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Confidence rises again

February 24, 2021

Graph depicting spread between the conference board's jobs plentiful and jobs hard to get indices

Source: The Conference Board

Consumer confidence moved higher for a second straight month in February with a 2.4-point increase to 91.3. Details were weaker than the headline, however, as the expectations component fell and buying plans were broadly lower. More encouragingly, the number of respondents characterizing jobs as plentiful exceeded those saying that jobs are hard to get for the first time in three months. The nascent improvements in the labor market, then, are beginning to register and should increasingly impact confidence more generally as they inevitably gather steam in the months ahead.

Home prices still soaring

The Case-Shiller 20-city home price index rose by 1.3 percent in December and is now up by 10.1 percent year-over-year, the first double-digit annual reading in the series since 2014. Prices were higher in all 20 markets, with all but Portland and San Francisco recording sequential increases of at least 1.0 percent on a seasonally adjusted basis and five now eclipsing 20.0 percent annualized over the last three months. A pickup in supply as the pandemic fades should alleviate some of the upward pressure in the year ahead, but, with the labor market on the mend and the Fed sidelined, this is shaping up to be a prolonged run. Consider that the Case-Shiller index didn’t peak in the mid-2000s until after the Fed had hiked rates 17 times and the yield curve had inverted (not coincidentally, prices began falling in 2006 almost immediately after the curve inversion). It is an open question as to whether the developing boom will match that one in intensity, but it is a good bet that it will at least surpass it in duration.

Daily Trivia

What was the most rapidly adopted product in U.S. history, with the household ownership rate increasing from 9.0 percent to 64.5 percent in just five years?

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What commodity’s name translates as “Wine of Arabia”?




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