Economist's Commentary: April 11, 2008

Quick Take on the Economy: April 11, 2008

By Lawrence Yun, Chief Economist

University of Michigan's Consumer Sentiment

• The measurement of consumers' sentiment fell for the seventh straight months. The current index of 63 is well below the low point reading of 77 in the last recession.
  

• Views on current conditions fell, but a much sharper drop was anticipated regarding future expectations.
  The latest index on expectations (chart below) fell to its lowest point in January since the deeper recession in 1990.

Import and Export Prices

• Import prices rose strongly by 2.8 percent in March, driven heavily by continuing high petrol prices.
  
• Export prices rose also, but less strongly. Export prices increased 1.5 percent.
  
• On balance, Americans are paying more for imports but not getting equally high prices when selling abroad.

What Does Today's Data Mean for REALTORS® and Consumers?

• Consumers are feeling the blues. There is a sense of something not being right. Home foreclosures, higher unemployment, and higher grocery and gas bills have lent themselves to consumer pessimism.
  
• Weakening confidence can delay any major expenditure, including a home purchase, even by those who are financially able. Weak confidence, by cutting back economic spending activity, can also lead to self-fulfilling prophecy of a weaker economy.
  
• Washington is pressured to do more. Expect the easy passage of a second fiscal stimulus — including many measures to help the housing industry — despite the White House's opposition to several components.

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

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