Tuesday, July 29, 2008

Major economic data released on July 29, 2008

1. S&P Case/Shiller index of home values Composite-20 for May
Expectations: -16.1% since last year
Previous (April): -15.3%
Today’s release (May): -15.8% since last year

The report was well-received by markets. A tenuous slowdown in price declines may now be at hand. On a month-to-month basis, housing prices declined less in May (-0.8%) than they did in April (-1.4%).
As seen in the chart, the rate of decline is slowing, and given that this trend continues, prices may (and I would like to emphasize the work may) have hit a bottom.

A closer look

Home values are starting to rise in some parts of the nation. Boston, Charlotte, Dallas, Denver, and Portland (5 out of 20 urban areas) saw at least two consecutive months of increasing home values. The data are not seasonally adjusted, and rising prices may simply be a function of higher spring demand in housing. However, this is a stark improvement over February’s release when home prices declined in all of the 20 urban areas.

Beware: This index is lagged by two months, and does not represent current market conditions.

Notes on revisions

This data is not revised.

2. Conference Board’s consumer confidence index for July
Expectations: 50
Previous (June): 50.4
Revised (June): 51
Today’s release: 51.9

The data shows a slight improvement in confidence. It is likely that waning gas prices (now $3.96 national average, down from $4.06) are improving consumers’ moods. This is the first improvement since December, while its competitor, the University of Michigan consumer sentiment index, saw two consecutive monthly improvements.

A closer look

Consumers remain quite gloomy in July with no significant increase or decrease in confidence. However, consumer outlook improved since last month. Business conditions are believed to be better next month by a rising, but still small, percentage of surveyees. The number of respondents that expect fewer jobs increased since last month; conditions in the labor market are looking bleak.

Notes on revisions

This is a preliminary result and will be revised next month. The June number was revised up from 50.4 to 51.


  1. Maybe consumers just aren't listening to the doom-and-gloom anymore as it is kind of like beating a dead horse (again). Saw a report that indicated the big cities in Texas are not suffering much if at all in housing price declines and employment. Should we all move to Houston??

  2. It seems that consumers react almost solely to the price of gasoline. If that eases back a bit, then they are likely going to be less gloomy. Amazingly, consumer confidence now is lower than during 2001-2003, when 1.7 million jobs were lost.


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