American consumer confidence hit a six-year high in March, according to data recently released by the Conference Board, providing promise that the first-quarter economic stagnation may have been mostly weather-induced, after all.
Following three-plus months of mostly uninspiring domestic returns, the Conference Board index showed that consumer attitudes rose a full four points – from a rating of 78.3 in February to 82.3 – for the final month of the first quarter. The March index figure represented the highest reading since January 2008, when the effects of the recession were just beginning to show up. It also greatly exceeded the expectations of economists who called for a reading of just 78.6, according to a Reuters report.
“The economy is showing signs of shaking off the weather effect,” said one West Chester, Pa.-based senior economist. “We are going to get a big lift to second-quarter growth from the weather.”
While gains in the labor and manufacturing sectors have also been adversely affected by the harsh winter weather seen across the Midwest and throughout the Northeast over the past few months, consumers are offering reasons for optimism. Many analysts have concluded that those conditions played a role in holding back hiring – especially in terms of staffing for many new construction projects – and undercut spending across the board. The outlook for the second quarter, therefore, is stronger than might be expected based on early-year returns. First-quarter growth is expected to pale in comparison to the annualized pace of 2.4 percent seen during fourth quarter 2013, though the data is not yet completely compiled.
Banking on better data, better weather
Bloomberg reported that many Americans are holding out hope for greater signs of progress from the next jobs report. The past three employment situation summaries from the Bureau of Labor Statistics have offered only modest signs of expansion and salary increases, though the consensus has been that those returns were skewed by weather conditions more than any hitch in business opportunity. Based on that optimism for upcoming labor expansion, the public appears hopeful as the deep freeze thaws.
“Signs of spring might be evident and might be getting people a little more optimistic that the future is going to be better,” Joe LaVorgna, a chief U.S. economist for Deutsche Bank Securities Inc., in New York, told Bloomberg. “As these weather effects dissipate and we get payback, you’ll see confidence improve even more.”
Following the release of the Conference Board data, the stock market and the US dollar exhibited gains reflecting the surge in public sentiment. In a separate report, the S&P/Case-Shiller composite in
dex, which measures median home prices across 20 major metro areas, revealed only negligible movement in terms of property values from December to January. While prices did rise 13.2 percent from January 2013, continuing a string of consecutive year-over-year gains, the shortage of housing inventory across the country continued to boost prices on average.
“The broad-based recovery in home prices which started just under two years ago remains well underway,” another New York-based economist told Reuters. “While home price appreciation is likely to slow later this year, the steady pace of home price gains should help further support the housing market recovery during the year.”
The inventory issue continues to plague the sales rate, however, as a lack of new construction – in part due to the weather delays – limits the options for prospective buyers. Separate data from the Commerce Department revealed that new home sales fell 3.3 percent in February, the lowest annualized monthly rate since September.
PLEASE NOTE LIMITATIONS: Please see Important Disclosure Information and the limitations of any ranking/recognitions, at www.fostergrp.com/info-disclosure/. A copy of our current written disclosure statement as set forth on Part 2A of Form ADV is available at www.adviserinfo.sec.gov.