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No news is good news, so to speak. There was very little economic data that came out this week. The good news is rates dropped again this week, creeping down closer to the 7% level.
Consumer spending makes up about 2/3rds of Gross Domestic Product or GDP. GDP is the government's measuring stick of the economy. Because the consumer is the key driver of GDP, we must ask: how long the consumer can hold up?
The issue coming in the next few months is the substantial dwindling of savings and the incredibly high credit debt. While April is typically stronger than most months for consumer spending because of the tax refund checks, this money will be gone before you know it.
Summer vacations will just add to the credit and savings issues. Come the fall and going into the election, the consumer could very well be flat on their back hoping to be resuscitated. At this point, the Fed may start to cut the Fed Funds rate.
Next week is the release of the Consumer Price Index (CPI). We don’t see any major surprises coming. Core inflation will likely drop a tad, which is a positive but not earth-shattering. As long as CPI doesn’t go up, we should see a continued trend downward for rates.
We took an unofficial poll at Las Vegas Pitch this week in Henderson on whether there was more buyer activity and multiple offers now than a month ago. Over 90% of the agents said activity is up. Buyers sitting on the sideline should seriously consider getting off the fence and buying now. Home values will almost certainly be higher a year from now given the low supply of homes.
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