US consumer woes offset housing cheer
HOUSE prices in America rose for a third month in July, but consumer confidence fell unexpectedly in September as the worst job market in 26 years fuelled worries about personal finances on the other side of the Atlantic, data showed yesterday.
The data indicates the economic rebound is still in its early days following the worst recession in decades, and it could be a long time before consumers contribute to growth.
The S&P/Case-Shiller composite index of house prices in 20 metropolitan areas rose 1.6 per cent in July from June, more than triple the estimate of a 0.5 per cent rise found in a Reuters poll. This index rose 1.4 per cent the previous month. The 10-city index gained 1.7 per cent in July after a 1.4 per cent rise in June.
Despite improvements elsewhere in the economy and a roaring stock market rally since March, the weakness of the consumer sector bodes ill for the year-end, traditionally a period of heavy shopping and spending.
Consumers’ job prospects might not improve anytime soon, judging by the plans of senior managers.
US chief executives are not ready to step up hiring or capital spending, according to a Business Roundtable survey.
It said 40 per cent expect to cut US jobs over the next six months, compared with 13 per cent who expect to add them.
The Conference Board, an industry group, said its index of consumer attitudes fell to 53.1 in September, versus a revised 54.5 in August and expectations of a rise to 57.0.
“Companies haven’t started to hire yet, which is going to weigh on confidence,” said Sean Simko, fixed income portfolio manager at SEI.
“Offsetting that is the positive move in the equity market. But in the end, as individuals feel under pressure from the labor market, you will have confidence lower than where it needs to be to bolster the economy.”