| ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
June 30th, 2017
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
Because of the timing of the 4th of July holiday, next week’s Monday Morning Quarterback has become this week’s Friday Afternoon Quarterback. There’s still lots to report.
Things still look good for the consumer. Personal income is up as are disposable personal income and personal consumption expenditures. One measure of consumer confidence is slightly up while the other is slightly down. And, home prices continue to increase more rapidly than the rate of inflation.
As for the business sector, corporate profits are slightly up while new orders for durable goods were down for the month.
As for Arizona, personal income continues to climb, Sky Harbor is seeing more traffic, retail gas prices are low just in time for the 4th of July weekend and lodging occupancy continues to recover.
Overall, you can ride off into the four day weekend with the knowledge that the economy continues to advance.
U.S. Snapshot:
- Personal income in May increased by 0.4% over April and now stands 3.5% above a year ago. This is a reasonable showing for an economy that is running at about a 2% inflation rate. Disposable personal income was up 0.5% compared to the previous month and is up 3.7% from a year ago. Personal consumption expenditures were up as well. May over April was up 0.1% but on a year over year basis, it was up 4.2%.
- Corporate profits continued to stay in the range they have been in since 2012 (see chart below). They were up 3.3% from a year ago but down 2.3% in the first quarter of 2017.
- The Conference Board’s national consumer confidence index increased 1.3 points to 118.9 in June. This comes after consecutive monthly decreases in confidence, with the current index sitting 6 points below its March high. Still, confidence is at a high level (see chart below) even by historic standards.
- On the other hand, the University of Michigan consumer sentiment index for June stood at 95.1 compared to 97.1 in May and 93.5 a year ago. The index did regain some momentum in the second half of the month, the final monthly reading implies a 95.7 reading for the second half of the month. As with the Conference Board measure, by historic standards, the reading is at a high level (see chart below).
- The S&P/Case-Shiller national home price index reported a 5.5% gain in April compared to a year ago. Even adjusting for inflation, the increase in home prices in the last 3 years shows that demand is rising. During this period, the supply of homes for sale has fallen to just a 4 month supply. This has kept prices on the rise.
- According the National Association of Realtors, persistent housing shortages seen in several markets, especially in lower price ranges, has created a situation where first time home buyers are having a tougher than normal time getting on the home buying ladder. As a result, the NAR pending home sales index fell modestly in May to 108.5. This is down from 109.4 in April and 110.4 a year ago. An index of 100 is equal to the average level of contract activity during 2001.
Arizona Snapshot:
- State personal income in the 1st quarter of 2017 increased 3.8% above year earlier levels. Incomes were up 1.0% from the 4th quarter of 2016. This is a satisfactory performance.
- Aircraft operations at Sky Harbor continued to increase in May. 1.5% more people enplaned in May 2017 than in May 2016. 2.3% more people deplaned over the same period. Overall, total air traffic grew by 1.9% compared to a year earlier.
- Statewide lodging performance improved by 2.7 points in May. Occupancy was 66.0% compared to 64.3% a year ago. That reflects a 3.9% increase in demand and a 1.2% increase in supply.
- According to the S&P/Case-Shiller home price index for Greater Phoenix, as of April, home prices in the area were up 5.7% from a year ago. Compared to March, prices were up 0.8%.
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