Positive Reports Signal an Improved Economy
Americans’ confidence in the economy soared in November. That is good for us in the construction industry in Atlanta, as well as the entire nation as a whole. That will show itself in strong holiday spending as well as growth next year.
The Conference Board’s monthly index of consumer confidence soared to 107.1 in November. This was the highest it has been since July 2007. Americans spend more when they are confident in the economy and its future.
The report also shows that Americans feel much better about the job market. Nearly 27% of respondents in the survey said jobs were “plentiful,” which is the most since August 2007. Historically, a high number like that has pointed to solid job growth ahead.
Trump’s Lofty GDP Goal
During President-elect Donald Trump’s campaign, he pledged to bring jobs back to America and increase overall economic growth. In a September speech, he said, “It’s time to establish a national goal of reaching 4 percent of economic growth.”
Over the last four decades, only Bill Clinton has come close to a 4% GDP rate, averaging 3.9% while he was in office. President Obama has averaged only 1.5% GDP.
While some economists believe 4% would be a tall order, many have improved their GDP forecasts based on Trump’s proposals to cut taxes and increase spending on infrastructure. They believe a GDP rate of 2.5% may be more likely in 2017 and 2018.
U.S. Presidents’ GDP Annual AverageJimmy Carter (1977-1980), 3.3%Ronald Reagan (1981-1988), 3.5%George H.W. Bush (1989-1992), 2.3%Bill Clinton (1993-2000), 3.9%George W. Bush (2001-2008), 2.1%Barack Obama (2009-2016), 1.5%Source: Marietta Daily Journal
U.S. Home Prices Improve
The Standard & Poor’s CoreLogic Case-Shiller national home price index is slightly above the peak it set in July 2006. That high point comes after four years of steady gains.
David Blitzer, managing director at S&P Dow Jones Indices said, “The new peak set by the S&P Case-Shiller CoreLogic national index will be seen as marking a shift from the housing recovery to the hoped-for start of a new advance.”
The ongoing recovery in home prices will increase Americans’ household wealth and grow the equity in their homes. This should provide an incentive for homeowners to consider selling their home and moving into another one.
In spite of the recent S&P report, other sources say there are still challenges in housing markets around the county. In many cities, home prices have not fully recovered and remain below their peaks. The quick rise in home prices has created an affordability issue in many markets as prices have outpaced household incomes.
According to S&P, home prices have increased at a 5.9% annual rate, adjusted for inflation. During that same time, Americans’ after-tax incomes have increased just 1.3%.
In spite of some housing challenges around the country, many Americans are optimistic about the upcoming year. They expect to see improvements in their income and household wealth. I hope you receive both of those in the coming year.
To Your Success,
