The Line: Consumer Confidence Up Again in September

Consumer confidence rose for the second straight month in September, to its highest level since April. This report is doubly good, as both the Present Situation and Expectations Indexes each rose last month. That means not only do Americans feel more optimistic about current economic conditions, but they also have a rosier outlook for the future.

How can consumers be so optimistic with high inflation, surging rates, a bear market for stocks, and the fear of an impending recession? Lower gas prices and a strong labor market.

I have said many times in this column that the only thing keeping us out of the economic abyss is the strength of the labor market. I guess adding lower gas prices to that was enough to make consumers jump for joy, and since their spending is 70% of GDP, it’s great news they’re becoming more Pollyanna-ish.

And speaking of the labor market, let’s get to our next bit of happiness.

Despite almost constant chatter about upcoming layoffs, the labor market just keeps humming along. Initial claims for unemployment fell by 16,000 last week to 193,000, their lowest level since April. Economists were expecting this figure to come in at 215,000, so this is a nice surprise, and who doesn’t like nice surprises? And to put a cherry on top, remember that there are still over 11 million unfilled jobs out there.

One week from today—mark your calendars if you still use physical calendars—the September jobs report comes out. This will be an important one, as another strong month of hiring can go a long way to offsetting some of the more troubling economic data out there. Stay tuned.

Let’s close it out with some good news from the housing market.

Sales of new homes rose 28.8% last month, a blow-away number no one saw coming. New homes are now selling at an annual rate of 685,000, far above the 500,000 figure economists were expecting.

Wait, I thought the U.S. was in a housing recession?

One great report doesn’t mean things have turned around, but since this is an all-good-news column, we can pretend for a moment that it might. Well, maybe that’s a bit irresponsible of me, so here’s some things to consider:

Both the average and median sales prices fell sharply last month, with 24% of home builders reducing their prices. Since new home sales are counted when contracts are signed, the impact of price cuts can be seen much faster than reports that look at closings.
Buyers were rushing to sign contracts before their rate locks ran out.
The supply of new homes for sale is still very high.

Got time for one last bit of happy news: Congratulations to Aaron Judge for tying Roger Maris’ home run record! What you have done this year is truly remarkable, and an inspiration to so many people. Let’s go Yankees!

Have a great weekend.