Economy Watch: Consumers Out Spending Again
Spending jumped, even though income still lags behind; there are a lot of empty homes out there; and Chicago's economy is showing accelerated growth.
U.S. consumers have been itching to spend, and in December they seemed to be out scratching that itch. According to the U.S. Department of Commerce on Monday, spending among consumers rose a seasonally adjusted 0.7 percent during the last month of 2010. That compares with an increase in November of 0.3 percent.
For the fourth quarter of last year, consumer spending rose 4.4 percent. That was the fastest quarterly increase since 1Q06, back when a lot more people had a lot more access to home equity lines of credit and the like.
The government also reported that income increases for U.S. consumers weren’t quite as brisk as the rise in spending, so the spending uptick was partly financed by savings and credit. The Commerce Department noted that the increase in income in December was 0.4 percent, and in the fourth quarter was 1.7 percent.
Home vacancies up, home ownership down
The U.S. Census Bureau said on Monday that the U.S. home vacancy rate rose to 2.7 percent during the fourth quarter, up from 2.5 percent in 3Q10. The rate measures the number of for-sale residential properties that are either empty and off the market or empty and actually for sale. The operative word is empty.
Out of a total of 74.8 million U.S. residences, about 2.1 million are vacant. The government chalks up the rise in vacancies to the renewed eagerness with which lenders are foreclosing on borrowers, whether or not the lenders put the newly seized houses on the market.
Also, the bureau reported that the percentage of Americans who own their homes fell to 66.5 percent during the fourth quarter, a 10-year low, down from 66.9 percent during 3Q10. The all-time high in U.S. homeownership was reached almost seven years ago, in 2004, when the rate was 69.2 percent, a rate unlikely to be reached again in many a moon.
ISM Chicago says Windy City economy revving up
The Institute of Supply Management-Chicago reported on Monday that business conditions in metro Chicago were even stronger in January than they were in December, with the Chicago PMI at 68.8, much higher than predicted. New orders rose to 75.7 and production to 73.7, readings that are well above 50, indicating month-to-month growth and even an acceleration in growth in recent months.
Perhaps even more encouragingly–as Chicago goes, so goes the nation, because of the area’s diverse cross-section of business sectors–the ISM employment index for Chicago jumped almost six points to 64.1. That’s the best reading in that indicator since well before the beginning of the recession and indicates that Chicago-area employers are looking to hire once more.
Wall Street turned out to be not all that upset about civil discord in Egypt after all, with the Dow Jones Industrial Average rising 68.23 points on Monday, or 0.58 percent. The S&P 500 and the Nasdaq gained 0.77 percent and 0.49 percent, respectively.
