Sentiment firm before latest turmoil, housing weak
Written on September 30, 2008
Consumer confidence was holding up well this month before the latest bout of financial turmoil but house prices suffered another record annual drop during July, according to data released on Tuesday.
Prices of U.S. single-family homes were down a record 16.3 percent in July from a year earlier, according to the Standard & Poor’s/Case-Shiller Home Price Indexes, though a slowing monthly rate of decline has encouraged some hopes that the worst falls may be over.
The Conference Board said its index measuring consumers’ mood rose to 59.8 in September from 58.5 in August. That was above Wall Street’s expectations but the timing of the survey may not fully reflect the latest chapter in the financial crisis.
“They took the survey before the latest fallout, so I don’t know what people would be saying today,” said Al Kugel, chief investment strategist, Atlantic Trust in Chicago.
“I think consumers are feeling better more because of the gasoline prices are going down faxless payday loans. That was the thing that spooked them earlier this year, every time they had to fill their tank it was $40 or $50.”
U.S. stocks held onto gains after the stronger-than-expected consumer confidence data, as did the dollar. U.S. government bond prices, which usually benefit more from weak economic data, extended their losses.
Another report showed business activity in the U.S. Midwest expanded in September at a faster rate than expected, with production picking up rapidly and hiring on the rise.
The Institute for Supply Management-Chicago business barometer slipped to 56.7 from 57.9 in August, but economists had forecast the index at 53.0. A reading above 50 indicates expansion.
Filed in: economics.