News on the US to even make the cynics a little less cynical

Posted: June 28, 2013 in United States, US Economy
Tags: , , , , , ,

If you like your news with a twist of misery and a slice of disaster thrown in, then apologies, you will be disappointed with the latest economic data coming out of the US. On the other hand, if you like to be cheered up, read on.

The latest batch of good news out of the US came in a set of three.

Firstly US consumer confidence, according to the closely watched Conference Board Index, hit a near five and a half year high in June, with the index hitting 81.4. The last time it was higher was January 2008.

Okay, admittedly the data used to draw up the index only goes up to Mid-June, and stock markets crashed after that. But then again, bear in mind that US consumer confidence is one of the drivers of the US stock market. Some might say that US consumer confidence is riding high because the Dow and S&P 500 recently hit new all-time highs, but you could respond by saying yes, but part of the reason for stock market strength has been buoyant US consumer confidence.

But don’t forget that there are reasons beyond surging stocks for US consumers to feel chuffed with themselves at present. For one thing, as pointed out here several times of late, US household debt to income has fallen sharply since 2007.

Then there is US house prices. They have been looking up lately too, and that is also good for US consumer confidence. Bear in mind, too, that US house prices to rent and income are now below the historical average, so there is a good fundamental reason for prices to rise.

And that brings us to good news item number two. According to the latest Case Shiller US house prices index, April saw prices rise by 12.1 per cent year on year, and by 2.5 per cent over March. In fact, the month on month rise was the highest ever reported in the 12 year history of the index

And if that isn’t enough reason for cheer, yesterday also saw data on US durable orders for May, and that too was up.

Actually, it was literally up, with sales of aircraft soaring 51 per cent – Boeing sold 252 planes in the month, compared to 51 in April.

Even stripping out transport goods, core durables’ orders increased by 0.7 per cent month on month.

Apologies again. It is fun to be cynical, and talk about the Fed squashing the world by ending QE.

And indeed, if rates are set to rise, this will be a problem for some countries.

But relative to what we have become used to, the news out of the US really has been encouraging of late, and, just for now, cast cynicism aside and enjoy the moment.

© Investment & Business News 2013

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