The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
By Elliott D. Pollack and Company
Not a lot of economic news last week. Manufacturers’ new orders rebounded. Housing continued its “up one day, down one day” fitfulness. And a new study by the National Association of Realtors suggests that there will be a large number of return buyers (from the population who were foreclosed on or did a short sale in this housing cycle) in 2015-2018. California and Florida, followed by Arizona and Georgia, will be beneficiaries of this. Locally, retail sales and housing were up.
Arizona Snapshot:
- Arizona retail sales were up 9.1 percent from a year ago in February.
- Retail sales in Maricopa County were up 9.2 percent over that same period (see chart below).
- According to Cushman & Wakefield, the Phoenix office market recorded a strong 1st quarter with 1.7 million square feet of leasing activity. Yet, vacancy rates, while down slightly from the 4th quarter, were 21.8 percent in the 1st quarter compared to 21 percent a year ago.
U.S. Snapshot:
- Manufacturing is on a dual track. Transportation is up while non-transportation is soft. Durable goods orders rebounded 4 percent in March after falling 1.4 percent in February. The gain was above expectations. Yet, excluding transportation, the core dipped 0.2 percent, following a decline of 1.3 percent in February. This points to a soft first quarter and continued low interest rates.
- Gas princes, while up for the week of April 20, were still down 31.6 percent from a year ago.
- The up and down pattern for housing continues. Last week’s decline in housing starts and permits were a surprising blow to the outlook. This was reversed in part by the report of very strong existing home sales this week. But, today it’s bad news again as new home sales fell a very steep 11.4 percent.
- The National Association of Realtors released a report on returning buyers-those who lost their homes to foreclosure or short sale. The bottom line is that between 2006-2014, about 950,000 of these former owners returned and between 2015-2023, about 1,640,000 are likely to return. Most of these will be between now and 2019. This demand is in addition to normal demographic demand. The states likely to benefit the most are California, Florida and, as a distant third, Arizona.
