{"id":1510,"date":"2019-04-30T12:36:24","date_gmt":"2019-04-30T16:36:24","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1510"},"modified":"2019-04-30T12:36:24","modified_gmt":"2019-04-30T16:36:24","slug":"1st-quarter-employment-costs-april-consumer-confidence-and-pending-home-sales-and-february-home-prices","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1510","title":{"rendered":"1st Quarter Employment Costs, April Consumer Confidence and Pending Home Sales and February Home Prices"},"content":{"rendered":"\n

KEY DATA:<\/strong> ECI (Over-Year): +2.8%;\nWages: +2.9%\/ Confidence: +5 points\/ Pending Sales: +3.8%\/ Home Prices\n(Over-Year): +4%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cConfidence is strong, labor costs are\nrelatively restrained and the housing market is stabilizing, so what is the Fed\nworried about?\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Is the economic lull now null?  I think that is a fair thing to say.  First quarter growth was okay, even given the\nsoftness in consumer and business spending. \nWith job gains also decent and labor market tight, there is every reason\nto expect that worker compensation costs would accelerate.  We are even seeing firms announce future\nincreases in wages to maybe even as much as $20 per hour in the future.  But happy days for workers is not here yet<\/em><\/strong>.\n The Employment Cost Index, which includes\nboth wages and benefits, rose at a moderate pace in the first quarter and the\ngain over the year actually decelerated.<\/em><\/strong>  That was true for both wages and benefits\nand for most industries and occupations. <\/em><\/strong>There were some exceptions in\nthose industries that are suffering from extreme labor problems, such as\ntransportation, warehousing and hospitality, but there were not many\nothers.  Basically, there may be labor shortages, but\nfirms are not trying to attract workers by raising compensation significantly.<\/em><\/strong><\/p>\n\n\n\n

The lack of sharp increases in wages is not\ndepressing households.  The Conference\nBoard\u2019s Consumer Confidence Index rose solidly in April <\/em><\/strong>and the details were even\nbetter.  Jobs were more plentiful, the\ncurrent economy was better and the outlook for growth and income improved.  <\/em><\/strong>The index is below its peak, but it\nis still at a high level, indicating the slowdown in spending we saw early in\nthe year should dissipate.<\/p>\n\n\n\n

As for the housing market, things there may be\nimproving \u2013 at least a little.  Pending\nhome sales jumped in April.  <\/em><\/strong>Demand in the West surged,\nwas up solidly in the South and Midwest but eased in the Northeast.  Still, the index is off from the levels posted in\nthe first half of 2018, so we may not see a huge rebound in sales.  <\/em><\/strong><\/p>\n\n\n\n

One aspect of the housing market that doesn\u2019t appear\nto be changing is the slowdown in price gains. \nThe Case Shiller index posted a moderate increase from February 2018,\nbut the year-over-year rise continued to decelerate.<\/em><\/strong>  We are even starting to see some weakness in\nSan Francisco \u2013 yikes.  In the past year,\nthe increase in the Bay Area was the second slowest of the twenty large areas\nin the index.  Only San Diego posted a\nsmaller gain.  The sharp rise in prices\nin so many areas has priced people out of the market and coupled with the lack\nof inventory, helped create the softening in sales.  Thus, an easing back in housing price gains can\nonly be good for the market.  <\/em><\/strong><\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong>  Friday\nwe get the April jobs report and it should be good, though maybe not\ngreat.  Regardless, with growth decent,\nthe labor market tight and housing at least stabilizing, the Fed members, who\nare starting their two day meeting today, should have little to complain about.\n<\/em><\/strong> Yet there is a concern.  Inflation is actually decelerating and is\nback below the target.  As long as that\nis the case, the Fed can hide behind the lack of inflation to support their do\nnothing policy.<\/em><\/strong>  I suspect that\nwill be the argument when the statement is released early tomorrow afternoon\nand Chair Powell holds his press conference afterward.  As for the markets, earnings are driving\ndecisions and they have tended to be good, with the usual random misses.  The economic data are not arguing investors\nshould be greatly worried.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: ECI (Over-Year): +2.8%; Wages: +2.9%\/ Confidence: +5 points\/ Pending Sales: +3.8%\/ Home Prices (Over-Year): +4% IN A NUTSHELL:  \u201cConfidence is strong, labor costs are relatively restrained and the housing market is stabilizing, so what is the Fed worried about?\u201d WHAT IT MEANS:  Is the economic lull now null?  I think that is a … Continue reading 1st Quarter Employment Costs, April Consumer Confidence and Pending Home Sales and February Home Prices<\/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-1510","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1510","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=1510"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1510\/revisions"}],"predecessor-version":[{"id":1511,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1510\/revisions\/1511"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1510"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1510"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1510"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}