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Consumer Confidence Dips Amid Economic Outlook

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Consumer confidence fell to a three-month low in December amid growing concerns about economic uncertainties, especially potential tariffs. These policy changes could derail inflation progress and lead the Fed to slow its easing pace.

The Consumer Confidence Index, reported by the Conference Board, is a survey measuring how optimistic or pessimistic consumers feel about their financial situation. This index fell from 112.8 to 104.7 in December, the largest monthly decline since August 2021. The Consumer Confidence Index consists of two components: how consumers feel about their present situation and about their expected situation. The Present Situation Index decreased 1.2 points from 141.4 to 140.2, and the Expectation Situation Index dropped 12.6 points from 93.7 to 81.1, just above the 80 threshold. Historically, an Expectation Index reading below 80 often signals a recession within a year.

Consumers’ assessment of current business conditions turned negative in December. The share of respondents rating business conditions “good” decreased by 2.5 percentage points to 19.1%, while those claiming business conditions as “bad” rose by 1.4 percentage points to 16.7%. However, consumers’ assessments of the labor market improved. The share of respondents reporting that jobs were “plentiful” rose by 3.4 percentage points to 37%, and those who saw jobs as “hard to get” decreased by 0.4 percentage points to 14.8%.

Consumers were less optimistic about the short-term outlook. The share of respondents expecting business conditions to improve fell from 24.7% to 21.7%, while those expecting business conditions to deteriorate rose from 15.9% to 18.3%. Similarly, expectations of employment over the next six months were less positive. The share of respondents expecting “more jobs” decreased by 3.7 percentage points to 19.1%, and those anticipating “fewer jobs” climbed by 3.4 percentage points to 21.3%.

The Conference Board also reported the share of respondents planning to buy a home within six months. The share of respondents planning to buy a home fell to 4.9% in December. Of those, respondents planning to buy a newly constructed home decreased to 0.4%, and those planning to buy an existing home dropped to 2.2%.

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This article was originally published by a eyeonhousing.org . Read the Original article here. .

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In Research & Trends

U.S. Consumer Debt Rises to $5.1 Trillion in the Third Quarter

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Total outstanding U.S. consumer debt stood at $5.10 trillion for the third quarter of 2024, increasing at an annualized rate of 3.28% (seasonally adjusted), according to the Federal Reserve’s G.19 Consumer Credit Report. In general, consumer debt has been slowing over the past two years, peaking at a high rate of 9.16% in the second quarter of 2022. However, the third quarter of 2024 experienced an uptick in growth from the previous quarter’s rate of 1.14%. 

The G.19 report excludes mortgage loans, so the data primarily reflects consumer debt in the form of student loans, auto loans, and credit card debt. As consumer spending has outpaced personal income, savings rates have been declining and consumer debt has increased. Previously, consumer debt growth had been slowing, as high inflation and rising interest rates led people to reduce their borrowing. However, the growth rate ticked up in the latest quarter, possibly reflecting expectations of rate cuts that took place at the quarter’s end. 

Nonrevolving Debt

Nonrevolving debt, largely driven by student and auto loans, reached $3.75 trillion (SA) in the third quarter of 2024, marking a 3.46% increase at a seasonally adjusted annual rate (SAAR). This growth rate is notably higher than in the previous six quarters, all of which remained below 2.5%. 

Student loan debt balances stood at $1.77 trillion (NSA) for the third quarter of 2024. Year-over-year, student loan debt rose 2.41%, the largest yearly increase since the third quarter of 2021. This shift partially reflects the expiration of the COVID-19 Emergency Relief for student loans’ 0-interest payment pause that ended September 1, 2023. 

Auto loans, meanwhile, totaled $1.57 trillion, with a year-over-year increase of only 0.96%—the slowest rate since 2010. This deceleration can be attributed to multiple factors, including tighter lending standards, higher loan rates, and overall inflation. Auto loan interest rates reached 8.40% (for a 60-month new car) in the third quarter of 2024, marking the highest rate since the data series began. Although the Federal Reserve has begun cutting rates, auto loan rates tend to respond more slowly and are less directly influenced by these cuts.  

Revolving Debt

Revolving debt, primarily credit card debt, reached $1.36 trillion (SA) in the third quarter, rising at an annualized rate of 2.79%. This marked a slight increase from the second quarter’s 2.58% rate but was notably down from the peak growth rate of 17.58% seen in the first quarter of 2022. The surge in credit card balances in early 2022 was accompanied by an increase in credit card rates which climbed by 4.51 percentage points over 2022. This was an exceptionally steep increase, as no other year in the past two decades had seen a rate jump of more than two percentage points.  

