Economy

Economic Data Roundup (02/24/2017)

2/24/17 12:00 PM

iStock-517010420.jpgThere were two important reports on the U.S. economy released this morning. First, data from the U.S. Census Bureau showed that sales of new single-family homes in America rose by 3.7 percent in January to a seasonally adjusted annual rate of 555K units. That was worse than economists had expected but still the largest monthly gain since July. Regionally, home sales last month rose in the Northeast (+15.8 percent), the Midwest (+14.8 percent), and the South (+4.3 percent) but fell in the West (-4.4 percent). The inventory of new single-family homes lifted for the sixth month in a row in January, and months’ supply held at 5.7 based on the current sales pace, therefore matching the highest reading since September 2015. The median selling price of new houses sold slid to $312,900 in January but that is still a 7.5 percent increase over the past twelve months, well above current measures of wage growth and general consumer inflation. Although new home sales are extremely volatile and account for a relatively small portion of the residential housing market, this metric is still worth keeping close track of because historically new home sales tend to head sharply lower ahead of a recession.

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Elsewhere, the popular consumer sentiment index from the University of Michigan ended February at 96.3, an improvement from the mid-month reading and better than expected. However, this was still the first month-over-month decline in headline consumer sentiment recorded since the November election. The slight pullback was due mainly to a stark partisan divergence where surveyed Democrats generally expect a recession and Republican respondents anticipate robust economic growth. Self-identified Independents were found to be much closer to the optimism of the Republicans than the pessimism of the Democrats, thus helping keep the index at elevated levels. In fact, this sentiment gauge has been higher during the past three months than at any other time since March 2004. Richard Curtin, director of the consumer survey, added that “Since neither recession nor robust growth is expected in 2017, both [political] extremes must eventually converge. Although the data indicate a growth rate of 2.7% in consumption during 2017, the data also indicate we can expect greater volatility and discretionary spending differences across subgroups.”

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Sources: Econoday, Bloomberg, Twitter, ZH, U.S. Census Bureau, UoM, FRBSL

Post author: Charles Couch