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Some days, the latest U.S. economic data leaves us scratching our heads. Consider the following from Tuesday:
- The S&P Case-Shiller index showed U.S. housing prices in January posted their biggest annual increase in more than six years, and stock markets responded favourably. Household real estate wealth increased by $1.4-trillion in 2012, according the U.S. Federal Reserve. Rising home prices in the U.S. mean more consumer spending, the big driver of economic growth, right?
- But wait – U.S. consumer confidence plummeted in March, to a reading of 59.7 from 68.0 the month before, while the “expectations index” plummeted to 60.9 from 72.4 the previous month, as their outlook on jobs was little changed, according to The U.S. Conference Board. CIBC World Market economist Avery Shenfeld noted confidence “has been on a largely sideways track since early 2011.”
- Maybe we should take hope from U.S. durable goods orders that climbed 5.7 per cent in February, right? Not really – much of the gains were from aircraft and defence orders, which will be hard hit by sequestration in the U.S., and followed a 3.8 per cent decrease in January. Over the first two months, orders excluding transportation increased by a measly 1.2 per cent. HIS Global Insight economist Michael Montgomery tried to sound optimistic: “It is no boom, but it is clear forward progress after months in the doldrums,” he wrote.
There actually is a common theme here: The Great Frustration – the period of prolonged sluggish growth coming out of the 2008-09 recession, continues apace. There might be signs of optimism, notably housing and the healthy state of U.S. corporations, but there won't be reason to be overly optimistic until employment and consumer confidence increase markedly, along with continuing improvements in housing prices, which are still climbing out from their post-subprime mortgage meltdown depths. Europe's continuing economic saga remains a hazard to global economic growth, ever more so after this week's questionable resolution of the Cyprus banking crisis. With the U.S. Federal Reserve trimming expectations for 2013 last week, it seems increasingly unlikely that will happen any time soon. Until it does, we continue to watch the stats, ever hopeful that the economic indicators start to click together in a way they haven't for five years.
Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Sean on Twitter at @seansilcoff.
Sean Silcoff