Economy Watch: New Homes Sales Up; C-Suites Pessimistic; Investors Nervous over Euro-Zone Riots
- Sep 27, 2012
The U.S. Census Bureau reported on Wednesday that new home sales in August were at an annualized rate of 373,000. That rate was down slightly (0.3 percent) from a revised 374,000 in July, but significantly up — 27.7 percent — when compared with August 2011. New home sales have averaged an annualized 362,000 units during the first eight months of 2012, after averaging under 300,000 for the previous 18 months.
The bureau also reported that the median price of a new home was up strongly in August month-over-month, by 11.2 percent to $256,900, which is the highest level since March 2007. Compared to August 2011, the median sales price spiked 17 percent, which is the largest rise since December 2004, back when the bubble was still alive and well.
No one’s calling it a bubble this time, however. Instead, the housing market seems to have clawed its way out of the very bottom of a deep trough. Healthy U.S. residential markets, at least by pre-Great Recession standards, saw annual sales of about twice what they will probably be in 2012, and conditions were still weak enough that Fed chairman Ben Bernanke called housing a “missing piston” during the recent speech announcing QE3.
C-Suites Less Optimistic
CEOs aren’t that cheerful these days, according to the second quarter 2012 survey by Business Roundtable, which was released on Wednesday. Only 29 percent of the CEO respondents felt that their companies would be hiring more workers in the next six months, while 34 percent expected a drop in their number of workers, and the rest said there would be no change. Almost 60 percent thought their company’s sales would be up over the next six months, but 75 percent thought so during the first quarter.
The C-suite denizens cited a number of worrisome trends, but several problems stood out. One is the fiscal cliff, which has everyone’s attention except perhaps members of Congress. Also troubling for the CEOs is the festering euro-zone crisis and the uncertainty surrounding the price of energy.
In a separate report by Deloitte, which was also released on Wednesday, North American CFOs voiced growing concerns about worsening conditions in Europe, global economic deceleration, slow growth at home, and governments’ often futile struggles to promote growth. But despite their macroeconomic worries, CFOs remain mostly optimistic about their own companies’ prospects and express solid year-over-year performance expectations.
Euro-Zone Riots Make Investors Nervous
Investors might have been momentarily happy when a lid seemed to have been put on the euro-zone crisis during the summer, but crowds on the streets of Athens, Madrid and other places, who are on the receiving end of austerity, haven’t been so happy in recent days. Rioting broke out in those places in recent days, and look likely to happen again, regardless of the amount of tear gas thrown at the rioters.
The unrest seemed to spook Wall Street again on Wednesday, with the Dow Jones Industrial Average dropping 44.04 points, or 0.33 percent. The S&P 500 was off 0.57 percent and the Nasdaq declined 0.77 percent.