While the housing slowdown is in full swing after the meteoric run up in the past few years, other factors are keeping the economy moving forward. The strong economy is keeping employment rates high, lower gas prices are contributing to inflation remaining in check, and overall consumer confidence has not been hurt.
The next indicator is the Christmas shopping season. If it remains strong with people unable to tap home equity, the pundits are predicting that the economy will remain solid for the next year as housing sorts itself out.
Confident consumers may be more willing to spend, helping the economy gain momentum after growing last quarter at the weakest pace in more than three years. The lowest unemployment rate in five years and smaller gasoline bills are lifting consumers’ spirits ahead of the holiday shopping season that kicks off after tomorrow’s Thanksgiving Day celebration.
“Sentiment is holding up and spending likely will as well in the key holiday season,” said Doug Porter, deputy chief economist at BMO Capital Markets in Toronto. “Sentiment has been largely driven by the pullback in gasoline prices.”
The Michigan index was expected to slip to 93.3 in November from the previous month’s final reading of 93.6, according to the median estimate of 57 economists in a Bloomberg News survey. Forecasts ranged from 90.8 to 95.
The Labor Department reported today that initial jobless claims rose by 12,000 to 321,000 in the week that ended Nov. 18. The number remains low enough to suggest little weakening in the labor market.
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Today's report is out on Atlanta and it's first for AnalysisGuy. No big bubble.
Daily Home Price Analysis
Living and experiencing the real estate market in California, I will say confidence has run its course. In order for a market to sustain its upward trend, homes must be sold and bought from all spectrum ranges of the housing market. The market has appreciated due to artificial interest rates, absurd loan options, and consumer confidence. Unfortunately, this appreciation has reached its peak as first time buyers have been priced out of the market. On the norm, people almost always upgrade during a sell and buy of a new home. If first-time-buyers can no longer buy and begin the steady upward stream of buying and selling, the market will decline. The market has declined here!