The Chicago region joins all the others in saying its manufacturing sector continues to contract in January as its PMI printed 44.3, its 5th month in a row below 50. I don’t have any details as the press release hasn’t hit their website yet.
Chicago PMI
S&P CoreLogic said its November home price index saw further slowing to a 7.7% y/o/y price increase vs 9.2% in October. Their index was down .3% m/o/m and that is the 5th month of price declines vs the prior month with all 20 major cities seeing m/o/m price drops. An outright price decline of 1.6% y/o/y was seen in San Francisco as this once great city continues to morph. Price gains lagged in Seattle, Portland and LA. The best price gains continue to be in the sunbelt cities like Miami, Tampa, Atlanta, Charlotte and Dallas.
Bottom line, again, the only question with housing at this point assuming mortgage rates stay above 6% is how much will home prices have to fall to mitigate this elevated mortgage rate level. Some think prices will eke out a modest gain while I’ve seen some think they will fall in the aggregate by 20%. I don’t know nationally but assume in some less inventory constrained markets that they will be falling.
The January Conference Board Consumer Confidence index fell to 107.1 from 108.3 and that was 2 pts under the forecast. The two main components were mixed as the Present Situation was up 3.5 pts m/o/m but Expectations fell by 5.6 pts. One yr inflation expectations rose two tenths to 6.8% after falling by 5 tenths in the month before. For perspective, the 20 yr average is 5.4%.
The answers to the job market questions improved as more said jobs were Plentiful and less said they were Hard to Get. On the flip side though, expectations for ‘more jobs’ fell to a 4 month low while higher income expectations were little changed.
With respect to spending intentions, there was no change for auto’s and major appliances and fell 3 pts for a home to the lowest since 5 months.
Bottom line, because of a much higher cost of living, consumer confidence at 107.1 still remains well below the February 2020 level of 132.6.
Consumer Confidence
One yr Inflation Expectations
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.