Consumer confidence wanes
Consumer confidence fell again in July, according to The Conference Board. Corporate accounting scandals, stock market woes, and the lack of meaningful job growth are making consumers more guarded. The increased consumer spending needed for a stronger economic recovery is being restricted by declining equity wealth, high debt burdens, and lack of pent-up demand.
Strong productivity gains are supporting personal income gains. Inflation-adjusted per capita disposable income rose at very strong annual growth rates of about 6% in May and June.
Construction labor market
Softness in the non-residential sector caused construction industry unemployment to increase to 10.3% in July, the highest rate since November 1996. Increases in wages and salaries of construction workers also moderated to a 3% annual rate in the second quarter.
Existing home sales
As new home sales rose in June, a surprising drop of nearly 12% occurred in the sales of existing homes, according to the National Association of Realtors. It is difficult to explain the drop, which occurred in every region of the country, because mortgage interest rates are at their lowest levels since the late 1960s. Sales will likely move back to higher levels in coming months.
Second mortgage interest rates
Low second mortgage interest rates, which dropped to 5.64% in July, continue to fuel remodeling project financing. July was the fourth straight month in which the average dropped, and the current rate is the lowest since last October.