Lindsey Report April ’17

Spring is here and the first quarter of 2017 is in the books. Of course with spring comes milder weather, the Masters and the NCAA Basketball Championships, which as a UNC Alumni was especially enjoyable). It is also tax time. Since April 15th falls on a Saturday this year, the tax filing day is extended to Monday, April 17th (Yahoo Finance).

On the economic front, the Conference Board reported that their March Consumer Confidence Index had risen sharply from a strong level in February to 128.6, which is the highest level we have seen in over sixteen years. The hope is that a stronger consumer will help to propel the economy and lead to higher growth in the coming quarters.

In a similar study, the University of Michigan’s Consumer Sentiment Report also showed improvement in March. Their study found that the “personal income” component had increased by a hefty .5% in February; however, spending only increased by .1%. Surprisingly, the American consumer has been saving more instead of spending more (ETF Daily News). While a healthy, spending consumer is a cornerstone in our economy, I see this as a positive trend: a wiser consumer saves first in order to spend later. Hopefully this bodes well for the future.

Another important area of the economy and indicator of consumer sentiment is home construction. After all, owning a home is the American Dream. As you are likely aware, the housing industry was at the epicenter of the Great Recession. Back then, it was not how many new homes were being built, but how many homes were being foreclosed upon.

The housing market has significantly improved since then. A March ’17 report from Trading Economics showed that housing starts had risen to an annualized rate of 1.28 million/year. To put this in context, it also noted that between 1959 – 2017 housing starts averaged 1.4 million/year, reaching an all-time-high of 2.49ml (January ’72) and a record low of 478K (April ’09). While housing is way up from ’09, it is still below the historical average; therefore, we could certainly see further improvement in housing, which should be good for the economy.

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

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