Elliott D. Pollack & Co.
This appears to be the strongest part of the cycle. Virtually everything is moving in the right direction. However, a meaningful housing recovery and the use of revolving credit are missing. The latter is good news. The economy is still overleveraged especially in the government sector. But, consumers are still feeling the pinch of too much debt, only modest growth in real incomes, a tough job market and, as a result, rising but modest consumer confidence. In addition, the basic underlying demographics of the U.S. job and spending markets are less than sanguine. More on that in later issues. Given this parade of horribles, continued growth is good news.
U.S. Snapshot:
- The latest Blue Chip forecast shows that year-over-year inflation adjusted real GDP for 2014 has tumbled again over the past month as a result of the further downward revision of first quarter real GDP. The consensus now predicts real GDP will grow only 1.6% on a year-over-year basis in 2014. This compared to 1.9% in 2013. The forecast for 2015 is 3.0%.
- Consumer credit rose 0.6% in May following a gain of 0.8% in April. Gains in revolving credit, up 0.2% in May after a surge of 1.0% in April, points to strong credit card use which is a big plus for retailers. Non-revolving credit, up 0.8%, continues to be driven by car loans as well as the government’s acquisition of student loans.
- There were 47,000 completed foreclosures nationally, down from 52,000 in May 2013. That’s a 9.4% decline. By comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
Arizona Snapshot:
- Enplanements and deplanements (together total air traffic) were up 3.4% over a year ago. This is good news for tourism.
- According to the Cromford Report, active listings in the Greater Phoenix market are now up 46.7% over a year ago. Prices in the resale market have flattened. While they are up 6.8% from a year ago, they are little changed over the past several months (see chart below).
- According to the Information Market, foreclosures in Greater Phoenix are down 33.9% from a year ago and were a modest 427 units in June.
