Slow and steady is often better than fast and erratic. That describes national economic growth.
U.S. Consumer Confidence Index
The U.S. Consumer Confidence Index increased 2.5 points to 101.3 in March after declining in February. The Expectations Index rose 6.0 points to 96.0, and the Present Situation Index declined 3.0 points to 109.1.
For the second month in a row, present-day conditions were less favorable. The percentage of Americans who think current business conditions are “good” remained at 26.7 percent, while those who claim business conditions are “bad” increased from 16.7 percent to 19.4 percent. Assessment of the job market was mixed: the proportion who stated jobs are plentiful increased marginally from 20.3 percent to 20.6 percent, but the percentage of those who think jobs are hard to get also increased from 25.1 percent to 25.4 percent.
However, expectations for the next six months improved overall. While fewer people expect business conditions to improve over the next six months—16.7 percent compared to 17.6 percent last month—the percentage of those who expect business conditions to worsen fell from 8.9 percent to 8.0 percent. The positive job outlook had the biggest impact on the Expectations Index as the percentage of people expecting more jobs in the month ahead increased from 13.8 percent to 15.5 percent. Simultaneously, the percentage of those who expect fewer jobs declined from 14.8 percent in February to 13.5 percent in March. Consumers are also optimistic about their income trajectories: 18.4 percent expect their incomes to increase in the next six months, up from 16.4 percent last month.
U.S. Consumer Price Index
The U.S. Consumer Price Index (CPI) increased 0.4 percent from January to February on a non-seasonally-adjusted basis. The Index has essentially remained flat over the last 12 months. The increase in the CPI stemmed from a combination of increases in shelter, energy, and food. The energy index increased 1 percent as gasoline and oil prices rose after several months of decline. The food index, which had not changed in January, rose in February as various items increased in price.
The sub-index of the CPI that tracks all items less food and energy rose 0.2 percent in February, which mirrors January’s increase. In addition to shelter, other indexes that increased from January to February included used cars and trucks, apparel, new vehicles, tobacco, and airline fares. Medical care did not change, and personal care prices declined.
Over the last 12 months the food index increased 3 percent, and the index for all items less food and energy increased 1.7 percent. Overall increases have been subdued as a result of the large effect energy has on the index, since energy comprises a large percentage of an individual’s purchases. The energy index has declined 18.8 percent over the past 12 months.
Housing prices have continued to climb in the first quarter of the year, both in Idaho and nationally. According to the CoreLogic Home Price Index, home prices increased 0.9 percent in Idaho from January to February, which represented a 5.1-percent rise compared to February 2014. Nationally, home prices increased 1.1 percent in February, which represented a 5.6-percent rise compared to February 2014’s prices. In Idaho, home prices are still 17.6 percent below their September 2007 peak, and home prices nationally are still 12.2 percent below their pre-recession high.
New home sales in February reached a seven-year high, according to data from the Commerce Department. Purchases increased 7.8 percent from January, reaching an annualized rate of 539,000. Much of this increase came in the North region, where January numbers were low because of winter snow storms. According to Patrick Newport, U.S. economist at research firm IHS, “There is a chance of really strong housing numbers, which may be showing up for the first time. But we need two to three months before we can say whether a new trend is being established.” It remains to be seen whether February’s new home sales indicate a trend, or simply a one-month aberration caused by pent-up demand from January’s bad weather. In any case, February’s housing numbers came as a pleasant surprise