The Monday Morning Quarterback / A quick analysis of important economic data released over the past week
More good news this week. The economy is, with the exception of the construction sector, doing well. Thus, while there will probably be no boom this cycle, at least the U.S. economy is expanding fast enough to bring the unemployment rate down. Internationally, Japan started another stimulus program and the Euroland is a mess. But, both here and abroad, the policies that would be required to help resolve the ongoing issues are, unfortunately, not politically viable. In addition, we believe that the last two administrations wasted billions of stimulus dollars on projects that were feel good rather than producing real job opportunities. Despite this, the economy is making progress.
Arizona Snapshot
Total retail sales in Arizona were up 3.7% from a year ago in August.
The homeownership rate in Arizona, like the national figure, continued to decline in the third quarter and now stands at 63.2%. This is down from 64.0% a year ago. The rate in Greater Phoenix was 60.9% while the Tucson rate was 70.1%.
According to the S&P/Case-Shiller home price index, home prices in Greater Phoenix as of August were up 4.3% from a year ago but only 0.2% from July.
According to CBRE, the Greater Phoenix office market continues to recover. As of the third quarter, vacancy rates were 21.7%, down from 23.2% a year ago and 22.0% in the second quarter. Thus, while the office market has a way to go before it is anywhere near normal, it is moving in the right direction.
CBRE also had positive news to report on the Greater Phoenix industrial market. Vacancy rates in the third quarter were 11.0% compared to 12.0% a year ago.
U.S. Snapshot
The U.S. economy expanded more than expected in the third quarter, capping its strongest six months in more than a decade, as gains in government spending and a shrinking trade deficit made up for a slowdown in household purchases. Growing oil production is limiting imports and contributing to a pickup in manufacturing allowing the economy to overcome slowing growth in overseas markets from Europe to China. At the same time, job gains and cheaper gas are giving American consumers the confidence and the means to spend. Real GDP grew at a 3.5% annualized rate in the three months ending September. Expectations were for a 3% gain.
Personal income continues a modest uptrend but spending slipped on volatile auto sales and lower gas prices. Personal income advanced 0.2% in September following a 0.3% gain in August. Disposable personal income increased by 0.1%. Personal consumption expenditures (spending) declined 0.2% after jumping 0.5% in August. The personal savings rate, personal savings as a percent of disposable personal income, was 5.6% in September compared to 5.4% in August.
Both major measure of consumer confidence showed gains. Both are at new recovery highs. These are the highest levels since 2007 and reflect strong gains in expectations of future activities.
Pending home sales rose slightly in September and are now above a year ago for the first time in 11 months. The index is now at 105.0 compared to 104.7 last month and 104.0 a year ago.
The national homeownership rate continued to decline in the third quarter and now stands at 64.4%. This is down from 64.7% last quarter and 65.3% a year ago.
The S&P/Case-Shiller home price index for August continues to show a deceleration in home prices. The 20-city composite, while up 5.6% from a year ago, is up only 0.2% from July.
