Economy Watch: Beige Book Reports ‘Strong’ Residential Growth
By Dees Stribling, Contributing Editor
The Federal Reserve released the latest Beige Book on Wednesday, which reported “all 12 Districts characterizing the pace of growth as either modest or moderate.” In fact, “modest or moderate” characterized many spheres of the economy, such as retail, which saw holiday sales “modestly higher than in 2011, though sales were below expectations for contacts in many of the Districts.”
On the other hand, the book also said that residential real estate growth was “moderate or strong.” In most places, sales are up, and so is construction, but inventories are nevertheless falling. “Hurricane Sandy disrupted construction activity initially in New York, but this has since led to increased work for subcontractors on repairs and reconstruction,” the report noted.
Though a little weaker than residential real estate, the Beige Book says that sales and leasing of nonresidential real estate are still mostly positive—”modest on average.” Nonresidential construction is weaker than residential, with only “slight to modest growth,” according to the Fed.
Homebuilders almost optimistic
According to the National Association of Home Builders on Wednesday, the organization’s homebuilder confidence index didn’t budge in January, remaining at 47. Following eight consecutive monthly gains, the index continues to hold at its highest level since April 2006, and close to 50, the point at which an equal number of builders view conditions as “good” as they do “poor.”
The index’s components were mixed in January. The component gauging current sales conditions remained unchanged at 51. The component measuring sales expectations in the next six months fell one point to 49, while traffic of prospective buyers gained one point to 37.
“Builders’ sentiment remains very close to the index’s tipping point of 50, and fundamentals indicate continued momentum in housing this year,” NAHB chief economist David Crowe said in a press statement. “However, persistently tight mortgage credit conditions, difficulties in obtaining accurate appraisals, and the ongoing stalemate in Washington over critical economic concerns continue to impede the housing recovery.”
CPI neither up nor down
The Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index also didn’t budge in December, though the index without food and energy (the so-called core) increased 0.1 percent in December, the same increase as in November. The gasoline index declined again in December, but other indexes, notably food and shelter, were up, resulting in the all items index being unchanged.
Over the last 12 months, the all items index increased 1.7 percent. Take out food and energy, and prices rose 1.9 percent over the last 12 months, the same figure as last month. Both figures are below the Fed’s target for inflation, which is 2 percent.
Wall Street didn’t move much on Wednesday, closing mixed. The Dow Jones Industrial Average lost 23.66 points, or 0.17 percent, while the S&P 500 was up 0.02 percent and the Nasdaq gained 0.22 percent.