One impact of the economic turmoil in our country after 2007 was the development of a consumer-base in the US that is quick to act in the face of uncertainty. Thus far 2015 has been very positive from an economic point of view as growth has been steady, the housing market has been very strong and the job market has improved. However, over the past several weeks uncertainty in the global economy related to a major slowdown in China and the re-emergence of Greece’s troubles, along with an increase in gas prices and a series of significant domestic events have caught the attention of US consumers. Unsurprisingly, there has been a pause in consumer spending and a dip in the overall confidence level. Let’s look at the recent economic data.
Retail sales make up 70% of US economic activity. The most recent retail sales figures were sharply lower with reduced auto sales leading a general decline across the retail categories. Only general merchandise and electronic categories showed an increase.
Two measures of consumer feelings about the economy dropped for the first time in many months. Expectations for the future also declined, but only slightly.
The producer and consumer price reports showed prices rising modestly, which should continue due to the extremely low #’s of the previous year. Yet, in an economy in which prices have hardly risen in years, any perceptible change is going to elicit a reaction. Gas prices are the most obvious change, but prices are generally higher across the board. Increasing producer costs suggest more price increases are coming.
While the manufacturing sector is far less important than it has been, the sector still employs large number of people. Manufacturers take advantage of the vacation schedules of employees, and the generally reduced demand from consumers, to retool and repair their plants. Consequently, it is very common for jobless claims data to spike in July–which it has. Other sectors seem to be stable, yet wages are still flat.
On a very positive note, the US housing market continues to be very strong and shows no sign of weakening. Housing starts spiked in the most recent reports to levels far above expectations. Permit figures demonstrate that the strength is likely to continue into the fall of 2015 and beyond.
Cautious consumers are a sign of wisdom and represent a net positive for our economy as well-informed decisions are being made.
The opinions expressed here within are my own completely independent of BHGRE Coccia Realty and its owners and subsidiaries.
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Raymond Ciampaglia, Realtor®
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Better Homes and Gardens Real Estate | Coccia Realty
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