Since the election of Donald Trump, survey based measures of economic activity have increased materially such as PMI data and consumer confidence. However, “hard data” such as home sales and durable goods continue to show mixed results. The jury is still out on whether or not increased consumer and business confidence will result in actual increases in economic activity or if this newfound optimism will simply fade over time.
This morning, January durable goods increased 1.8% month over month compared to expectations for 1.7% month over month. While the major news outlets were quick to call this a “beat,” they missed that December was revised downwards from 0.4% decline to 0.8% decline. So the 1.8% month over month increase in January was off of a much lower base.
In addition, January pending home sales decreased 2.8% month over month vs. expectations for a 0.8% gain. It appears that higher mortgage rates are starting to take a bite into the housing market.
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