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Tuesday, September 25, 2012

Consumer Confidence Rebounds

A huge 12.6 point jump in expectations about future economic conditions sent consumer confidence up 9.0 points in September. The rise in expectations mirrors the recent improvement in the stock market.

Wellsf Fargo Weekly Economic Commentary

• Existing home sales rose 7.8 percent in August and single-family housing starts increased 5.5 percent.

• With new home inventories at all-time lows, distressed inventories falling and the Fed buying mortgage-backed securities on an open-ended basis, the housing recovery appears poised to shift into higher gear.

• Data from the manufacturing sector, however, and labor market continue to flash warning signs.

Sales of new homes appear to be poised for solid gains in 2013. Since the beginning of the year, sales of new homes are up around 21 percent ahead of their year-ago pace. Many builders have purchased lots at greatly discounted prices and with inventories of new homes at all-time lows and shadow inventories declining, builders are far more confident in ramping up activity. Moreover, with the share of distressed transactions continuing to decline and home prices modestly increasing, the gap between the price of a new home versus the price of an existing home is narrowing. Home prices have clearly firmed with the S&P/CaseShiller 20-City Home Price Index up 0.5 percent in June, the first year-over-year gain in almost two years. More importantly, builder sentiment continues to increase. The NAHB/Wells Fargo Housing Market Index rose 3 points in September to 40, with builders noting increased buyer traffic and rising sales.

Video: Monthly Economic Outlook – September 2012

Housing Starts Rebound In August

Housing starts rose 2.3 percent in August, reversing much of the previous month’s drop. Single-family starts rose 5.5 percent to a 535,000-unit pace, while multifamily starts fell 4.9 percent. Permits fell 1.0 percent.

Saturday, September 15, 2012

Wells Fargo Weekly Economic & Financial Commentary

The Federal Reserve announced another round of asset purchases and further extended the time that it expects short-term interest rates to remain extraordinarily low through the middle of 2015.

 Data on retail sales and industrial production came in well below expectations, even after accounting for unusually large swings in utility usage and surging energy prices.

Inflation roared back in August, as gasoline prices surged and wholesale food prices spiked. More inflation remains in the pipeline but the Consumer Price Index should remain within the Fed's comfort zone for the next few quarters.

Business Inventories Jump in July

Posting the strongest gain in six months, total business inventories jumped 0.8 percent in July. Sales halted a
three-month slide, bringing the overall inventory-to-sales ratio down to 1.28.