The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
By Elliot D. Pollack & Co. | Rose Law Group Reporter
Economic data was mixed this week. Personal income saw a bigger than expected jump, mostly attributed to the enhanced child tax credit that the government is giving to families as an advance for the 2021 tax year. Despite the extra cash, consumer sentiment dropped to the lowest level in a decade. Experts are calling this an emotionally driven result, blaming fatigue from COVID with the latest variants keeping things from returning to normal as well as ongoing inflation cutting into consumer buying power. Mortgage rates stayed low which has helped with affordability in the face of continually increasing home prices due to lack of supply and higher costs on land, labor, and materials.
Here in Arizona, lodging performance continues to post substantial gains over the depressed travel industry in 2020. Compared to a more normal historical year, July’s performance came close to July 2019’s performance.
U.S. Snapshot:
- The first round of payments for the Child Tax Credit approved last spring went out last month, causing personal income to grow at 1.1%, surpassing expectations and surpassing economists’ expectations. A large portion of the increase went into savings, as the savings rate increased from 8.8% to 9.6% in July. Consumer expenditures increased by only 0.3% over the month as the Delta variant and restrictions made some consumers pull back on spending.
- The University of Michigan Consumer Sentiment had a substantial decline in August. The confidence level declined 13.4% for the month and 5.1% from a year ago. The combination of the Delta variant, inflation, wage growth, and employment were cited as the reason for the extraordinary decline. The decline was across all demo groups and regions.
- Mortgage rates remained below 3.0% for the month, allowing homeowners a chance to refinance if they did not get a chance and potential homebuyers to purchase at lower rate
- New home sales had an increase of 1.0% as builders continued to face higher land, labor and material costs. The median sales price increased 5.5% and reached $390,500 in July.
- Existing home sales rose for both total and single-family homes for the month. Total sales were up 2.0% while single family saw an increase of 2.7%. The median sales price is up significantly from a year ago. A recent increase in inventory is helping buyers and if it continues, a leveling off of on prices is expected.
Arizona Snapshot:
- The lodging performance across the state continued to improve in July. Occupancy level was 62.2% which is up 32.1% from a year ago. Compared to 2019, July’s performance was only down a couple percentage points. We will see how travelers continue to react to the Delta variant.
