Consumer Confidence Makes Another Cycle High, Existing Home Sales Exceed Expectations

- Consumer Confidence for April rose to 109.6 versus estimates of 106.2 and a reading of 107.5 in March.
- Existing Home Sales for March rose to 6.92M versus estimates of 6.66M and 6.9M in February.

BOTTOM LINE: Consumer Confidence in the US economy unexpectedly jumped to the highest in four years, as an improving labor market helped Americans overcome concerns about high gasoline prices, Bloomberg reported. Wage gains and low unemployment will keep buoying spirits and lift retail sales, economists said. The present situation component of the index rose to 136.2 versus 133.3 in March. The expectations component rose to 91.9 versus 90.3 in March. The percentage of consumers that saw jobs as plentiful rose to 29.1%, the highest since August 2001, versus 28.3% in March. The percentage that said jobs are hard to find fell to 19.6%, the lowest since the 9/11 attacks. The percentage of people planning to by a house over the next six months fell to 2.7%, the lowest since November 2004, versus 4.1% the prior month. According to a recent National Assoc. of Business Economics survey, 44% of companies expect to hire more in the next six months versus 42% in the January survey. I still believe consumer confidence will improve modestly over the intermediate-term as rising stocks, relatively low long-term rates, declining energy prices, a healthy job market and a further lifting of irrational pessimism more than offsets a housing slowdown.

Sales of previously owned homes in the US unexpectedly rose last month at the same time the number of houses on the market increased, signaling that the housing slowdown is likely to be gradual, Bloomberg said. Compared with March of last year, existing home sales fell .7%. The number of unsold homes now represents 5.5 months’ worth at the current sales pace, the highest since 1998. The median price of an existing home rose 7.4% in March from a year ago to $218,000. The median price of a home rose 58% over the last five years as the economy strengthened and interest rates remained low. Sales rose 1.7% in the Northeast and 1.2% in the Midwest. Sales fell .7% in the South and West. I continue to believe housing is slowing to more healthy sustainable levels, which will likely send US economic growth back to average levels from robust rates.