U.S. consumers will have a lot to say this week, telling us more about whether their appetite for a new home grew stronger and more realistic in January and whether they became more confident about the economy, considering how ulcer-inducing the financial markets have been.
If last week’s indicators were predictive, people are likely to be less enthused about home buying and, presumably, the big-ticket expenditures that go along with them than they were as the previous year ended.
The Commerce Department reported Wednesday that housing starts fell 3.8 percent in January, to a three-month low of 1.1 million at an annualized rate, from 1.14 million in December. All regions of the country saw a decline. Economists had expected an increase of 2 percent, to 1.173 million.
A Bloomberg report said the data suggest there is a limit to how much the home-buying industry will help the economy grow as the new year moves forward, although one economist saw the decline as temporary.
“We had a mild November and December, and there’s just a little bit of payback in January,” Gus Faucher, an economist at PNC Financial Services Group Inc. in Pittsburgh, told Bloomberg. “I do expect to see growth in housing starts over the course of the year.”
Today we will get January data from the National Association of Realtors on home resales. On Wednesday the Commerce Department will deliver its report on new-home sales for the month.
Business Insider said the home resales report is expected to show a 2.2 percent month-on-month decline after a 14.7 percent gain in December. New-home sales are forecast to have fallen 4.4 percent after a 10.8 percent increase in December.
Both of the top U.S. reports on consumer confidence are due this week. Today The Conference Board will release its Consumer Confidence Index for February; economists expect a slight decline, to 97.5, from 98.1 in January.
On Friday the University of Michigan will release its final Consumer Sentiment Index for the month. That barometer is expected to be unchanged from a preliminary reading of 90.7, which the researchers released a couple of weeks ago.
One hard number due Thursday — durable goods orders for January — is optimistically expected to show a gain of 3.5 percent, economists say, after a 5 percent decline in December.
"Despite the macro data doing well, pessimists often try to convince me that we are on the road to a full-blown credit crisis, which will push the economy into a recession," Deutsche Bank economist Torsten Sløk said of the United States in an interview with Reuters.
"But if this is true, why did the data for January show an acceleration in consumer spending, a decline in the unemployment rate, an acceleration in wage inflation and an increase in consumer confidence?"
The same Reuters report predicted that Markit Economics' flash manufacturing purchasing manager's index for February would show that the manufacturing sector remains resilient, but the index was at 51, its lowest reading since October of 2012, when it was revealed on Monday.
Business Insider said that on a seasonally adjusted basis, that's the lowest figure since September of 2009, about the time the economy was beginning to recover from the Great Recession.
“U.S. factories are reporting the worst business��conditions for over three years," Markit chief economist Chris Williamson said in a press release. "Every indicator from the flash PMI survey, from output, order books and exports to employment, inventories and prices, is flashing a warning light about the health of the manufacturing economy.”
The second estimate of fourth-quarter GDP is due on Friday, and economists expect scant growth of 0.4 percent, down from an initial estimate of 0.7 percent.
January data on personal income and spending also will be released on Friday, and encouraging numbers are forecast — an 0.4 percent increase in incomes and an 0.3 percent increase in spending.
Business Insider said the report also will provide the latest data on the personal savings rate, which hit 5.5 percent in December and has been rising during the past several months as consumers appeared to want to save, rather than spend, their initial energy-related savings.
It may be that economy watchers will have to wait until the fading winter turns to spring before they see how much consumers intend to spend this year. The El Nino-influenced season has generally been mild in much of the nation. Perhaps it will exit early and we won’t have long to wait.