The final holiday gift was a report that consumer sentiment surged during the last 2 months of 2016. Here are the 5 things we learned from U.S. economic data released during the week ending December 30.
Another measure of consumer sentiment jumped in December. The Conference Board’s Consumer Confidence Index added 4.3 points during the month to a seasonally adjusted reading of 113.7 (1985 = 100). This follows an 8.5 point bump in November and puts the measure at its highest reading in nearly 15 years. The expectations index surged by 11.1 points during the month to a reading of 105.5 (its highest point in 13 years) while the present conditions index shed 5.9 points to a reading of 126.1. The percentage of survey respondents who expect business conditions will improve over the short-term surged from 16.4% in November to 23.6% in December. Only 8.7% of survey respondents anticipate economic conditions will deteriorate in the coming months. The press release noted that older survey respondents were more likely to have had a “post-election surge in optimism for the economy, jobs and income prospects” while also pointing out that the high level of confidence will continue depending “on whether or not their expectations are realized.” Last week we learned that another confidence survey–the University of Michigan’s Index of Consumer Sentiment–also has surged in the time since the election. That measure hit a 13-year high in December.
One reason: the pace of layoffs remained slow for all of 2016. The Department of Labor reports that there were a seasonally adjusted 265,000 first-time claims made for unemployment insurance benefits during the week ending December 24. This was down 10,000 claims from the week before and 20,000 claims under the count from the same week a year earlier. First-time jobless claims have been below 300,000 for an impressive 95 consecutive weeks, a streak not seen for more than 45 years. The 4-week moving average for first-time jobless claims slipped by 750 to 263,000 claims, 5.1% below the moving average of a year ago. 2.140 million people were receiving some form of unemployment insurance benefits during the week ending December 10, 8.4% below the count from the same week in 2015.
Increasing interest rates may have sapped home sales activity in November. The National Association of Realtors’ Pending Home Sales Index (PHSI) lost 2.7 points during the month to a seasonally adjusted reading of 107.3 (2001 = 100). This was only off 0.4% from its November 2015 reading. The index fell in 3 of 4 Census regions during the month: West (-6.7%), Midwest (-2.5%), and South (1.2%). The PHSI edged up 0.6% during the Northeast. There was a similar pattern for the 12-month comparables. That is, the index was below its November 2015 readings in the Midwest (-2.4%), South (-1.3%), and the West (-1.0%). The index, which measures home purchase contract signings, was up 5.7% in the Northeast versus its November 2015 mark. The press release blamed the decline in sales to a “quick ascension of [interest] rates immediately after the election” and tight inventories of homes “in the affordable price range.”
Home prices continued to rise in October. The 20-city Case-Shiller Home Price Index jumped 0.6% on a seasonally adjusted basis during the month following a 0.5% gain during September. Prices increased in all 20 metro areas tracked, led by Atlanta (+1.4%), Cleveland (+1.3%), Tampa (+1.2%), Dallas (+1.0%), and San Francisco (+1.0%). The index has grown 5.1% over the past year but remained 7.1% under the measure’s peak value attained back in July 2006. The national Case-Shiller index gained 0.9% on a seasonally adjusted basis and was 5.6% above its October 2015 reading. This measure of home prices was 0.2% above its pre-recession peak value from June 2006. The press release noted higher interest rates and home prices that are expected to “outpace gains in wages and personal income” could end up cooling off the housing market.
Wholesalers tightened inventories during October. The Census Bureau reports that inventories of merchant wholesalers contracted 0.4% during the month to a seasonally adjusted $587.7 billion. This was also 0.4% smaller than that reported for October 2015. Durable goods inventories contracted 0.3% during the month to $352.9 billion (-2.2% vs. October 2015), led by declines in inventories for machinery (-1.0%), metals (-1.0%), and hardware (-0.8%). Inventories of furniture jumped 1.6% during the month. Inventories of nondurables shrank 0.4% during the month to $235.8 billion (+2.5% vs. October 2015). Falling were inventories of drugs (-3.2%) and chemicals (-1.1%) while growing were inventories of petroleum (+1.9%) and alcohol (+1.0%). The inventory-to-sales (I/S) ratio slipped by 2-basis points to 1.30. The I/S ratio for October 2015 was 1.33. The I/S ratios for both durable (1.63) and nondurable (1.00) goods fell by 2-basis points during the month.
Other U.S. economic data released over the past week:
– Agricultural Prices (November 2016, Prices Received by Farmers (Index: 2011 = 100), seasonally adjusted): 83.6 (+3.5% vs. October 2016, -8.9% vs. November 2015).
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What We Learned About the U.S. Economy Last Week 