Economists' Outlook

Housing stats and analysis from NAR's research experts.

Consumer Confidence: Highest in Nearly Seven Years

  • Consumers are feeling much better and more confident in recent months:  the consumer confidence index in August rose to the highest mark in nearly seven years.  Such a trend could lead to improvement in home sales and boost demand for retail commercial spaces.
  • Numerically, the index hit 92.4.  The last time it was that high was right before the financial market crisis in October 2007 when the unemployment rate was very low at 4.7 percent (versus today’s unemployment rate of 6.1 percent).  The index, however, is still shy of 100, where at least half of Americans would be saying that the economy is generally moving in the right direction.
  • For home buying, it is not only about financial capacity and mortgage rates.  Confidence also matters.  People need to feel they will be better off in the future in order to make a major expenditure.   The index that captures only the future expectations was 90.9, also nearing the crucial 100 marker.
  • The very strong, high stock market has driven total household net worth to an all-time high.  However, only about 10 percent of Americans have meaningful exposure to the stock market.  Therefore the stock market is not the best gauge of economic sentiments of the middle class.  In contrast, the consumer confidence index covers a whole swath of people across all income spectrums and therefore this index is much better in assessing the mood of normal Americans.
  • Confidence can change the world.  In fact, when the Portuguese first circumnavigated the lower tip of Africa on their way to Asia for spices, the very stormy area with constant violent sea waves near the tip was given the scary name of Cape of Bad Storms.  The King of Portugal immediately changed the name to Cape of Good Hope in order to encourage more sailors to make the trip.  Portugal and subsequently Spain rose in economic power while the old trade route cities of Venice and Genoa lost economic power.

090914a

090914b

090914c

 

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.

Advertisement