Economist's Commentary: September 12, 2008

Quick Take on the Economy: September 12, 2008

By Danielle Hale, Research Economist

Prices for crude, intermediate, and finished goods all fell in August after having risen in the two months prior.
Falling energy prices were a big driver of the decline. The index for finished goods fell 0.9 percent in August while the index for finished goods except food and energy was up 0.2 percent.

Retail sales estimates from July were revised downward to a 0.5 percent decline. Total sales declined again by 0.3 percent from July to August with only automobiles showing an increase.
Year over year figures indicate growth of 1.6 percent for total retail and 5.5 percent if autos are excluded.

The index of consumer sentiment showed a big gain of 10.1 points from its August level as a result of increases in attitudes about current conditions and even greater increases in the index for expectations.
The overall index is at its highest level since January 2008 and the index for expectations is at its highest level since September 2007.

Moderating prices are a welcome development, but the moderation has not yet been strong enough nor the duration long enough to have a big impact. Producer prices are up 9.6 percent compared to one year ago.
To the extent that producers pass these price increases through to customers, increased prices are eroding consumer spending power and have eaten into sales.
However, a big component of consumer spending is on energy, and the moderation of energy prices may be contributing to better consumer expectations about the future.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

Comments? Questions? E-mail NAR Research.

NAR members, learn how you can add this commentary to your Web site, blog, or newsletter. Read more >