ELLIOTT D. POLLACK & Company
FOR IMMEDIATE RELEASE
October 16th, 2017
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
It was a slow week for economic news. Consumer confidence increased. Retail sales were satisfactory. Mortgage rates crept up a little. And, locally, the housing market continued to modestly improve.
The only piece of information that I found interesting was the latest forecast from the national Blue Chip economic forecast. The Blue Chip forecast, started by Bob Eggert, who spent the last several decades of his long and productive life in Sedona after years as chief economist of Ford Motor Company, is the most influential consensus forecast in the country. It is a consensus forecast of more than 50 leading economists. Studies consistently show that consensus forecasts tend to be more accurate than any individual forecast over time.
The Blue Chip consensus forecast of 2018 real GDP has been most interesting to me. For the 9th month in a row, the consensus forecast for 2018 remains at 2.4%. This would make 2018 the best year in terms of real GDP growth since 2015 (2.9%). If accurate, it also means that the current recovery/expansion by the end of 2018 would be 114 months old. That would make it the second longest period of expansion in U.S. history.
What is surprising, though, is that despite the ups and downs that the Trump administration has had legislatively, the consensus has not changed its opinion of 2018 since his inauguration. Whether the consensus is not paying attention or they believe that only so many of the proposed policies actually will be enacted remains to be seen. While not the 3%+ the current administration is talking about, a 2.4% rate of growth in Real GDP in 2018 should be considered a good year this late in the cycle.
The University of Michigan consumer sentiment index for October hit its highest level since January 2004. The index rose to 101.1 compared to 95.1 in September and 87.2 a year ago. Consumers were more confident in their current economic conditions and they were more optimistic about their families’ outlooks.
Consumer prices rose 0.5% in September on a seasonally adjusted basis. Over the last 12 months, the all items index rose 2.2%. This compares to the FED’s target of about 2%. All items less food and energy (called the base rate of inflation) rose 1.7% compared to a year ago.
S. retail and food sales for September were up 4.4% over a year ago. This is a good sign as the country approaches the Christmas season.
Total manufacturing and trade sales grew 0.7% in August when compared to July and now stand 5.5% over a year ago. Thus, the important manufacturing sector continues to expand.
Mortgage rates for 30-year fixed rate mortgages rose to 3.91% last week compared to 3.85% the week earlier and 3.78% a month ago.
According to ARMLS (the Greater Phoenix multiple listing service) the median price of single family homes sold rose to $255,000 in September. This compares to $245,000 a year ago. That’s a 4.1% increase.
In Greater Tucson, the median price of homes sold in September was $206,915 compared to $177,000 a year ago.