Home Prices and New Home Sales Move Up

Diane Swonk | May 23, 2013 | Leave a comment

The FHFA measure of home prices jumped 1.3% in March and 7.2% from a year earlier. Tight inventories and ongoing easing by the Federal Reserve have contributed to recent increases and helped to cushion the blow of higher taxes. Refinancing, in particular, surged at the end of 2012 and start of 2013 which, in a rising home price environment, allowed homeowners to keep spending even as the end of the payroll tax holiday put a pinch on take-home pay.

Separately, new home sales rose to a 454,000 unit pace in April, up 2.3% from March, and almost 30% ahead from a year ago. Read More »

Existing Home Sales Rise Despite Inventory Constraints

Diane Swonk | May 22, 2013 | Leave a comment

Existing home sales rose to a 4.97 million unit rate in April, after being revised up for the month of March. This is the highest level since the first-time home buyer tax credit spiked sales in late 2009. Sales remain well below previous peaks, and are constrained by inventories. Prices are rising at a double-digit rate, but Read More »

Consumer Credit Continues to Shine in March, but all the Glitters is not Gold

David Nice | May 20, 2013 | Leave a comment

In March total consumer credit outstanding posted its 19th consecutive month of growth. Total Credit expanded by $8.0 bil., comprised of a $9.7 bil. expansion in nonrevolving and a contraction of $1.7 bil. in revolving credit (see chart below).

On the surface this data appears promising: Read More »

Consumer Confidence Jumps with Asset Prices, Cheaper Gas

Diane Swonk | May 17, 2013 | Leave a comment

Consumer sentiment jumped to 83.7 in May, the highest level since July 2007. A pickup in net worth via the stock market, home values and falling prices at the pump all helped fuel the gains. Consumers’ assessments of their personal finances jumped to 97.5, the highest level since late 2007. The gains, however, were concentrated in the upper third of income earners. This helps explain the unevenness of retail sales between discount retailers, which are lagging and luxury retailers, which are leading. Read More »

Question I received on inflation this morning:

Diane Swonk | May 16, 2013 | Leave a comment

There are multiple inflation measures, the most used and least accurate of which is the Consumer Price Index (CPI). The CPI is measured from a fixed basket of goods; prices are adjusted for quality improvements where possible. Historically, the overall index has converged to the core index, so excluding food and energy prices is important in that transitory shocks may be isolated versus more permanent shocks. The drought last summer pushed up crop prices, especially dairy items. Only a portion of that showed up at grocery stores Read More »

Weekly Unemployment Claims 5/11/2013

David Nice | May 16, 2013 | Leave a comment

Weekly unemployment claims moved back above the 350,000 threshold to 360,000 during the week of May 11. Read more

 

Housing Disappoints and Inflation Moderates

Diane Swonk | May 16, 2013 | Leave a comment

Today’s data confirm a picture of moderation in growth this spring. Housing starts were significantly lower than expected in April at an annualized rate of 853,000, while the data for March was revised down. The largest drop was in multi-family units, which plummeted 142,000 units over the month, with declines heavily concentrated in the South. Read More »

Industrial Production Falls with Decline in Heating Demand

Diane Swonk | May 15, 2013 | Leave a comment

Industrial production fell 0.5% in April after increasing 0.3% in March. Most of the weakness showed up in a 3.7% monthly drop in utilities. Heat, in particular, didn’t need to be turned on as much, once spring arrived a month late. That said, losses were widespread with the only notable gains in mining. Production of consumer durables (mostly vehicles) retreated after several strong months. That will be largely temporary; auto dealers are asking for inventory in the U.S.; exports are not great.

We are also seeing weakness in equipment production, Read More »

Producer Prices Continued to Drop on Food and Energy

Diane Swonk | May 15, 2013 | Leave a comment

Producer prices plummeted 0.7% in April, after falling at almost the same pace in March. Declines were largest in food and energy, as prices excluding those two components eked out a modest 0.1% increase and continued to moderate from the pace in previous months.

The only major increase in the index for finished goods in April was pharmaceuticals, Read More »

Retail Sales Surprise to Upside

Diane Swonk | May 13, 2013 | Leave a comment

Retail sales squeaked out a modest increase of 0.1% in April, foiling expectations for a decline. Moreover, the biggest decline in the data was in gasoline station sales, where prices were falling. That freed up cash for consumers to spend elsewhere. Core retail sales, which exclude autos and gasoline, were up 0.6%, compounded by upward revisions to the core last month.

Gains were broad-based, with the biggest increases in spending showing up at building materials and garden stores (people could finally plant and make outdoor repairs after a frigid March), discount stores, apparel, electronics and appliance stores, online and sporting goods stores. Discretionary spending also came back with an increase in spending at restaurants.

How is the consumer doing it? Revisions to the employment data suggest the cushion on income was likely greater than initially reported. Refinancing also continued at a rapid clip in the first quarter and the savings associated with that restructuring is being spent. Read More »