Economy Watch: Case-Shiller’s Slender Good News: Home Prices Didn’t Go Down in May
The latest S&P/Case-Shiller index shows property values mostly holding steady; consumers are slightly less grumpy than last month; and U.S. investors hold their breath about the debt ceiling.
By Dees Stribling, Contributing Editor
Congress may be fiddling while the credit rating of the United States burns, but that doesn’t mean that the economy has come to a grinding halt (just yet). The latest S&P/Case-Shiller index of property values came out on Tuesday, with prices in 20 major U.S. markets hardly moving from April to May on a seasonally adjusted basis (but up 1 percent without that adjustment).
“This is a seasonal period of stronger demand for houses, so monthly price increases are to be expected,” David Blitzer, chairman of the index committee, notes in a statement. “The concern is that much of the monthly gains are only seasonal. Sustained increases in home prices over several months and better annual results need to be seen before we can confirm real estate market recovery.”
Metro Washington, D.C., was up 1.4 percent on a monthly basis, leading the pack. Eight other cities experienced monthly increases, while 11 cities saw losses in May. Overall, the 20-city index was down 4.5 percent in May 2011 compared with May 2010. Only metro Washington, D.C., saw a year-over-year increase, up 1.3 percent, while Minneapolis, off 11.7 percent year-over-year, was the number-one city in declining home valuation.
Consumer confidence sees an uptick, but most still grumpy
It’s a mild surprise: According to the Conference Board, its Consumer Confidence Index, which had declined in June, improved slightly in July. The index now stands at 59.5 (that halcyon year 1985=100), up from 57.6 in June. The Present Situation Index decreased to 35.7 from 36.6, but the Expectations Index rose to 75.4 from 71.6 last month.
Those respondents saying that business conditions are “good” decreased to 13.4 percent from 13.7 percent, while those claiming business conditions are “bad” increased to 39 percent from 38.4 percent. Those claiming jobs are “hard to get” increased to 44.1 percent from 43.2 percent, while those affirming that jobs are “plentiful” remained unchanged at 5.1 percent, and raised the perennial question of just who these 1 in 20 people are, anyway.
“Consumer confidence posted a modest gain in July, the result of an improvement in consumers’ short-term outlook,” says Lynn Franco, director of the Conference Board Consumer Research Center, in a statement. “Consumers’ appraisal of current business and employment conditions, however, was less favorable as concerns about the labor market continue to weigh on consumers’ attitudes. Overall, consumers remain apprehensive about the future, but some of the concern expressed last month has abated.”
One week to go
Meanwhile, in Washington, D.C., this week is the debt-ceiling endgame, or maybe the beginning of something much worse. The House will likely vote on its bill to raise the ceiling on Wednesday, while the Senate might tarry a little longer before voting on its version. Plenty of unanswered questions remain. Will the Republican caucus in the House experience a rift over Speaker Boehner’s bill and manage not to pass it? Will the speaker cry if that happens? Will the debt-ceiling be raised before Aug. 2 but the rating agencies downgrade the United States anyway? Who will cry if that happens, pretty much everyone?
For the moment, investors in U.S. debt seem to be calm about the whole thing. On the other hand, equity-market investors seem to be tapping their feet and clearing their throats a little loudly now. Will it take a precipitous drop in share prices to goad Congress to action, something like the precipitous Dow Jones drop in late 2008 after the initial rejection of TARP?
In any case, Tuesday’s drop wasn’t precipitous, though there was a drop. The Dow Jones Industrial Average lost 91.5 points or 0.73 percent. The S&P 500 and the Nasdaq were down 0.41 percent and 0.1 percent, respectively.