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Pollack: Positive momentum continues

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March 4th, 2019

The Monday Morning Quarterback

A quick analysis of important economic data released over the last week

2018’s 4th quarter real GDP (up 2.6% at an annual rate) showed that 2018 as a whole was a good year economically. The economy grew by 2.9% (2018 over 2017). By comparison, 2017 grew by 2.2% year over year.  While the rate of growth in the 4th quarter slowed somewhat from 3rd quarter levels, economic activity was still respectable and, with the exception of a small downturn in residential investment, was up across the board.  While the 1st quarter of 2019 will be affected by the government shutdown, the economy continues to have positive momentum.  Plant and equipment spending, inventory investment, state and local spending and federal government spending are all likely to be up this year.  It even appears that residential investment could be aided early this year by the recent decline in mortgage rates.  Overall, this is a positive picture going into a year that is likely to have a slower rate of growth than last year.

In other news, consumer confidence rebounded, manufacturing continued to grow, and mortgage rates declined a little in February.  And while total building permits increased modestly, single family permits remained anemic.  Not surprisingly, home prices were down slightly across the country.  In Arizona, activity at Sky Harbor continues to be strong and retail sales in the state and in Maricopa County were also strong.

U.S. Snapshot:

  • Consumer confidence, as measured by the Conference Board, rebounded in February to 131.4.  This compares to 121.7 in January and 130.0 a year ago (see chart below).  Confidence in both current conditions and expectations about the future were both up.

  • The University of Michigan’s consumer sentiment index also rebounded but not by as much as the Conference Board’s results.  The index in February increased to 93.8 from 91.2 in January.  It is still below year earlier levels of 99.7.  The current level is still quite high by historic standards.

  • The ISM’s manufacturing index stood at 54.2 in February.  This is down from 56.6 in January and 60.7 a year ago.  But, any reading above 50 suggests that the sector continues to grow.

  • Mortgage rates remained mostly unchanged last week while mortgage applications rose 5.3% from the previous week.  The general decline in rates we have seen recently combined with rebounding pending home sales hint at a strong spring home buying season.  Mortgage rates for the week of February 28 were 4.35%.

  • Private sector building permits increased to 1,326,000 in December.  That’s up from 1,322,000 in November and 1,320,000 a year ago.  For 2018 as a whole, permits came in at 1,310,700 compared to 1,282,000 for 2017 (2.2% increase).

  • The NAR pending home sales index rose in January to 103.2.  This compares to 98.7 in November and 105.6 a year ago.

  • The S&P/Case-Shiller home price index (20-city composite) declined 0.2% in December from November levels.  The 20-city composite was up 4.2% from year earlier levels.

Arizona Snapshot:

  • Sky Harbor International Airport continued to see strong traffic growth in January.  Enplanements grew by 3.4% from year earlier levels and deplanements grew by 2.6%.  In total, traffic was up 3.0% from year earlier levels.

  • Retail sales in the state were up 4.8% from year earlier levels in December compared to year earlier levels.  Retail sales in Maricopa County were up 5.7% over the same period.

  • Home prices in Greater Phoenix as measured by the S&P/Case-Shiller home price index rose 0.1% in December and now stand 8.0% over year earlier levels.

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

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