Better Housing Market Push Consumer Confidence Higher
Higher home prices are making for slightly happier consumers, a trend that is helping holiday sales and other consumer-driven parts of the economy, while business sits on the sidelines, worrying about the “fiscal cliff.”
That trend should be apparent in the S&P/Case-Shiller home price data for September, released at 9 a.m. ET Tuesday. It is expected to show an annual return of three percent in the 20-city index. Consumer confidence for November is released at 10 a.m., and it is also expected to rise, but the question is how much was it impacted by Super Storm Sandy or anxieties about the election or fiscal cliff.
“I've been somewhat surprised at how healthy consumer confidence has been over the last few months because the fundamental indicators haven't been fantastic,” said Stephen Stanley, chief economist at Pierpont Securities. “It's not like the economy accelerated rapidly. I do think better housing is helping.”
Economists expect confidence to rise to 73 from 72.2 but Stanley is more optimistic, expecting a jump to 78.
“The house price data has looked pretty good. If anything the pace of gains might taper off a little bit heading towards the latter part of the year but it definitely feels like we've turned the corner there,” Stanley said. “That's a pretty big positive and at least one of the reasons consumer confidence has done better in the last couple months…history suggests that consumer confidence tends to go up in the November of election years.”
The economy is facing tricky cross-currents. The housing recovery and the improved state of the consumer are vulnerable and dependent on Congress and President Barack Obama coming to an agreement on the fiscal cliff. The cliff is the expiration of dozens of tax breaks and the onset of automatic federal spending cuts that will occur starting Jan. 1 if Congress does not take action.
Via – CNBC
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