Consumer confidence is high in the United States right now, and why shouldn’t it be?
After the economy added 261,000 jobs in October during a bounce-back month from the setbacks that hurricanes Harvey and Irma caused, the unemployment rate stood at 4.1 percent. That is the lowest rate since December of 2000.
MarketWatch said the median forecast of economists was for a gain of 325,000, so job creation fell short of what experts expected, but it represented a solid step forward.
The Labor Department initially reported that the economy lost 33,000 jobs in September, but updated figures in the October report show that there actually was an increase of 18,000 jobs.
Average hourly earnings for all employees on private nonfarm payrolls fell by 1 cent, to $26.53, after rising by 12 cents in September, the government said. During the past 12 months average hourly earnings have increased by 63 cents, or 2.4 percent.
"[Friday’s] report falls short of what many investors would have hoped for, but that doesn't mean the economy isn't gaining some serious momentum," Mike Loewengart, vice president of investment strategy at E-Trade, said in a statement that U.S. News and World Report quoted in a story about the jobs report.
"Despite coming in below expectations, this is the type of report the [Federal Reserve] was looking for to sign, seal and deliver a rate hike in December,” Loewengart added. But we still need to see improvement on wages and low inflation remains concerning."
Consumers have sensed the improvement for some time, and both of the major barometers of the public mood are setting marks for positivity. The Conference Board’s Consumer Confidence Index rose to 125.9 in October, a five-point gain from the previous month that put the index at its highest level in nearly 17 years.
The research association said the percentage of consumers who said jobs are “plentiful” rose from 32.7 percent to 36.3 percent; those who said jobs are “hard to get” decreased from 18 percent to 17.5 percent.
“Consumers’ assessment of current conditions improved, boosted by the job market, which had not received such favorable ratings since the summer of 2001,” Lynn Franco, director of economic indicators at The Conference Board, 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,” Franco added. “Confidence remains high among consumers, and their expectations suggest the economy will continue expanding at a solid pace for the remainder of the year.”
As gauged by the University of Michigan’s Consumer Sentiment Index, public confidence has risen to a 13-year high. The final reading for October was 100.7, up from 95.7 at the end of September.
Richard Curtin, chief economist of the university’s Surveys of Consumers, said in a statement that this is only the second time the index has been above 100 since the end of the 1990s expansion.
“The October gain was reflected in more favorable consumers' assessments of current economic conditions, as well as expected economic prospects,” he said.
“Personal finances were judged near all-time record favorable levels due to gains in household incomes, as well as decade highs in home and stock values. Lingering doubts about the near-term strength of the national economy were dispelled as more than half of all respondents expected good times during the year ahead and anticipated the expansion to continue uninterrupted over the next five years.”
The nation’s gross domestic product rose at an annual rate of 3 percent in the third quarter, a solid performance that followed a 3.1 percent gain in the previous quarter, the Commerce Department said in late October. The growth occurred despite the damage the hurricanes caused, particularly in Texas and Florida.
“It’s hard to confidently discern the hurricane effects in this report, but the economy seems to be on pretty solid ground,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, told Bloomberg. “The details are reasonably solid. Consumers stepped down a little from the second quarter, but their spending still expanded at a decent pace.”
The government said personal consumption expenditures, private inventory investment, nonresidential fixed investment, exports and federal government spending contributed to the gain. Imports decreased.
Current-dollar GDP rose 5.2 percent, or $245.5 billion, in the third quarter, to $19,495.5 billion. In the second quarter it increased 4.1 percent, or $192.3 billion.
Personal saving was $494.8 billion in the third quarter, compared with $545.6 billion in the prior quarter. The personal saving rate was 3.4 percent in the third quarter, compared with 3.8 percent in the previous one.
The housing market delivered mixed news. The National Association of Realtors said Oct. 20 that existing-home sales rose 0.7 percent, to a seasonally adjusted annual rate of 5.39 million units, in September.
Nonetheless, NAR chief economist Lawrence Yun said closings declined on an annual basis for the first time in more than a year.
“Home sales in recent months remain at their lowest level of the year and are unable to break through, despite considerable buyer interest in most parts of the country,” he said in a statement.
“Realtors this fall continue to say the primary impediments stifling sales growth are the same as they have been all year: not enough listings — especially at the lower end of the market — and fast-rising prices that are straining the budgets of prospective buyers.”
“Sales activity likely would have been somewhat stronger if not for the fact that parts of Texas and South Florida — hit by hurricanes Harvey and Irma — saw temporary, but notable declines,” Yun added.
The NAR said the median existing-home price for all housing types in September was $245,100, up 4.2 percent from the same month last year ($235,200). September was the 67th straight month in which prices have shown year-over-year increases.
“A continuation of last month's alleviating price growth, which was the slowest since last December (4.5 percent), would improve affordability conditions and be good news for the would-be buyers who have been held back by higher prices this year,” Yun said.
Meanwhile, new-home sales soared in September to a 10-year high.
The Commerce Department said sales were at a seasonally adjusted annual rate of 667,000, which was 18.9 percent higher than the August rate of 561,000 and 17 percent above the September 2016 estimate of 570,000.
Sales rose in all regions of the country. The median sales price of new houses that sold during the month was $319,700. The average sales price was $385,200. The seasonally adjusted estimate of new homes for sale at the end of the month was 279,000, which represents a five-month supply at the current sales rate.
Sentiment among homebuilders rose in October. The National Association of Home Builders/Wells Fargo Housing Market Index rose four points, to 68. The trade group said the reading was the highest since May.
“This month’s report shows that homebuilders are rebounding from the initial shock of the hurricanes,” NAHB chairman Granger MacDonald, a homebuilder and developer from Kerrville, Texas, said in a statement. “However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages.”
“It is encouraging to see builder confidence return to the high 60s levels we saw in the spring and summer,” NAHB chief economist Robert Dietz said. “With a tight inventory of existing homes and promising growth in household formation, we can expect the new-home market to continue to strengthen at a modest rate in the months ahead.”