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TWO-FER TUESDAYS: CONSUMER CONFIDENCE PLUNGES, HOME PRICES BLIP HIGHER

Investors were treated to two economic indicators on Tuesday, but The Conference Board hogged the spotlight.

The mood of the consumer, who props up about 70% of U.S. GDP, has dimmed considerably this month, according to The Conference Board $(CB)$.

CB's Consumer Confidence index USCONC=ECI slid 7 points to 98.3 compared with the 102.5 level estimated by economists.

It was the largest monthly decline in three-and-a-half years.

The report follows UMich, NFIB, AAII and other survey-based indicators showing rising pessimism and uncertainties since the beginning of the year.

Those mounting uncertainties were laid bare an 11.3% plunge in the near-term expectations component, which printed at 72.9, well below the level of 80 which typically signifies impending recession.

"Based on all the indicators showing declining consumer and business confidence and sentiment, we are expecting a slowing economy," writes Carl Weinberg, chief economist at High Frequency Economics. "We will opine that the chaos in Washington has something to do with this."

"The decline in consumer sentiment since the November election might not be a coincidence," Weinberg adds.

Indicator geeks will note that the wider the gap between current conditions and expectations, the greater the likelihood that recession is waiting in the wings.

Pivoting to the housing market, home prices increased in December by 0.5% on a monthly basis, an unexpected acceleration from November and hotter than the 0.3% consensus.

Year-on-year, Case-Shiller's 20-city composite USSHPQ=ECI increased by 4.5% up from 4.3% the prior month and a bit north of the 4.4% analysts expected.

But despite December's blip, home prices are on a cooling trend.

"Home prices stalled during the second half of the year with markets in the West dropping the fastest," says Brian Luke, head of commodities, real & digital Assets at S&P Dow Jones.

"We are a few years removed from peak home price appreciation of 18.9% observed in 2021 and are seeing below-trend growth over the history of the index," Luke adds.

Among the 20-city composite, all but Tampa saw year-on-year gains, with New York and Chicago rising most, by 7.2% and 6.6%, respectively.

(Stephen Culp)

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