With 2012’s Black Friday and Cyber Monday officially in the books, Tuesday brought the news that US consumers are more confident than they’ve been since February 2008, according to the New York-based Conference Board, a private research group. The rise in consumer confidence is welcome news for companies, even if the timing seems a bit odd given what could be coming with the arrival of Baby New Year.
Economists and policy makers have been nail-biting over another possible economic slowdown that could occur should Congress and the president fail to reach a deal to avoid the so-called fiscal cliff – a batch of spending cuts and tax hikes that will take effect automatically at midnight on New Year’s Eve unless action is taken to stop them.
Key US government statistics point to a decent level of confidence among both consumers and companies. Unfilled orders for durable goods were up 4.4 percent in October 2012 compared to October 2011. This includes things like transportation and communications equipment, machinery, and other nuts and bolts items (including nuts and bolts) that keep the economic needle moving in the right direction.
Construction, both residential and nonresidential, is also recovering. Total construction spending increased 8.9 percent in the first nine months of 2012 compared to the same period in 2011. Residential spending grew 12.1 percent while nonresidential increased 7.4 percent. The number of residential building permits issued, itself a type of indicator of consumer confidence, rose 33.2 percent in the first 10 months of 2012 compared to 2011. Existing home sales rose more than 10 percent in October compared to a year earlier, according to the National Association of Realtors. Home prices are also inching upward as inventories are getting tighter.
The improvement in the housing market suggests consumers are confident enough in the economy to take long-term risks. The durable goods orders data seem to indicate some companies and industries have a similar view. With good news coming from the industrial and housing sectors, many economists, including Federal Reserve Chairman Ben Bernanke, feel 2013 could be a pretty good year for the US. Hopefully, Congress and the president can deliver a holiday gift for the American consumer that keeps on giving.