Economic data

S&P/CaseShiller said home prices in Jan fell 3.06% y/o/y in the top 20 cities, a touch better than expectations of a fall of 3.2% but it does take the index right back to the lows. At 140.86, it is just 1.1% above the low reached on Apr ’09 and is 31.7% below the record high in July ’06. With the Federal Government the unfortunate growth leader for the economy, Washington DC saw a 3.6% y/o/y price gain. San Diego also saw a gain but the other 18 cities had price declines led by Phoenix and Detroit. Bottom line, prices are retesting the lows again with no reason to think they won’t break below. The question of course is to what degree and whether bank balance sheets are prepared. Most unfortunately do not assume a double dip in pricing.

Reflecting the recent goings on, March Consumer Confidence fell to 63.4 from 72 in Feb and was 1.6 pts below expectations. It does match a 4 month low but the breakdown was mixed as the Present Situation rose 3 pts to the best since Nov ’08 while Expectations were down by 16.5 pts to the lowest since Nov ’10. The answers to the labor market questions weakened somewhat as those that said jobs were Plentiful fell and those that said jobs were Hard to Get rose. Those that plan to buy a home within 6 months fell to a 3 month low and those that plan to buy a car was down by almost 2 pts. Importantly and worrisome for the Fed, one yr inflation expectations jumped to 6.7% from 5.6% to the highest since Oct ’08 and compares unfavorably with the 20 yr average of 4.7%.

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