The US Economy Continues to Show Resilience, As Housing Reverses Up

The US economy took a dip in the last two years, but it has shown during Q4 that the recession fears are behind us and we will see a “soft landing”, while the FED is planning to start lowering rates, which will help the economy further. The sectors are returning to growth, with manufacturing leaving contraction behind, while now the housing market is also reversing the trend after a slowdown in 2023.

On Thursday, the New Home Sales which have been on a softening strend showed a reversal in December, beating epectations, while the number from November was revised higher too, by 25K. Even the Federal Reserve has acknowledged that the economy has made a u-turn and is getting stronger, ASs Brainard’s comments indicated at the end of the week.

US December New Home Sales

• Actual: 664K
• Expected: 645K
• Previous (Revised): 615K (originally reported as 590K)

Sales Change (Month-over-Month):

• Sales increased by 8.0%
• Previous month change: -9.0%

In November we saw a sharp drop in the new home sales number, but Thursday’s numbr showed that the rebound in December reversed the severe decline in the previous month. Home builders’ comments on the latest earnings calls demonstrate their eagerness for increased new starts.

US December Housing Data on Pending Home Sales

• Actual: +8.3%
• Expected: +1.5%
• Previous (Revised): -0.3% (originally reported as 0.0%)

Pending Home Sales Index (December):

• Actual: 77.3 points
• Previous: 71.6 points

Borrowing rates dropped slightly in December after raising for two years, and property buyers poured in. This reveals that manuy people werewaiting on the sidelines as rates surged, waiting to buy a home, while now they are starting to come back and will do so even more further ahead in 2024, as the FED lowers interest rates. This seems like we might be in the beginning of an upcoming housing boom.

White House’s, ex FED Brainard sounded optimisti on Friday regarding the current state of the U.S. economy. Here’s a summary of the key points in her speech:

1. Economic Assessment:
   • The White House’s Brainard characterized the economy as “upbeat.” This suggests a positive view of the current economic conditions.
2. Inflation Anchoring at 2%:
   • There’s mention of inflation getting anchored at 2%. This could indicate an effort to stabilize inflation around the target rate set by policymakers.
3. Consumer Confidence and Spending:
   • Consumer confidence and spending are highlighted as indicators of Americans’ faith in their personal finances. This suggests a positive sentiment among consumers regarding their economic well-being.
4. Risks from China’s Slowdown and Red Sea Disruptions:
   • Brainard acknowledges risks to the U.S. economy from China’s economic slowdown and disruptions in the Red Sea. However, these risks are mentioned as being contained.
5. Focus on U.S. Steel Production:
   • President Biden is emphasized to be vigilant in ensuring that steel continues to be produced in the U.S. by Americans. This reflects a commitment to supporting domestic industries.
6. Tariff Considerations:
   • When asked about lowering tariffs, Brainard notes that goods are already seeing disinflation. This suggests that tariff-related measures may be affecting the prices of goods.