Consumer confidence edged higher in July as jitters over the outlook eased, though consumers remained gloomy about their current situations, according to a private sector report released on Tuesday.
NEW HOME SALES:
The Commerce Department said sales of new single-family homes fell by 1 percent in June.
KEY POINTS: * The Conference Board, an industry group, said its index of consumer attitudes rose to 59.5 from a downwardly revised 57.6 the month before. Economists had expected a reading of 56.0, according to a Reuters poll.
STEVEN WOOD, CHIEF ECONOMIST, INSIGHT ECONOMICS, DANVILLE, CALIFORNIA:
New home prices rose relative to their post-tax-credit year ago levels and appear to have reached a bottom. However, that conclusion must remain tentative given the large number of distressed properties. Fortunately, with no excess, or absolute, inventory of unsold new homes, any sustained rebound in new home sales should quickly translate into firmer prices.
HUGH JOHNSON, CHIEF INVESTMENT OFFICER OF HUGH JOHNSON ADVISORS LLC IN ALBANY, NEW YORK:
Clearly the biggest surprise is the consumer confidence number. That tends to track the Michigan numbers, so most forecasters will be surprised it increased and did not decline. Whether you're looking at Case Shiller or (other) home sales, the numbers tend to jump around from month to month and are hard to forecast. What does it add up to?
I think on balance I don't think it's going to change anybody's view of housing, and I don't think it's going to change anybody's view on the economy and consumer spending. The basic views of the economy are not going to be affected by these numbers that jump around so much.
WAYNE SCHMIDT, CHIEF INVESTMENT OFFICER, GRADIENT INVESTMENTS, ST. PAUL, MINNESOTA:
I think just in the larger picture, those consumer confidence numbers are still low by historical standards. It still reflects uncertainty in Washington and the high unemployment rates and the uneasiness of the consumer.
My sense is that investors' worries about Washington and the threat of default are probably the key stories today and maybe the consumer confidence is just a side story.
In general, the consumer is just weak right now and those numbers reflect that. We're going to have to have employment come back and housing get better. It seems to me that the housing market employment situation needs to come first and then the consumer will feel better and those numbers will reflect that. Until that happens, we're just stuck here in the kind of environment we've been in.
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK:
(Consumer confidence) sort of bucks the trend of what we have seen recently in some other sentiment indices, namely the Michigan one which really took a hit in the July preliminary report. Generally it does look like after a few months of declines in this index, this might have been a tap on the brakes, although sentiment remains on soft footing and still trending downward.
(New homes) fell by more than was anticipated by the market. That really just continues to reinforce that housing demand continues to be pretty soft.
The confidence number is more of a surprise but it will probably be discounted. This whole debt ceiling debate doesn't seem to be making anyone any more confident.
GARY THAYER, CHIEF MACRO STRATEGIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI:
We saw a bounce in confidence which is encouraging but it's still lower than it was earlier this year. It suggests the economy is still probably in a soft spot. We still have high energy prices this summer and a lot of uncertainty about jobs and the political debates on the debt and deficit weighing. And the housing market is not helping. Home sales were disappointing. It shows the new housing market is pretty much dead in the water. Still too many unsold existing homes on the market and builders are not seeing a lot of demand for new homes.
TOM PORCELLI, U.S. ECONOMIST, RBC CAPITAL MARKETS
As we've been saying for quite a while, I think you're going to be hard-pressed to see any encouraging sign out of home sales.
On confidence, you got some improvement but I think the one thing that was not very encouraging is that the present situation actually fell. The increase was due to future expectations. It's good to be hopeful for the future but we want consumers to be more confident in the present.
PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:
The report hints that consumer confidence is stabilizing. Predictions had looked for a small decline in The Conference Board's consumer confidence numbers, but it turned out that the consumer confidence numbers improved. That hints at a stabilization, halting the recent sharp decline. That would be encouraging if it meant that people might once again want to buy durable goods. Spending growth in general has slowed in recent months. But the real sore point has been in durable goods but we're in the middle of the summer and you never know what's real and what's not.
Home sales look perfectly credible. There's improvement because builders started more single-family houses in June but there's no evidence of inventory climbing which would have happened if builders had built too much.
The good news is that sales are stable, but the bad news is that sales are stable. The housing market is essentially stagnant across the board at low levels.
MARKET REACTION: STOCKS: U.S. stock indexes slipped BONDS: U.S. bond prices were steady at higher levels FOREX: The dollar was little changed