As 2011 draws to an unspectacular close, U.S. economic data are sending thoroughly mixed messages about the near-term path of the recovery. That’s not particularly reassuring given the still enormous risks emanating from Europe – but it’s better than the unequivocal weakness that prevailed during the first half of the year.
Consumer confidence offered some reassurance, jumping to an eight-month high in December and showing other encouraging signs as well as Eric Green of TD Securities explains:
The better than expected consumer confidence numbers (64.5) put confidence, like most measures of economic activity, back to the levels of early spring. Views on the labor market, however, look to be rising at a much better clip. The labor differential (between jobs plentiful and hard to get) continued to improve. That measure tracks the unemployment rate very well. It rose in December from -37.4 to -35.1. That remains exceptionally weak, but it is the trend that matters. That trend has improved decisively over the past several months and is now well above the spring levels that averaged closer to -39, and is the highest since the end of 2008.
Still, a much sharper-than-expected fall in U.S. home prices for October, while relatively stale as a data point, was enough to remind the Wall Street crowd that this fundamental source of growth remains in a rut with no end in sight. U.S. home prices peaked in mid-2006 and have since dropped by about a third nationwide, with much steeper plunges in the hardest hit parts of the country.
Nomura’s Aichi Amemiya reminds clients of the foreclosure glut still to hit housing: