By Elliott D. Pollack and Company
The outlook is still good, in our opinion. While the data has been more mixed than it has been over the past year, part of the cause is Mother Nature (the harsh winter in the mid-west and northeast), part is due to unions (the west coast port slowdown) and part is due to the fact that we are probably past that point in the cycle where all the news will be good. The basics still appear to be intact.
Consumers’ incomes are slowly growing, jobs are being added (chances are good that the lackluster performance last month was an aberration), confidence remains strong, businesses are in good shape financially and housing is slowly recovering. No unusual debt burden issues for consumers or business have manifested themselves. Excess inventories do not appear to be a problem. The yield curve, while being manipulated by the Fed, is still in mid-cycle form. Yes, the strong dollar will make our goods tougher to export, but that will only slow things modestly. It will not stop the expansion. Thus, the outlook is for more growth, albeit tame by historic standards.
- Activity at Sky Harbor continued to pick up in February. The total of enplanements and deplanements grew by 4.4 percent from a year ago.
- The Cromford Report shows active listings down 9.1 percent in March from a year ago and resale activity up 17.9 percent. Not surprisingly given those dynamics, the median sales price of a resale home was up 5.5 percent from a year ago.
- Also according to the Cromford Report, new build sales volume was 818 units last month, up 8.2 percent from a year ago. And, the median sales price of a new home was $321,085, up 3.3 percent from a year ago.
- The Greater Tucson MLS had total listings in March at 5,721, essentially flat from a year ago.
- For a second consecutive month, the consensus forecast of real (inflation adjusted) GDP growth in 2015 slipped as an overwhelming majority of panelists continued to cut their forecasts of growth in reaction to a steady stream of data that suggests, as discussed above, that a bad winter and the Long Beach port worker slowdown temporarily depressed economic activity. The good news is that real GDP is predicted by the consensus to bounce back over the remaining quarters of the year. The consensus forecast is now for real GDP to grow by 2.9 percent in 2015 and 2.8 percent in 2016.
- Consumer credit rose at a 5.6 percent annual rate in February. Revolving credit (credit cards for the most part) declined and now stands at a modest 3.0 percent over a year ago (see chart below). Non-revolving credit (mainly autos and student loans) grew at a 9.4 percent annual rate in February and now stand 8.3 percent above a year ago.
- Gas prices (regular gas) for the week of April 6 were $2.499 nationally. That is down 31.9 percent from a year ago.
- Mortgage rates for the same week were 3.66 percent, down 15.7 percent from a year ago.
- Initial claims for unemployment insurance continue to decline and are now at levels not seen since 2006 (see chart below). This suggests a continued decline in the unemployment rate.