLICY IMPLICATIONS:<\/strong>I\nhave argued that the economy was not nearly as bad as it seemed and there could\nbe a rebound in the spring and summer. \nThe recent data are more mixed than they had been and that is good given\nhow poor the numbers were for a couple of months.  But don\u2019t expect growth to surge.<\/em><\/strong>  I am not sure we will even average 2.5%\nduring the middle portion of the year and by year\u2019s end, even that pace could\nbe a thing of the past.  Think closer to\n2%.  That is not a recession, but it is\nnot anything that makes people feel good. \n It is growth that could be enough\nto accelerate pressure on wages, which is needed since worker compensation\nnumbers are up but not so good that consumption can be strong.  In other words, unless some positive shock hits\nthe economy, by the fall, we are likely to be back to where we were before the\ntax cut bill was passed.  <\/em><\/strong>What\ndoes this mean for the Fed?  It is all\nabout inflation.  If it remains\ncontained, there is no reason for the gang that cannot think straight to make\nany move.  And for me, that is a problem\nbecause the current level of rates is simply too low to provide much ammunition\nwhen the next downturn hits. \n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Confidence: +4.6 points\/ Feb. Income: +0.2%; Jan. Income: -0.2%; Jan. Spending: +0.1%\/ New Home Sales: +4.9%; Prices: -3.6% IN A NUTSHELL:  \u201cThe consumer started the year in the doldrums but a pick up in confidence may lead to better spending in the months to come.\u201d WHAT IT MEANS:  Households have not been happy … Continue reading March Consumer Confidence, February Income and New Home Sales<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1486","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1486","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1486"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1486\/revisions"}],"predecessor-version":[{"id":1487,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1486\/revisions\/1487"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1486"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1486"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1486"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}