Economic Round Up — Consumer Confidence At 28-Year Low, Housing Situation Improves
(RTTNews) - Friday was another hectic day on the economic front, highlighted by the release of discouraging report on the mindset of the US consumer and a speech on the housing and credit crisis from Treasury Secretary Henry Paulson
US consumer confidence fell to its lowest since the summer of 1980 in May, a survey showed Friday morning. Just as the price of surged to a new record above $127 a barrel, the survey confirmed that surging food and energy prices continued to weigh on consumer sentiment this month.
The Reuters/University of Michigan Surveys of Consumers said its preliminary index of confidence fell to 59.5 in May, down from 62.6 in April. This was well below economists’ median expectation of a reading of 62.0.
The dismal consumer confidence reading overshadowed data showing that housing starts unexpectedly showed a significant increase in the month of April, according to a report released by the Department of Commerce. The data is likely to offset some of the recent pessimism about the outlook for the housing market.
The report showed that housing starts jumped 8.2 percent to an annual rate of 1.032 million units in April from the revised March rate of 954,000 units. Economists had expected starts to edge down to 940,000 units from the 947,000 unit rate originally reported for the previous months.
Later in the day, Treasury Secretary Paulson spoke about the US housing and credit crisis at the 2008 Luncheon of the Post 200 Friday afternoon, stressing that the Hope Now Alliance has made “enormous progress”, but that the housing crisis remains the biggest risk to the economy.
Paulson also discussed the role of home owners in the housing market recovery, urging them to accept assistance and not to walk away from mortgages that they can afford to pay.
Addressing the lingering problems in the credit markets, Paulson noted that financial markets have calmed considerably compared to last summer and that he sees “signs of progress” in capital markets. He suggested that liquidity was improving and that financial markets have been driven less by recent turmoil, but conceded that improvements were not taking place across the board.
Across the Atlantic, the Eurostat announced that Euro zone trade balance with the rest of the world showed a deficit of EUR2.3 billion in March. In February, the trade balance recorded a surplus of EUR0.8 billion. Economists had expected the trade surplus to increase to EUR2.5 billion in March.
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