Despite recent financial market upheaval that led to the failure of two regional banks, U.S. consumer confidence unexpectedly rose in March. Yet, people in the country still expect inflation to remain high over the coming year.
More people intended to purchase automobiles and home equipment including refrigerators, washing machines, vacuum cleaners, and television sets over the next six months, according to the Conference Board's study on consumer confidence released on Tuesday.
Nonetheless, consumers tended to reduce their discretionary expenditure, which includes buying lottery tickets, traveling to amusement parks, seeing movies, and eating out. Nonetheless, they expected to raise spending on things like personal care, home or auto upkeep, veterinary care, and healthcare.
Although there hasn't been much of a relationship between consumer confidence and spending, the study found that consumption may expand at a moderate rate and support the broader economy.
"Tighter financial conditions have not materially impacted consumers' confidence about the economy," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. "The availability of jobs and low unemployment more than offset the negative impact from recent banking crises." The Conference Board's consumer confidence index rose to 104.2 this month from a reading of 103.4 in February. The cutoff date for the survey was March 20, 10 days after California-based Silicon Valley Bank collapsed. New York-based Signature Bank failed on March 12.
According to Reuters' poll of economists, the index was expected to be 101.0. The increase in confidence was in contrast to a decline in mood that the University of Michigan observed earlier this month. Consumers under the age of 55 and households making $50,000 or more per year were the main drivers.
The labor market is given more weight in the poll. While the percentage of consumers who said jobs were "plentiful" increased, the percentage who said they were "not so plentiful" decreased. Nonetheless, the percentage of people who said it was "hard to acquire" a job fell to its lowest point since April 2022.
The survey's so-called labor market differential, which is based on information on respondents' perceptions of how easy or difficult it is to find a job, decreased from 40.7 in February to a still-high 38.8 and remained consistent with a tight labor market.
This indicator, which reflects the U.S. Labor Department's unemployment rate, was nevertheless the second-highest since last June. 3.6% of people were unemployed in February.
"Views on the labor market remain broadly supportive, even if not quite as strong as last month, which points to continued resilience," said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina.
People now forecast more inflation over the next year, up from 6.2% last month to 6.3%. In response to the stress on the financial markets, the Federal Reserve increased its benchmark overnight interest rate by a quarter of a percentage point last week, but signaled it was about to pause further rises.
Since last March, the U.S. central bank has increased its policy rate by 475 basis points, moving it from a level near zero to the current range of 4.75%-5.00%.
In March, consumers' intentions to purchase a home within the next six months remained the same. As home price increases continue to slow, housing affordability, which had gotten worse as mortgage rates rose in response to the Fed's fight against inflation, is beginning to progressively recover.
In a second report released on Tuesday, it was revealed that the S&P CoreLogic Case-Shiller national home price index, which includes all nine U.S. census divisions, rose 3.8% on a year-over-year basis in January, marking the ninth consecutive month of slowing annual home price rises. It came after a 5.6% increase in December.
Throughout the Southeast, annual home price growth remained robust, with double-digit increases in Miami and Tampa. With annual drops in San Diego, Portland, San Francisco, and Seattle, prices in the West kept dropping.
A Federal Housing Finance Agency report showing that home prices increased 5.3% in the 12 months through January after increasing 6.7% year-over-year in December served as additional evidence of the slowing of total house price inflation.
According to a New York Fed survey, Americans anticipate a marked slowing in house price growth over the coming year.
"Pent-up buyer demand is eagerly responding to mortgage rate movements," said Selma Hepp, chief economist at CoreLogic. "But, ongoing volatility in mortgage rates and fallout from the banking crisis could put a damper on spring home-buying season, particularly if credit tightening impacts mortgage availability."
Trade flows are deteriorating while the housing market seems to be finding a floor.
According to a report from the Commerce Department, the goods trade imbalance rose to $91.6 billion in February, up 0.6% from the previous month. The goods trade gap for the first two months of this quarter is marginally higher than the level of the quarter from October to December.
Last month, exports of goods fell 3.8% to $167.8 billion, driven primarily by an 11.9% decline in motor vehicles and parts.
Goods imports decreased 2.3% to $259.5 billion. Motor vehicle and component imports fell 7.1%, while imports of consumer goods fell 5.6%. Businesses restocked merchandise at a consistent rate in February despite the overall fall in imports.
The Commerce Department also noted a 0.2% increase in wholesale inventories in February. Retailer stocks increased 0.8%. The economy grew by 2.7% annually in the fourth quarter, with help from a lower trade deficit and an accumulation of unsold products at enterprises.
On the basis of the trade statistics, Goldman Sachs reduced its first-quarter GDP tracking forecast from a 2.4% pace to a 2.2% pace.
"We expect continued deterioration in trade levels throughout the first half of the year as the economy heads towards a recession," said Matthew Martin, a U.S. economist at Oxford Economics in New York.
