ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
October 1st, 2018
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
With the economy now growing more rapidly than it has in years and labor cost pressures starting to become evident, the Fed is trying to get ahead of the game by increasing rates (this time by 25 basis points). In essence, the Fed is adding “bullets” that will allow it to combat the next recession whenever it does occur. To do this effectively, it needs short term rates to be significantly higher before the cycle ends. Thus, interest rate increases are expected to continue over the next several quarters.
The economy is presently in the boom phase of the cycle. There is stimulus from tax cuts, changes in tax law and regulation that is pushing businesses to spend on plant and equipment, strong consumer spending, fiscal deficits and housing. Thus, while the economy is now in the bottom of the 7th or in the 8th inning of the cycle, this stimulus is likely to cause growth, albeit at a slower rate than in the 2nd quarter, to continue through 2018 and 2019. Right now, both major measures of consumer confidence remain strong. Personal income continues to increase. Manufacturers’ new orders for durable equipment remain very strong. And, housing prices nationally continue to rise causing a “wealth effect” bonus for home owners.
In Greater Phoenix, traffic at Sky Harbor continues to increase and housing prices continue to increase at a rate faster than in the U.S. as a whole. Thus, the economic picture both nationally and in the state remains positive going in to fall.
U.S. Snapshot:
-
Real GDP annualized growth rate remained unchanged at 4.2% for the second quarter.
-
Personal income grew 0.3% in August and is 4.7% higher than the prior year. Disposable income has increased 5.2% over the year and personal consumption expenditure is up 5.3% for the same time period.
-
The U.S. consumer confidence index reached its highest level in 18 years in September 138.4 (see chart below).
-
The University of Michigan Consumer Sentiment increased to 100.1 in September over August’s 96.2. This increase continues to keep the index among its high levels of the cycle (see chart below).
-
The pending home sales index decreased from a year ago for the 8th straight month. Low inventory and affordability concerns continue to slow overall activity.
-
The U.S. S&P/Case-Shiller home price 20-city composite index increased 0.3% in July and 5.9% over a year ago as home prices continue to increase across the U.S.
Arizona Snapshot:
-
Arizona’s personal income increased 5.6% over a year ago.
-
Total activity at Sky Harbor increased 1.2% in August over a year ago. Year-to-date, overall activity is up 1.8% over the same period last year.
-
According to the S&P/Case-Shiller home price index, Greater Phoenix’s home prices continue to increase at a rapid pace. Prices increased 7.5% annually in July. This growth rate is higher than the composite-20 (5.9%) and U.S. national average (6.0%).
About EDPCo
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.
For more information, contact –
Elliott D. Pollack & company
7505 East Sixth Avenue, Suite 100
Scottsdale, Arizona 85251
480-423-9200
