Economy Watch: Consumers Still Confident About Housing
Consumers might still be a little leery about the broader economic recovery, but at least they’re fairly confident in the housing recovery.
By Dees Stribling, Contributing Editor
Consumers might still be a little leery about the broader economic recovery, but at least they’re fairly confident in the housing recovery. That’s the conclusion of Fannie Mae’s March 2013 National Housing Survey, which was released on Monday, and their confidence comes in the face of concerns about sequestration and other dodgy fiscal policy.
The share of consumers who believe home prices will go up in the next year came in at 48 percent in March, an all-time high for the survey, according to the GSE. Also reaching a survey high, 26 percent of respondents believe now is a good time to sell a home, which is nearly twice as many as said that in March 2012.
“Despite an uptick in concern expressed about the direction of the economy, it appears consumers believe that the housing recovery will march on,” Doug Duncan, chief economist at Fannie Mae, noted in a press statement. The survey polls 1,004 Americans via telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances and overall consumer confidence.
Foreigners fond of our Benjamins
The rise of debit cards, electronic fund transfers, and other non-cash monetary transactions was supposed to spell doom for paper money in this country, ushering in the cashless society promised by futurologists since the 1970s. But not so fast: According to the Federal Reserve Bank of San Francisco’s recently released annual report, the amount of U.S. dollar-denominated cash in circulation has risen by 42 percent in the last five years, rising at a 7.5 percent annual clip, much more than could be expected from a domestic economy using less paper money every year. From 2003 to 2008, the increase in Federal Reserve Notes in circulation was only 3.8 percent per year.
The rising demand for U.S. cash is evidence that the cash-rich of the world are worrying more about the long-term viability of the new-fangled euro than whatever debts the United States is laboring under, or the bogeyman of a default by the country. Confidence in the physical greenback is so potent that many non-Americans are willing to invest in an instrument that offers exactly a 0 percent rate of return, at least for now.
Mainly the demand is for Benjamins—$100 bills—and a lot of them are being bought with euros. “As Europe’s crisis worsened in the spring of 2010, U.S. currency holdings rose sharply,” John Williams, president of the San Francisco Fed, said in the report. “And they continued to rise as economic and political turmoil and uncertainty about the future sent Europeans scrambling to convert some of their euros to dollars.”
Wall Street enjoyed a rebound on Monday, with the Dow Jones Industrial Average up 48.23 points, or 0.33 percent. The S&P 500 gained 0.63 percent and the Nasdaq advanced 0.57 percent.