(Source:www.thestraitstimes.com)
More people intended to purchase automobiles and home equipment including refrigerators, washing machines, vacuum cleaners, and television sets over the next six months, according to the Conference Board's study on consumer confidence released on Tuesday.
Nonetheless, consumers tended to reduce their discretionary expenditure, which includes buying lottery tickets, traveling to amusement parks, seeing movies, and eating out. Nonetheless, they expected to raise spending on things like personal care, home or auto upkeep, veterinary care, and healthcare.
Although there hasn't been much of a relationship between consumer confidence and spending, the study found that consumption may expand at a moderate rate and support the broader economy.
"Tighter financial conditions have not materially impacted consumers' confidence about the economy," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. "The availability of jobs and low unemployment more than offset the negative impact from recent banking crises." The Conference Board's consumer confidence index rose to 104.2 this month from a reading of 103.4 in February. The cutoff date for the survey was March 20, 10 days after California-based Silicon Valley Bank collapsed. New York-based Signature Bank failed on March 12.
According to Reuters' poll of economists, the index was expected to be 101.0. The increase in confidence was in contrast to a decline in mood that the University of Michigan observed earlier this month. Consumers under the age of 55 and households making $50,000 or more per year were the main drivers.
The labor market is given more weight in the poll. While the percentage of consumers who said jobs were "plentiful" increased, the percentage who said they were "not so plentiful" decreased. Nonetheless, the percentage of people who said it was "hard to acquire" a job fell to its lowest point since April 2022.
The survey's so-called labor market differential, which is based on information on respondents' perceptions of how easy or difficult it is to find a job, decreased from 40.7 in February to a still-high 38.8 and remained consistent with a tight labor market.
This indicator, which reflects the U.S. Labor Department's unemployment rate, was nevertheless the second-highest since last June. 3.6% of people were unemployed in February.
"Views on the labor market remain broadly supportive, even if not quite as strong as last month, which points to continued resilience," said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina.
People now forecast more inflation over the next year, up from 6.2% last month to 6.3%. In response to the stress on the financial markets, the Federal Reserve increased its benchmark overnight interest rate by a quarter of a percentage point last week, but signaled it was about to pause further rises.
Since last March, the U.S. central bank has increased its policy rate by 475 basis points, moving it from a level near zero to the current range of 4.75%-5.00%.
In March, consumers' intentions to purchase a home within the next six months remained the same. As home price increases continue to slow, housing affordability, which had gotten worse as mortgage rates rose in response to the Fed's fight against inflation, is beginning to progressively recover.
In a second report released on Tuesday, it was revealed that the S&P CoreLogic Case-Shiller national home price index, which includes all nine U.S. census divisions, rose 3.8% on a year-over-year basis in January, marking the ninth consecutive month of slowing annual home price rises. It came after a 5.6% increase in December.
Throughout the Southeast, annual home price growth remained robust, with double-digit increases in Miami and Tampa. With annual drops in San Diego, Portland, San Francisco, and Seattle, prices in the West kept dropping.
A Federal Housing Finance Agency report showing that home prices increased 5.3% in the 12 months through January after increasing 6.7% year-over-year in December served as additional evidence of the slowing of total house price inflation.
According to a New York Fed survey, Americans anticipate a marked slowing in house price growth over the coming year.
"Pent-up buyer demand is eagerly responding to mortgage rate movements," said Selma Hepp, chief economist at CoreLogic. "But, ongoing volatility in mortgage rates and fallout from the banking crisis could put a damper on spring home-buying season, particularly if credit tightening impacts mortgage availability."
Trade flows are deteriorating while the housing market seems to be finding a floor.
According to a report from the Commerce Department, the goods trade imbalance rose to $91.6 billion in February, up 0.6% from the previous month. The goods trade gap for the first two months of this quarter is marginally higher than the level of the quarter from October to December.
Last month, exports of goods fell 3.8% to $167.8 billion, driven primarily by an 11.9% decline in motor vehicles and parts.
Goods imports decreased 2.3% to $259.5 billion. Motor vehicle and component imports fell 7.1%, while imports of consumer goods fell 5.6%. Businesses restocked merchandise at a consistent rate in February despite the overall fall in imports.
The Commerce Department also noted a 0.2% increase in wholesale inventories in February. Retailer stocks increased 0.8%. The economy grew by 2.7% annually in the fourth quarter, with help from a lower trade deficit and an accumulation of unsold products at enterprises.
On the basis of the trade statistics, Goldman Sachs reduced its first-quarter GDP tracking forecast from a 2.4% pace to a 2.2% pace.
"We expect continued deterioration in trade levels throughout the first half of the year as the economy heads towards a recession," said Matthew Martin, a U.S. economist at Oxford Economics in New York.
(Source:www.thestraitstimes.com)