Economic Update February/March 2019

Continued Strong Job Growth Should Help Drive Home Improvement Industry… 

In what should be quite beneficial for the home improvement industry job growth in the United States has remained strong. January nonfarm payrolls grew 304,000, higher than the consensus expectation of 165,000, with December adding 222,000. The average monthly gain in 2018 was 223,000. An additional positive is that average hourly earnings for employees increased to 3.2% in January compared to January 2018 reflecting rising pay for employees after many years of stagnant earnings growth. 

Consumer Confidence, Economic Update

…With Consumer Confidence Bouncing Back…

The Conference Board reported that its’ consumer confidence index rose to 131.4 in February bouncing back from the January figure of 121.7. The government shutdown, China trade concerns and stock market weakness in December/January likely had a negative impact on the confidence figure in January. The February bounce back is still close to the figure in October 2018 of 137.9 which was the highest since 2000. One interesting tidbit from the report was that the gap between survey participants who said jobs were “plentiful” compared to those who said that jobs were “hard to get” hit an 18 year high, supporting the continued strong employment trends in the country.

…Although Growth Likely Slowed At End Of 2018 After Strong Q2 and Q3… 

Coming off of a strong middle part of 2018 the economy appears to have slowed somewhat in the 4th quarter with GDP growth coming in at 2.6% based on the first estimate released Friday. That is down slightly from 4.2% and 3.4% in the third and fourth quarters respectively. Consumer spending in the fourth quarter remained solid growing at 2.8% but down from 3.6% in the third quarter.

…Fed Raised Rates Again In December But Now On Hold…

In December the Federal Reserve raised its’ benchmark interest rate by a quarter percentage point. It was the fourth rate hike in 2018. These rate hikes have resulted in some increase in the rates that consumers pay for a variety of loans including mortgages, autos, credit cards and other types of consumer credit. In the Fed’s January meeting it indicated that it would be “patient” with further interest rates rises as it watches economic data for the next several months.

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