More consumers, and most Americans, are deciding they want calm after the Pandemic era. They are craving fewer economic disruptions for starters, such as the partisan wars that have stymied budget negotiations.
“Nearly three-quarters of Americans (73%) rate strengthening the economy as a top priority. That is considerably larger than the shares citing any other policy goal,” reports a recent PEW Research poll.
With Americans fully employed for more than two years and average wages rising faster than inflation, it is boosting consumer confidence and hence consumer spending. This is in turn boosting economic growth.
The US economy averaged 2.5 percent real GDP growth last year, and predictions are for 2-3 percent average GDP growth this year.
The latest University of Michigan sentiment survey highlights their wish for stability.
“Consumer sentiment moved little this month with a 0.4 index point decrease that is well within the margin of error, and thus sentiment has been steady and essentially unchanged since January 2024…After strong gains between November 2023 and January 2024, consumer views have stabilized into a holding pattern; consumers perceived few signals that the economy is currently improving or deteriorating. Indeed, many are withholding judgment about the trajectory of the economy, particularly in the long term, pending the results of this November’s election.”
The other Conference Board confidence survey was similar with overall inflation remaining the main preoccupation of consumers, and are a bit less concerned about food and gas prices, which have eased in recent months. But they are still concerned about the labor market situation and the US political environment.
Stability is what Americans crave after COVID and two ongoing wars. Americans reacted similarly once before, during the Great Depression in the 1930s that resulted in 25 percent of working Americans unemployed.
FDR was then elected that brought in a New Deal. This time it’s the Biden creating the bipartisan new, New Deal that is spending $billions on renewing our infrastructure, manufacturing with the CHIPS Act, in social services, and combating climate change with the Inflation Reduction Act. It will boost economic growth for the rest of this decade.
Further signs of a strengthening economy are in the housing industry. Builder confidence rose for the fourth month in row in March, as buyer demand remained strong.
The expectations of a jump in demand in the coming months pushed the National Association of Home Builders’ (NAHB) monthly confidence index up 3 points to 51 in March, the trade group said on Monday.
Housing starts jumped in February as well. Construction of new U.S. homes rebounded 10.7% in February to an annual pace of 1.52 million units, the Commerce Department reported Tuesday. Single Family Starts are up 35% Year-over-year in February; Multi-Family Starts Down Sharply, said the NAHB. That is the biggest gain in nine months.
“The solid level of single-family production in February tracks closely with rising builder sentiment, and with mortgage rates expected to moderate further this year, this will provide an added boost for single-family building,” said Carl Harris, chairman of the National Association of Home Builders (NAHB). “But policymakers need to help the industry's supply-chains in order to protect housing affordability and add much needed supply to boost inventory.”
That means interest rates must come down this year to continue to support housing affordability, in particular. Housing has traditionally led economic recoveries, so it is an important indicator of when we will break out of the current holding pattern.
Congress has just reached final agreement on the federal budget for the rest of this year, which will further enhance economic stability during the election season.
Harlan Green © 2024
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
No comments:
Post a Comment