ELLIOTT D. POLLACK
FOR IMMEDIATE RELEASE
July 16th, 2018
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
Not quite the exciting week for economic news compared to recent weeks, but, it’s a luxury that we can be bored by ongoing good news. Real GDP this year is expected to grow 2.9%. For 2019, it’s expected to be 2.6%. Consumer confidence is still strong. And those consumers seem to be more willing to use their credit cards. Prices are also still under control.
Locally, the Greater Phoenix apartment market is still in good shape despite a rise in the vacancy rate. In Tucson, the single family housing market continues to tighten and, as a result, year over year prices are up.
So, while last week was slow by the standards of the drama filled events of many of the previous weeks, the news suggests that the economy is still on track.
According to the latest Blue Chip consensus forecast survey taken July 5th and 6th, real GDP in 2018 is expected to grow by 2.9% on both a year over year and 4th quarter over 4th quarter basis. In 2019, it is forecast to increase by 2.6% year over year and 2.3% 4th quarter over 4th quarter. To date, rising trade tensions between the U.S. and its major trading partners have had little impact on the panelists’ forecasts of the U.S. economy’s performance this year or next. Yet, if tensions evolve into a growing tit-for-tat imposition of tariffs that result in higher prices, curb investments, disrupt supply chains and promote weakness in financial markets, there will undoubtedly be some downward revisions made. Higher tariffs have about the same effect as a tax increase. If they result in an increase in domestic jobs, there would be some offsets.
According to the University of Michigan consumer sentiment survey, the index dipped modestly from 98.2 in June to 97.1 in July. Sentiment remains at a high level by historic standards.
Total outstanding consumer credit in May expanded by 0.6% over June and now stands 4.8% above a year ago. Revolving credit increased by 0.9% and was up 5.2% over a year ago. This is the largest gain since November 2017. Consumers are now using credit at a rate far faster than income growth. Non-revolving credit, mainly used for auto loans and student loan debt, increased 0.5% over last month and is up 4.6% over the past year.
Consumer prices as measured by the CPI for all urban consumers (CPI-U) increased by 0.1% in June and now stands 2.8% over a year ago. While this is above the FED’s target of 2.0%, the index for all items less the volatile food and energy sector was up 0.2% for the month and stands 2.2% over a year ago. This indicates that inflation still seems to be under control.
According to RealData, vacancy rates for the Greater Phoenix apartment markets are modestly up from 7.5% in the first quarter to 7.9% in the second quarter. A year ago, vacancy rates stood at 7.4%. Over the last year, the number of units in the area has grown by 10,200 units (up 3.5%). Average rents over the year have increased by 5.4% to $988 per month.
Active listings of single family homes and condos in Greater Tucson continue to decline. Active listings in June were 2,974 units compared to 3,351 a year ago. Total units sold in June were 1,593 compared to 1,528 a year ago. Thus, the month’s supply of homes in Tucson continues to decline.
Elliott D. Pollack & Company (EDPCo) offers a broad range of economic and real estate consulting services backed by one of the most comprehensive databases found in the nation. This information makes it possible for the firm to conduct economic forecasting, develop economic impact studies and prepare demographic analyses and forecasts. Econometric modeling and economic development analysis and planning are also part of our capabilities. EDPCo staff includes professionals with backgrounds in economics, urban planning, financial analysis, real estate development and government. These professionals serve a broad client base of both public and private sector entities that range from school districts and utility companies to law firms and real estate developers.
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