US consumer confidence hits 17-year high
Fed to meet as Yellen era appears set to close
WASHINGTON: US consumer confidence recovered from the hurricane-induced doldrums last month to hit a 17-year high in October, according to a monthly survey released yesterday. And the consumer confidence index for September was revised up to show a slight increase after the initial report showed a modest decline following the impact of Hurricanes Harvey and Irma.
The index beat expectations, rising to 125.9 in October from the upwardly-revised 120.6 in September, the Conference Board survey showed. That marks four straight months of increases. The positive confidence data “suggest the economy will continue expanding at a solid pace for the remainder of the year,” Lynn Franco, the Conference Board’s head of indicators, said in a statement. “Consumers were also considerably more upbeat about the short-term outlook, with the prospect of improving business conditions as the primary driver.”
Meanwhile, US home prices rose sharply in August from a year ago, a trend that is thwarting many would-be buyers and potentially slowing sales. The Standard & Poor’s CoreLogic CaseShiller national home price index, released yesterday, increased 6.1 percent in August from a year earlier. That’s higher than the 5.9 percent annual gain in July. In 9 of the 20 cities tracked by the index, yearly price gains in August were faster than in July.
Fewer Americans are selling their homes, and builders aren’t putting up enough new houses to meet burgeoning demand. That has forced home buyers into bidding wars, lifting prices. Mortgage rates remain at historically low levels, making it easier to afford higher costs. That has resulted in rising prices even as sales have slipped this year.
“Home price increases appear to be unstoppable,” says David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. Housing costs are climbing much faster than overall inflation or wages.
Fed meeting
The Federal Reserve is due to begin a twoday monetary policy meeting today, largely overshadowed by this week’s expected White House decision to replace central bank chief Janet Yellen. Policymakers are unlikely to raise interest rates at the current meeting, holding off until at least December as they grapple with consistently poor inflation numbers despite falling unemployment and robust economic growth.
The White House is slated to unveil President
Home prices rose sharply in August
Donald Trump’s nominee for Fed chair tomorrow, the day after the meeting concludes, and media reports indicate Trump has settled on current Fed Governor Jerome Powell, a Republican attorney and a former investor. Doing so would make Trump the first president not keep on a Fed chair
installed by a preceding administration since 1978, when Jimmy Carter swapped out Arthur Burns in favor of G William Miller as an anxious public dealt with soaring inflation.
Yellen has won plaudits for careful economic stewardship which has seen price pressures remain low amid robust job creation and historically low unemployment-conditions that have favored Wall Street’s booming run in recent years. And, despite berating her during his campaign last year, Trump has said he likes Yellen and was considering renaming her. But Trump told a Fox News host this month: “You like to make your own mark, which is maybe one of the things she’s got a little bit against her.” “But I think she’s terrific,” he added.
Moving in January? Since his appointment by Barack Obama five years ago, Powell, the only Republican holdover currently on the Federal Reserve Board, has voted with the majority of policymakers on the Federal Open Market Committee, which sets US monetary policy. Analysts say Powell may offer what Trump views as the best of all words-a cautious approach to raising rates, an open mind to the administration’s deregulation agenda and the chance to remove a top-level Obama appointee. “Powell is a respected guy in the committee, a smart guy, and probably would be good in the sense that, although he hasn’t written about monetary policy, he has more on regulatory policy, and has had some time at the Fed to learn,” Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics and a former Fed official, told AFP.
As for the meeting’s outcome, markets will be looking for hints as to when the next rate hike may come. Futures markets put the odds of a December hike at nearly 100 percent.
But Beth Ann Bovino, chief US economist at S&P Global, said her organization instead expects the central bank to wait until January, given the persistently weak inflation data.
“We’re still concerned about the inflation story but we’ll see what happens,” she told AFP. “At this point in time, the data aren’t making us feel much more comfortable.” —Agencies