US consumer confidence slips
New home sales hit 8-month high
WASHINGTON, April 25, (RTRS): US consumer confidence fell from a more than 16-year high in April, but a surge in new home sales to an eight-month high last month suggested underlying strength in the economy despite an apparent sharp slowdown in growth in the first quarter.
The economy’s healthy fundamentals were also underscored by other data on Tuesday showing the biggest year-on-year increase in house prices in 2-1/2 years in February. Though consumer confidence slipped this month, it remained at a very high level and many households expected to buy big-ticket items like cars.
That would suggest an acceleration in consumer spending after a slowdown that likely helped restrain economic growth at the start of the of the year.
“The housing market continues to look quite good. Consumers also have more jobs and are getting higher wages, so they will likely increase their spending this year,” said Gus Faucher, chief economist at PNC Financial Services Group in Pittsburgh.
The Conference Board said its consumer confidence index fell to 120.3 this month from 124.9 in March, which was the highest reading since December 2000. The index in April was the second highest reading since 2000.
Consumers’ assessment of labor market conditions were slightly less favorable than in March. Still, the survey’s so-called labor market differential, derived from data about respondents who think jobs are hard to get and those who think jobs are plentiful, was the second-highest since 2001.
That measure closely correlates to the unemployment rate in the Labor Department’s employment report. The survey also showed increases in the number of consumers planning to buy major appliances.
The dip in confidence is likely related to last month’s failed attempt by Republicans in the House of Representatives to pass legislation to repeal the Affordable Care Act, the 2010 healthcare restructuring popularly known as Obamacare.
That failure stirred concerns in financial markets about the difficulties the Trump administration might have in implementing other policies, including its plan to cut taxes.
“Consumer confidence is starting to reflect the realities of governing, not the hopes that the swamp will be drained,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “The failure to implement any real policy changes has made people a little more uncertain about what will actually get done.”
US financial markets were little moved by the data as investors focused on other issues, including negotiations for a short-term spending deal to avert a shutdown of the US government early on Saturday.
The dollar fell to a 5-1/2-month low against the euro. US stocks were trading sharply higher, with the Nasdaq Composite hitting the 6,000 mark for the first time. US Treasury prices fell.
In a separate report on Tuesday, the Commerce Department said new home sales jumped 5.8 percent to a seasonally adjusted annual rate of 621,00 units last month, the highest level since July 2016.