The July Consumer Confidence # was a touch below expectations at 50.4 vs 51, down from 54.3 in June and at a 5 week low. Most of the drop from June was in the Expectations part which fell by 6 pts while the Present Situation fell by .7 pt. Those that said jobs were Plentiful were unch at 4.3, the lowest since Mar. Those that said jobs were Hard to Get rose 2.3 pts to the highest since Mar, thus both point to a still sluggish labor market. Those that said business conditions were ‘good’ rose a touch but those that said it’s ‘bad’ rose to a 4 month high with the balance ‘normal’. Without the home buying tax credit, those that plan to buy a home fell .1 pt at 1.9 to the lowest since Dec ’09 when it reached the lowest level since ’64 at 1.7. Those that plan to buy an auto rose .4 pt to 4.5 but remains below the yr ago level of 4.8. One yr inflation expectations fell .2% of a pt to 4.9%, the lowest since Mar ’07. Bottom line with the Confidence data and after seeing earnings from many US multinationals, there is a clear distinction between those businesses that have overseas exposure and those that are more US centric as well as a US consumer that is still dealing with a tough labor market, too much debt, a lower home price and less access to credit.
The S&P/CaseShiller home price index of 20 cities rose .47% m/o/m SA and 4.61% y/o/y, above expectations but there may be some lingering impact in the calculation of pricing from the tax credit that expired on Apr 30th but where closings don’t need to be done until Sept 30th. The non SA increase was 1.27% m/o/m where 19 of the 20 cities saw gains with Las Vegas the only one that didn’t. On a y/o/y basis, 13 of the 20 had gains led by San Francisco and San Diego with the biggest decliner again Las Vegas. Bottom line, because of the influence of the tax credit where the closing of a contract signed before the Apr 30th expiration has to be completed by Sept 30th, it will be a few months before we get clean pricing data. The industry has had a clear downturn over the past few months since Apr 30th and it will be only employment and income growth that will put individuals in a better position to take advantage of low prices and mortgage rates.