Comparatively, so far in 2024 the credit card rate increased 0.17 percentage points. For the third quarter of 2024, the average credit card rate held by commercial banks (NSA) reached a historic high (since data has been recorded) of 21.76%, an increase from 21.51% last quarter.   

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Consumer Confidence Dips Amid Job Market Concerns

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Consumer confidence fell to a 3-month low in September due to growing concerns about the job market, despite the labor market remaining healthy. Recent job growth revisions showed fewer jobs were added in 2023 than initially reported. However, the unemployment rate remained at a relatively low level and wage growth continued to outpace inflation. This suggests the labor market is cooling from its red-hot pace but remains steady. 

The Consumer Confidence Index, reported by the Conference Board, is a survey measuring how optimistic or pessimistic consumers feel about their financial situation. This index fell from 105.6 to 98.7 in September, the largest monthly decline since August 2021. The Consumer Confidence Index consists of two components: how consumers feel about their present situation and about their expected situation. The Present Situation Index decreased 10.3 points from 134.6 to 124.3, and the Expectation Situation Index fell 4.6 points from 86.3 to 81.7, but still remained above the 80 threshold. Historically, an Expectation Index reading below 80 often signals a recession within a year.

Consumers’ assessment of current business conditions turned negative in September. The share of respondents rating business conditions “good” decreased by 2.3 percentage points to 18.8%, while those claiming business conditions as “bad” rose by 2.9 percentage points to 20.2%. Consumers’ assessments of the labor market worsened as well. The share of respondents reporting that jobs were “plentiful” decreased by 1.8 percentage points to 30.9%, while those who saw jobs as “hard to get” increased by 1.5 percentage points to 18.3%.

Consumers were also less optimistic about the short-term outlook. The share of respondents expecting business conditions to improve fell from 19.1% to 18.5%, while those expecting business conditions to deteriorate rose from 14.5% to 16.6%. Similarly, expectations of employment over the next six months were less positive. The share of respondents expecting “more jobs” increased by 0.1 percentage points to 16.4%, and those anticipating “fewer jobs” climbed by 1.3 percentage points to 18.3%.

The Conference Board also reported the share of respondents planning to buy a home within six months. The share of respondents planning to buy a home rose to 5.7% in September. Of those, respondents planning to buy a newly constructed home increased slightly to 0.7%, while those planning to buy an existing home decreased to 2.4%.

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Real estate game changer: New rules to hit the housing market soon

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New home buying rules to begin

FOX 26 Business Reporter Tom Zizka has more on the new rules and what it could mean for you.

HOUSTON – A massive settlement that changes the way homes are bought and sold goes into effect August 17. In the spring, the National Association of Realtors agreed to a $418 million settlement and rule changes to answer a class-action suit alleging a fee conspiracy to inflate broker commissions. 

The settlement is supposed to make home buying more transparent, but adds another complication to an already-tight housing market.

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Houston real estate agent Tricia Turner says tight inventory, high prices, and inflated interest rates are already making home sales a tough-sell for many, “50% of all real estate agents have not sold a single home this year. Not one single home. So, they are already struggling.”

The Houston Association of Realtors reports June sales were down more than 11%, over a year ago. Now, the new settlement rules will add work and costs to would-be buyers.

Before the agreement, when a house went on the market, the seller typically paid the cost of all of the agents involved. It was usually about 6%; 3% for each side, and that information was stipulated on the listing. Specifically, it stipulated how much the buyers agent would receive for finding someone to buy the home. 

That’s what’s changing. 

Now, if you want to buy a home, you’ll have to find your own agent or broker, negotiate how much money they will earn, and sign an agreement every time you come to look at a house.

FOX 26 Houston is now on the FOX LOCAL app available through Apple TV, Amazon FireTV, Roku, Google Android TV, Samsung TV, and Vizio!

It will all mean a lot of extra work just to view a potential purchase, as brokers will have to justify what they earn for what they do. All of it is designed to give buyers and sellers flexibility over what they pay. 

“If you’re a buyers agent, you’re going to want something rather than nothing, so you’re going to have to make the deal work,” says Turner. “(But) those buyers agreements can be amended.  So, just because a buyers agent says, ‘I want you to pay me 2%,’ and the buyer agrees, those can be amended and changed.”

The net-effect is that sellers will generally make a little more money on the sale of their home. Buyers, meantime, will often have to pay for a professional service that was previously rolled-into the deal. Consequently, they’ll want to find someone who knows what they’re doing. That’s where research and recommendations will be vital.



This article was originally published by a www.fox26houston.com . Read the Original article here. .

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