{"id":2087,"date":"2021-08-31T12:16:44","date_gmt":"2021-08-31T16:16:44","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=2087"},"modified":"2021-08-31T12:16:44","modified_gmt":"2021-08-31T16:16:44","slug":"august-consumer-confidence-and-june-housing-prices-2","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=2087","title":{"rendered":"August Consumer Confidence and June Housing Prices"},"content":{"rendered":"\n

KEY DATA:<\/u><\/strong>  Confidence: -11.3 points; Current: -9.9 points; Expectations: -12.4 points\/ Case-Shiller National Prices: +2.2%; Over-Year: +18.6%\/ FHFA Prices: +1.6%; Over-Year: +18.8%<\/p>\n\n\n\n

IN A NUTSHELL:<\/u><\/strong> \u201cConfidence is faltering and that raises some questions about the strength of the recovery going forward.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT MEANS:<\/u><\/strong>  What me worry?  Well, yes.  That seems to be the verdict, as the Conference Board\u2019s Consumer Confidence Index tumbled in a sharp manner that mirrors what we saw in the University of Michigan\u2019s Consumer Sentiment report.<\/em><\/strong>  The difference is that there the Michigan Sentiment number was even lower than the pandemic bottom reached in April 2020, while the Confidence Board\u2019s Confidence level was still well above the low.  As was the case with the Michigan report, both the current conditions and expectations indices tanked.<\/em><\/strong>  In addition, household views about both the business situation and the labor markets, in the present and the future, were off solidly.  Household concern is rising sharply and if those worries persist, we could see some scaling back of spending.<\/em><\/strong><\/p>\n\n\n\n

On the housing front, prices seem to know no upper bound.\u00a0 Both the Case-Shiller and Federal Housing Finance Agency home price indices rose sharply in June.\u00a0 Over-the-year, both surged over 18.5%, an enormous increase, and the price gains are accelerating.<\/em><\/strong>\u00a0 Is that sustainable?\u00a0 Do you think that increases of 29.3% in Phoenix, 27.1% in San Diego and 25% in Seattle are sustainable?\u00a0 Only three of the twenty large metro areas in the report posted over-the-year increases less than sixteen percent while eleven had price gains in over nineteen percent.\u00a0 Can you say bubble?\u00a0 If not, I will. <\/em><\/strong><\/p>\n\n\n\n

IMPLICATIONS: Confidence is falling, despite strong gains in jobs, solid increases in wages, and large declines in the unemployment rate.So, why are households feeling so uncertain?\u00a0 The only logical reason is the rapid spread of the Delta variant<\/em><\/strong> and the worries that a major slowdown could occur.\u00a0 That raises questions about using the confidence data to forecast consumer spending.\u00a0 Usually, spending changes follow confidence changes when the source of the disturbance is related to economic factors.<\/em><\/strong>\u00a0 While the Conference Boards measure about current and future jobs and business activity did decline in August, their levels are not signaling any major slowdown.\u00a0 But the reports do raise the warning flag that if the pandemic worsens, and given the continued unwillingness of many to get vaccinated that is a real possibility, we could see people stashing away funds just in case. <\/em><\/strong>\u00a0That would mean at least a short-term easing in demand.\u00a0 In addition, there\u2019s the housing bubble.<\/em><\/strong>\u00a0 The National Association of Realtors Housing Affordability Index is down nearly 16% over the year.\u00a0 It is not just new buyers who are being priced out of the market, but current owners as well.\u00a0 Those high prices may not be sustained.\u00a0 Residential investment was a drag on the economy in the spring and it could continue slowing growth for some quarters to come.<\/em><\/strong>\u00a0 If the pandemic leads not only to a drop in confidence, but also an unwillingness to go into stores and restaurants again, then consumption could falter as well. \u00a0We could see growth moderate faster than expected.<\/em><\/strong>\u00a0 Which raises the question: When it comes to tapering, is the Fed behind the curve?\u00a0 If you believe Chair Powell, the answer is no. \u00a0If you believe several the Fed Bank presidents, the answer is yes.Today\u2019s numbers only confound the issue as they imply a slowdown in the future, which doesn\u2019t help a data-dependent Fed.The next FOMC meeting on September 21,22 could be very interesting.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Confidence: -11.3 points; Current: -9.9 points; Expectations: -12.4 points\/ Case-Shiller National Prices: +2.2%; Over-Year: +18.6%\/ FHFA Prices: +1.6%; Over-Year: +18.8% IN A NUTSHELL: \u201cConfidence is faltering and that raises some questions about the strength of the recovery going forward.\u201d WHAT IT MEANS:  What me worry?  Well, yes.  That seems to be the verdict, … Continue reading August Consumer Confidence and June Housing 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":[1],"tags":[],"class_list":["post-2087","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/2087","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=2087"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/2087\/revisions"}],"predecessor-version":[{"id":2088,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/2087\/revisions\/2088"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2087"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2087"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2087"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}