- Housing Starts for April rose to 1032K versus estimates of 939K and 954K in March.
- Building Permits for April rose to 978K versus estimates of 915K and 932K in March.
- Preliminary Univ. of Mich. Consumer Confidence for May fell to 59.5 versus estimates of 62.0 and a reading of 62.6 in April.
BOTTOM LINE: Construction of US single-family houses in April fell to the lowest level in 17 years, even as building of condominiums and townhouses rebounded, Bloomberg reported. Starts jumped 24% in the Midwest, 19% in the West and 3.6% in the South. They fell 13% in the Northeast. Residential construction has subtracted from overall US economic growth since the first quarter of 2006. Despite this rebound, construction will remain muted over the intermediate-term as homebuilders work down inventories.
US consumer confidence fell to a 28-year low as gas prices continued to rise to records this month, Bloomberg reported. The Expectations component of the index fell to 51.7 from 53.3 in April. The Current Conditions component of the index fell to 71.7 versus 77.0 in April. Regular unleaded gasoline prices reached a record $3.79 a gallon at the pump yesterday, and are up 24% just this year. Despite this, retail sales have improved meaningfully of late and $90 billion in tax rebate checks have yet to hit. According to Bankrate.com, the average fixed rate 30-year mortgage is falling 6 basis points today to 5.80%, down from 6.12% on March 6th and down from a high of 6.42% on June 14th, 2007. Saudi Arabia just announced that they will pump an extra 300,000 barrels of oil per day in June. Saudi currently produces 9.12 million bpd and has the spare capacity to produce 11.1 million bpd. The ECRI Weekly Leading Index was flat this week at 133.50. However, it has risen during four of the last six weeks and is up from a low of 129.50 the week of March 28th. I still think consumer confidence gauges will improve meaningfully into year-end as election uncertainty ends, energy prices fall, housing fears subside, fiscal/monetary stimuli hit, the American Axle strike ends, interest rates remain low, inflation decelerates, stocks rise, credit market turmoil ends, the US dollar rises and the job market improves.
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