Week in Review: Sep. 26-30

Home sales, inflation, and consumer confidence

Another volatile week in financial markets, with currency, fixed-income, and other markets flashing signs of warning. There was some good news this week as well, but are we living at a time when good news is really bad news?

Monday

Chicago Fed National Activity Index (CFNAI)

This index indicates that economic growth sped up in August. Of the 85 individual indicators accounted for in this deeply complicated composite index, 46 made a positive contribution. Take from that what you will. Like I’ve said before, Mondays are slow for economic data. If they released the CFNAI on a different day of the week, it probably wouldn’t make it into this newsletter.

Indeed, there was a fair amount of upbeat data this week as you’ll see. But that supplies the Federal Reserve with more motivation to keep raising rates. I’ve been suggesting for months that that’s what will ultimately sink us. Ok, enough premature commentary. Let’s go to . . .

Tuesday

Durable Goods Orders

New orders for durable goods fell $0.6 billion (-0.2%) in August. Excluding defense-related orders, new orders fell 0.9% for the month. Despite the decline in new orders, shipments of durable goods increased in August for the 15th time in 16 months. Unfilled orders and inventories were also up for the month.

New Home Sales

New home sales increased 28.8% from July, but this estimate is +/- 18.3%, so it could be as low as a 10% increase. Still, this is significantly higher than expected given lofty mortgage rates. On a year-over-year basis, new home sales were virtually unchanged (-0.1%).

It may be that some buyers realize that now is a good time to purchase a home – yes mortgage rates are high, but competition for properties is low. One can save on price and refinance later.

Home Price Indices

Home prices declined 0.6% in July but were up 13.9% year over year, according to the Federal Housing Finance Agency’s House Price Index. The S&P Corelogic Case-Shiller National Home Price Index indicates that prices fell 0.3% on a monthly basis in July, but are still up 15.8% year over year. With mortgage rates rising recently, financial market values dipping, and pessimism remaining pervasive, it’s pretty easy to see that the year-over-year appreciation figures will continue to dip during the months ahead.

Conference Board Consumer Confidence Index®

Consumer confidence increased for a second consecutive month in September, with Americans feeling more upbeat about both the current situation and short-term outlook. Considering that confidence decayed pretty sharply from April to July, I’m going to guess that lower gas prices have a lot to do with how Americans feel about the economy.

Wednesday