Market’s rough ride may have hit consumers’ positive outlook
Consumer spending and confidence surged last year, but recent stock market volatility may have taken some toll early in 2018. Reports on those key measures highlight a busy week of economic news.
New home sales plunged 9.3% in December as limited inventories and sharply rising prices curbed buyer interest. Housing permit increases suggest a rebound in January is likely, says Nomura economist Lewis Alexander. But he warns that low supplies and rising interest rates may continue to crimp sales. Economists estimate the Commerce Department on Mon
day will report a 4% increase in new home sales to a seasonally adjusted annual rate of 650,000.
Consumer confidence reached a 17year high in November and has hovered modestly below that level in recent months. Strong job and income growth underpin Americans’ positive outlook. But the market sell-off early this month may have dinged confidence. Still, Alexander says he believes the recent tax cut more than offset any market jitters. Economists figure the Conference Board on Tuesday will announce a modest increase in its consumer confidence index.
On Wednesday, Commerce releases its second estimate of fourthquarter economic growth. Its initial reading showed the economy growing at a solid 2.6% at an annual rate late last year. And Commerce on Thursday provides its first snapshot of consumer spending in 2018.