Posted on 07/27/2004 9:35:46 PM PDT by rb22982
Consumer Confidence Soars, Housing Strong
By Mark Felsenthal
WASHINGTON (Reuters) - U.S. consumer confidence surged to a two-year high this month on hiring hopes while new home sales in June posted a smaller decline than expected, according to two reports on Tuesday that signaled the economy may be picking up after a brief hiatus.
The Conference Board, a private forecasting group, said its consumer sentiment gauge climbed in July for the fourth straight month to 106.1 from an upwardly revised 102.8 in June, outpacing Wall Street forecasts.
"These are strong numbers. I have no doubt they indicate continuity for the economic expansion, and are a prelude to a second half that is stronger than the first half," said David Littmann, chief economist at Comerica Bank.
Stock markets and the dollar rallied on the buoyant data, while investors dumped safe-haven Treasuries.
The Dow Jones Industrials (DJI) rose 123 points, or 1.2 percent, to 10,085, its biggest gain since early June. The dollar rose to five-week highs against the euro.
U.S. Treasury securities prices slid, as the reports contributed to the biggest two-day sell-off in nearly three months. The benchmark 10-year note fell 29/32 in price, lifting yields to 4.60 percent, up sharply from a low of 4.35 percent last week.
A separate report from the Commerce Department showed sales of new homes dipped to a seasonally adjusted annual rate of 1.326 million units last month, down 0.8 percent from a downwardly revised but still-record fast 1.337 million in May.
Helped by low interest rates and tight inventories that are sustaining homebuyer appetites, the housing sector has consistently defied economists' expectations for a fall-off.
Inventories of homes for sale held steady at a record low 3.4 months' supply for the second straight month.
The new homes sales number comes a day after the National Association of Realtors reported that existing homes staged an unexpected jump to a record high last month.
SHORT-LIVED WEAK SPOT
Analysts said the confidence rise lent weight to Federal Reserve Chairman Alan Greenspan's argument last week that recent weakness in the economy would prove short-lived.
"Consumers are feeling better not only about current conditions, but also about prospects for the future. It looks as if a lot of people believe that business conditions are holding their own and doing better than a year ago," said Gary Thayer, chief economist at A.G. Edwards & Sons.
Consumer faith in the economy is often seen as a proxy for future spending, although some economists and Fed officials argue the correlation is not always exact.
Those surveyed expressed more optimism about the job market, which could play into President Bush's favor as he heads toward the November presidential elections.
The percentage of consumers who said jobs were hard to get dipped to 26.0 from 26.2, while those saying work was plentiful increased to 19.8 from 18.3.
The present situation index rose to 106.5. from 105.9 in June, while the expectations index soared to 105.8 from 100.8.
According to the Commerce Department report, new homes sold fastest in the South, where sales jumped 9.6 percent to a record high 696,000 rate. They fell 13.1 percent to 338,000 in the West, 2.9 percent to 201,000 in the Midwest, and 14.2 percent to 91,000 in the Northeast.
Despite a rise in the U.S. central bank's benchmark federal funds rate in late June, mortgage rates are hovering not far above historical lows.
After rising in the spring, the national average for the popular 30-year fixed rate mortgage fell to 5.98 percent last week, mortgage finance provider Freddie Mac said.
CHAIN STORES
In separate reports on the retail sector, chain store sales picked up last week compared with the same time last year, thanks to a bout of warm weather and healthy demand for back-to-school merchandise.
Sales rose by 0.2 percent in last week, matching a 0.2 percent rise the previous week, the International Council of Shopping Centers and UBS said in a joint report. Compared with the same week a year ago, sales increased 3.8 percent, up from the 3.3 percent growth pace of the preceding week.
A report by Redbook Research offered a similar picture. Redbook said sales at major retailers grew 3.5 percent on a year-over-year basis last week, up from the preceding week's 2.6 percent pace.
To date in July, sales are down 0.3 percent from June.
"Retailers are doing well, including key companies in the heavily weighted discount sector, where strength can lift the entire retail group," the report said.
Tom Daschle and Willie Green are deeply saddened.
This is B-A-D news for the Rats, indeed.
Indeed, and, going forward, this recovery only gets worse for Democrats.
So is THIS Bad News for our Dem Rats....
Deficit is expected to be $100 BILLION Less than thought...
http://www.freerepublic.com/focus/f-news/1179527/posts
Business bump!
Ol' Willie Green be cryin' da blues tonight.
So, how are housing prices in Brooklyn these days?
Unfortunately going up, which in turn means that appraisials for Real Estate tax purposes are going up as well. That gives old Bloomie and excuse to demand more money from me.
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