By Mark Huffman
ConsumerAffairs.com
June 29, 2010
In case you haven't checked your 401(k) balance lately, Wall Street is in a funk. Whenever its confronted with both good and bad news, it ignores the positive and focuses on the negative.
Today was such a day.
On the positive side of the ledger, home prices rose in April, according to the latest reports from S&P; Case-Shiller. On the negative, consumer confidence plunged in May.
First, the home prices. The S&P;/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that annual growth rates of all 20 Metropolitan Statistical Areas (MSAs) and the 10- and 20-City Composites improved in April compared to March 2010. The 10-City Composite is up 4.6 percent from where it was in April 2009, and the 20-City Composite is up 3.8 percent versus the same time last year. In addition, 18 of the 20 MSAs and both Composites saw improvement in prices as measured by April versus March monthly changes.
Ordinarily, that would be great news, but there's a very big caveat hanging over it. The federal home-buyers' tax credit expired at the end of April. The competition created by the additional buyers drawn into the market should have provided some support for prices. It remains to be seen whether that support is still there when May's sale prices are tallied.
"Home price levels remain close to the April 2009 lows set by the S&P;/Case Shiller 10- and 20-City Composite series," said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "The April 2010 data for all 20 MSAs and the two Composites do show some improvement with higher annual increases than in March's report. However, many of the gains are modest and somewhat concentrated in California."
Lack of confidence
The bad news of the day came from the Conference Board, which reported consumer confidence fell by nearly 10 points to 52.9 in June, from a revised 62.7 level in May.
Two parts of the index saw big declines. The Present Situation Index, which measures how consumers feel about current conditions, dropped to 25.5 in June, from 29.8 in May, while the Expectations Index, which measures expectations for the next six months, declined to 71.2 from 84.6.
"Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence," said Lynn Franco, director of the Conference Board Consumer Research Center. "Until the pace of job growth picks up, consumer confidence is not likely to pick up."
And neither is the stock market. Stocks were down big again Tuesday, with the Dow Jones Industrial Average dipping back below the 10,000 level. April's optimistic forecasts that the U.S. - and global - economy are on the rebound appears to be forgotten, at least for now.
