Housing, Profits, Confidence: Mending Continues

Recent days have seen continued rebounds in housing, corporate profit reports and consumer confidence.

Two reports early this week point to continued progress in residential housing resales. On Monday the National Association of Realtors implied that the home-buyer tax credit will likely sustain the housing market throughout next year. In October, first-time buyers used the tax credit and combined it with record low mortgage rates to push home sales to their highest level in 2 1/2 years. Home sales are now 37 percent above their bottom in January and the seven-month supply of inventory is quite modest. We saw bidding wars break out earlier this year in select areas, but now those competitions are becoming more widespread.

On Tuesday, home prices continued to show improvement according to the Case-Shiller report. The report data continued a long strong string of improvements: Year-on-year rates continue to improve; quarter-to-quarter rate shows steady improvement and those areas that were especially hit hard like the West and pockets of Florida have turned markedly higher.

An analysis of corporate profits is also quite rosy. Tuesday’s government release shed light on huge corporate profits: up 16% since the end of last year. What is particularly noteworthy is that even though we’ve just made it through a strong recession, profits in US firms have essentially doubled in the past 8 years.

And a consumer confidence report out on Monday took everyone by surprise. Heading into the holiday season, consumer confidence is back on the rise. The Conference Board consumer confidence index rose to a level not forecast by even the most optimistic forecasters. Most had expected a downturn in confidence.

While many expect that the holiday consumer season will be light, many indications point to an economy and a consumer that are ready to believe in a brighter 2010.

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1 comment to Housing, Profits, Confidence: Mending Continues

  • Ray

    With the national debt topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will top $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink dramatically.

    In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
    (By Edmund L. Andrews, NY Times News Service)

    Not to mention the inevitable bankruptcies of the Social Security system, Medicare and Medicaid.

    We’ll need more than confidence to take away the federal government’s magic checkbook.

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