Last week brought in plenty of new data for economists and financial analysts. The Consumer Confidence Index statistics for March have come in, and the Standard & Poor’s/Case-Shiller home price index report is in for January. Consumer confidence and home prices are both rising, slowly.
A rising Consumer Confidence Index is good news for self storage operators, as well as for other businesses. Consumers who feel that the economy is good may also feel more confident taking on the responsibility of a month-to-month self storage unit lease. Improvements in housing markets, too, are worthy of cautious optimism.
In March, the Consumer Confidence Index rose 6.1 points – significantly more than market analysts had predicted – to 52.5. (Industry experts were expecting levels at around 50.)
The Consumer Confidence Index measures
consumers’ assessments of the economy as it is now and as it is expected to be over the next six months. In all the regions that were surveyed, except for New England, fewer consumers are describing the economy as bad (only 42.8 percent, down from 45.1 percent a month ago). More consumers are also starting to predict that jobs will become more plentiful and easier to get (14.6 percent expect more jobs to open up, and 4.4 percent now feel that jobs are plentiful).
When the Consumer Confidence Index is higher, consumers may spend more. Economists feel that increasing consumer levels is critical to building a stronger economy, because consumer spending accounts for about 70 percent of economic activity in the United States. While a rising Consumer Confidence Index is a good sign for the economy,
economists say that consumer confidence is still relatively weak.
“We’re a lot better off, but we have a lot more improvement to go,” International Council of Shopping Centers chief economist Michael Niemira told the Associated Press on Tuesday.
Chief economist James O’Sullivan of MF Global, talking to the Boston Globe, agreed. “With signs of improvement in the labor market, confidence is more likely to be up than down in the next few months,” he remarked. “It’s still a low level of confidence.”
At the same time, home prices have been slowly rising in many areas, according to the Standard & Poor’s/Case-Shiller home price index. The index surveys home prices in 20 major U.S. cities. From Decemb
er to January, 12 out of 20 cities surveyed saw increases in home prices. The biggest increases were in San Francisco, San Diego, and Dallas. In some areas, though, including Las Vegas and Tampa, home prices continued to fall.
Some analysts warned that what appears to be an increase in home prices may be somewhat deceptive. The home price index is seasonally adjusted, and, according to reporter David Streitfeld of The New York Times, “In the slow-selling winter months, the seasonal adjustments lift the numbers, the opposite of what happens in the summer.”
Sources used:
Associated Press. “At a glance: March’s consumer confidence report.” Business Week. March 30, 2010.
Associated Press. “Consumers slowly show signs of springing back.” New York Times. March 30, 2010.
Brown, Steve. “Dallas home prices rise 4% in index.” Dallas Morning News. March 31, 2010.
“Consumer confidence increases in March survey. U.S. house prices edge higher.” Counting Pips.com: Forex Trading & Currency Information. March 30, 2010.
Schlisserman, Courtney. “March confidence up as job prospects lift.” The Boston Globe. March 31, 2010.
Streitfeld, David. “Analysts unswayed by home sales data.” The Houston Chronicle. March 30, 2010.