George Peppard, as Col. John “Hannibal” Smith on “The A-Team,” always loved seeing a plan come together.
Economy watchers are likewise happy when sales or survey numbers they encounter clear the air, simplifying forecasts and decisions, but that’s not what we saw last week.
The housing market generated mixed reports. Home resales climbed smartly in January, but sales of new homes tumbled. The country’s two main consumer confidence surveys revealed an American public that is pessimistic about whether the economy is improving.
Steadier signals may be on the way this week. Sales of new cars and trucks have been consistently rising for the past five years, and the auto industry is expected to reveal continued solid growth when its February numbers are released today.
Inautonews said U.S. new-vehicle sales in February are expected to increase 8.1 percent from a year earlier, according to a monthly sales forecast from J.D. Power and LMC Automotive, reaching 1,357,800 units of light vehicles sold, up from 1,255,769 a year earlier.
The seasonally adjusted annualized rate is projected to hit 17.7 million units this month, up 1.4 million units from a year earlier and the highest rate since 2000, when it was nearly 19 million.
The Labor Department’s monthly unemployment report on Friday is also expected to be encouraging. MarketWatch said economists’ consensus is that the country added 195,000 jobs, the jobless rate remained at 4.9 percent and there was an increase in average hourly earnings of 0.2 percent.
Last Friday the Commerce Department said consumer spending increased 0.5 percent in January and personal income rose by the same percentage, with both gains topping forecasts. Core inflation rose 0.3 percent, a development that economists said boosts the chances of another interest-rate increase sooner rather than later.
Despite less-than-stellar consumer confidence surveys, people seem willing to continue buying big-ticket items. The recovering boating industry hopes to remain aboard this wave as winter eases into spring.
The National Association of Realtors said Feb. 23 that home resales climbed to a six-month high in January, rising 0.4 percent to an annual rate of 5.47 million despite a punishing Northeast snowstorm. Economists had predicted a decline.
New-home sales for January went in the opposite direction, falling 9.2 percent, to a seasonally adjusted annual rate of 494,000 units, according to the Commerce Department.
Nonetheless, MarketWatch saw rays of sunshine in the new-home numbers; Trulia chief economist Ralph McLaughlin said the share of homes purchased, but not yet started, is near a 10-year high.
“Why? The inventory of existing homes continues to fall,” McLaughlin wrote in a research note. “Low existing inventory likely pushes prospective buyers away from existing homes towards new homes, and as new-home sales rise, this allows builders to sell more new homes off plan.”
MarketWatch said low inventory was an important aspect of the realtors group’s home-resales numbers. Only four months’ worth of homes were available, the group said, well below the six months’ worth that is considered a sign of a healthy market.
In January 18 percent of the homes that were sold were in the $150,000-$199,999 range, up from 13 percent in December, and 34 percent of the homes sold were in the $200,000-$299,000 range, up from 33 percent in December. All of the higher-priced categories except the most expensive — $750,000 and more — lost ground.
“Increases in relatively affordable homes is a sign that the first-time buyer is finally creeping back into the home-buying market,” said David Crowe, chief economist for the National Association of Home Builders.
Recent consumer confidence readings — The Conference Board’s Consumer Confidence Index and the University of Michigan’s Consumer Sentiment Index — portray a national workforce that is hungry for higher pay to improve its lifestyle.
The Conference Board’s index dropped to 92.2 for February from a revised 97.8 in January. The board’s monthly survey found that people were apprehensive about business conditions and job prospects and concerned about turbulence in the stock markets.
“It’s too early to say that consumer confidence is really on the cusp of rolling over, but your antennae have to be raised and you have to pay attention to see where this goes over the next three months or so,” Brett Ryan, a U.S. economist at Deutsche Bank in New York, told Bloomberg.
Consumers “may be frustrated that they are not seeing wage gains,” he added. “Corporate profits have been weak as of late, and add to that the volatility in the equity markets, it probably has people a little uneasy.”
The University of Michigan said Friday that its Consumer Sentiment Index slipped slightly, to 91.7 in February, from 92 the previous month. The index was at 95.4 a year ago.
“Most of the decline from last year’s peak has been in how consumers view year-ahead prospects for the economy, while the outlook for their personal financial situation has improved to its best level in 10 years,” Richard Curtin, the survey’s chief economist, said in a statement.
“Rather modest wage gains, as well as very low inflation, have meant that consumers expect increases in their real incomes during the year ahead.”
