U.S. Consumer Confidence March 2015

U.S. consumer confidence decreased to a reading of 101.3 (1985=100) in March, as published this morning by The Conference Board. This compares to a revised reading of 98.8 in February.

The Present Situation Index component decreased to 112.1 from 109.1, while the Expectations Index component increased to 90.0 from 96.0.

Lynn Franco, Director of Economic Indicators at The Conference Board, said: “Consumer confidence improved in March after retreating in February. This month’s increase was driven by an improved short-term outlook for both employment and income prospects; consumers were less upbeat about business conditions. Consumers’ assessment of current conditions declined for the second consecutive month, suggesting that growth may have softened in Q1, and doesn’t appear to be gaining any significant momentum heading into the spring months.”

Consumer Confidence

The U.S. consumer sentiment index, reported by the University of Michigan, decreased to 93.0 in March from 95.4 in February.

The harsh winter weather and the small rebound in gas prices caused some slippage in consumer confidence since the start of the year. Importantly, most of the recent variation was among lower income households, whose budgets are more sensitive to higher utility costs and disruptions in work hours. Households with incomes in the middle and top thirds of the distribution, in contrast, recorded gains in confidence in the March survey. Expanding job opportunities as well as more favorable wage gains have meant that consumer spending will rebound during the balance of the year. While there is a widespread expectation that interest rates will begin to rise later in the year, few consumers anticipated that the size of the increases will dampen their credit sensitive purchase plans.

Consumer Sentiment

The recent trend:

Confidence Both

U.S. House Prices In January 2015

U.S. S&P Case-Shiller Home Prices were little change in January, with the 20-city composite index decreasing by less than 0.1% (not seasonally adjusted). Year over year, the 20-City Composite is up 4.6%.

Case-Shiller Change

The national house price level is now roughly equal to where it stood in November 2004.

Case-Shiller Index Level

Of the 20 cities tracked in the index, Los Angeles has had the greatest increase in home prices since 2000, while Detroit has been the only city where prices have declined over the past 15 years.

Case-Shiller Cities

From a year ago, house prices have increased the most in Denver, where they rose 8.4%. Washington D.C. has had the slowest rate of annual increase, rising only 1.3%.

Case-Shiller Cities Change

Dallas and Denver are the only cities whose prices have increased beyond their pre-recession peak. Las Vegas remains the furthest below its peak.

Case-Shiller Table

The U.S. Federal Housing Finance Agency saw its national house prices increase 0.3% in January (not seasonally adjusted), and increasing 5.1% from a year ago.

The FHFA HPI is calculated using home sales price information from mortgages either sold to or guaranteed by Fannie Mae and Freddie Mac.

FHFA Change

The U.S. index is roughly the same as its December 2005 index level.

FHFA Index Level

Of the 9 different geographic census divisions that FHFA tracks, house prices have increased the most year over year in the Pacific and increased the least in the Middle Atlantic region.

FHFA Regions

U.S. Disposable Personal Income And Outlays In February 2015

U.S. disposable personal income increased 0.4% in February to a seasonally adjusted annual rate of $13.32 trillion. This increase follows a 0.5% increase in January, and leaves disposable personal income up 4.3% from a year ago.

DPI Change

Personal outlays for the month totaled an annualized $12.55 trillion, a 0.1% increase, leaving personal outlays up 3.4% from the year prior.

Outlays Change

Historically, the change in outlays is far less volatile than the change in disposable income.

DPI and Outlays

Personal savings, which is disposable personal income less personal outlays, increased to $768.7 billion from $728.7 billion.

Income and Outlays

The personal savings rate increased to 5.77% from 5.49%.

Savings Rate

House Price Bubbles And Buyer Overconfidence

An Extrapolative Model of House Price Dynamics:

A modest approximation by homebuyers leads house prices to display three features that are present in the data but usually missing from perfectly rational models: momentum at one-year horizons, mean reversion at five-year horizons, and excess longer-term volatility relative to fundamentals. Valuing a house involves forecasting the current and future demand to live in the surrounding area. Buyers forecast using past transaction prices. Approximating buyers do not adjust for the expectations of past buyers, and instead assume that past prices reflect only contemporaneous demand, as with a capitalization rate formula. Consistent with survey evidence, this approximation leads buyers to expect increases in the market value of their homes after recent house price increases, to fail to anticipate the price busts that follow booms, and to be overconfident in their assessments of the housing market.

U.S. State Unemployment Rates In February 2015

In February, the unemployment rate decreased in 26 U.S. states, increased in 6 states, and was unchanged in 18 states.

The unemployment rate is higher than a year ago in 4 states: Louisiana (6.7% vs 5.4%), South Carolina (6.6% vs 6.1%), Tennessee (6.6% vs 6.5%), and North Dakota (2.9% vs 2.7%).

Recall that the national jobless rate in February was 5.5%.

State Unemployment Rates

U.S. Q4 2014 GDP Revisions Keep Growth At 2.2%

Real gross domestic product increased at a seasonally adjusted annual rate of 2.2% in the fourth quarter of 2014, the U.S. BEA published this morning. This was the third estimate for Q4, and the headline figure is essentially unchanged from the prior estimate. The GDP growth rate in Q3 was 5.0% annualized.

Components of GDP by their contributions to GDP growth in Q4:

  • Personal consumption expenditures: +2.98%
  • Private investment: +0.61%
  • Net Exports: -1.03%
  • Government Consumption: -0.35%

GDP Components

Nominal GDP was at an annualized $17.7037 trillion in Q4, while real (inflation adjusted, 2009 chained) GDP was $16.2947 trillion.

Nominal GDP

Real GDP was up 2.4% from Q4 2013.

GDP Annual

Weekly Initial Jobless Claims At 282k

U.S. initial jobless claims for the week ending March 21 were a seasonally adjusted 282k, down from the prior week’s revised reading of 291k. Not seasonally adjusted, jobless claims for the week were 247k.

Jobless Claims

Individual states that had changes in claims of more than 1k (not seasonally adjusted):


The 4-week moving average of initial jobless claims was 297k.

Jobless Claims 4W

The number of unemployment insurance recipients, or continuing claims, for regular state programs was 2.416 million, down from the previous week’s revised reading of 2.422 million.

UI Recipients

The insured unemployment rate, which is the number of unemployment insurance recipients as a share of covered employment, was 1.81%, down from 1.82% the week prior.

Insured Unemployment Rate

89.95% of all U.S. jobs are covered by state unemployment insurance programs.

Covered Employment

Of the 8.705 million Americans currently unemployed, 27.75% receive unemployment insurance.

UI Recipients Share

Jobless claims and the unemployment rate:

Labor Market