U.S. automobile and real estate sales decline despite higher consumer confidence and low unemployment as of October 2018.

Fiona Sydney

2018-10-27 09:34:00 Sat ET

U.S. automobile and real estate sales decline despite higher consumer confidence and low unemployment as of October 2018. This slowdown arises from the current U.S. interest rate hike that helps wean the economy off near-zero rates. High costs of capital squeeze the automobile and real estate industries after the prior decade of monetary stimulus. The most expensive U.S. consumer purchases are cars and houses, and these consumer industries are quite sensitive to the cyclical ebbs and flows of credit supply expansion. Recent U.S. mortgage rates reach 5% for the first time since 2011, and thus new home sales tumble 5.5% in 2018Q3 to the lowest level in about 2 years.

Residential home sale declines are double-digits and quite severe in the northeast and west U.S. states. In light of higher mortgage rates and home prices, financial economists start to consider rental properties more cost-effective than residential home purchases. Meanwhile, most Case-Shiller home price indices begin to show the current trend that home price gains decelerate from March 2018 to September 2018. Wall Street seems to impose hefty penalties on automobile and real estate stocks. Many homebuilder ETFs such as XHB, TOL, and KBH have plunged about 30% year-to-date since January 2018. Also, several automobile stocks from Ford to GM show 25%+ price declines in the same time frame. The latter auto industry further suffers higher production costs due to Trump tariffs. These bearish traces suggest the inconvenient truth that the U.S. economy may have gone beyond the peak of real business cycles with low inflation and robust employment and capital investment growth.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Carol Dweck describes, discusses, and delves into the scientific reasons why the growth mindset often helps motivate individuals, teams, and managers to accomplish more with greater grit, focus, and resilience.

Dan Rochefort

2025-05-21 04:27:10 Wednesday ET

Carol Dweck describes, discusses, and delves into the scientific reasons why the growth mindset often helps motivate individuals, teams, and managers to accomplish more with greater grit, focus, and resilience.

Carol Dweck describes, discusses, and delves into the scientific reasons why the growth mindset often helps motivate individuals, teams, and managers to acc

+See More

Warren Buffett points out that many people misunderstand his stock investment method in several ways.

Jonah Whanau

2017-06-21 05:36:00 Wednesday ET

Warren Buffett points out that many people misunderstand his stock investment method in several ways.

In his latest Berkshire Hathaway annual letter to shareholders, Warren Buffett points out that many people misunderstand his stock investment method in seve

+See More

What are the best online stock market investment tools?

Amy Hamilton

2021-07-07 05:22:00 Wednesday ET

What are the best online stock market investment tools?

What are the best online stock market investment tools? Stock trading has seen an explosion since the start of the pandemic. As people lost their jobs an

+See More

There are several highlights from the first news conference after Trump's presidential election victory.

Monica McNeil

2017-01-23 09:30:00 Monday ET

There are several highlights from the first news conference after Trump's presidential election victory.

There are several highlights from the first news conference after Trump's presidential election victory: The Trump administration will repeal-and-

+See More

U.S. trade envoy Robert Lighthizer proposes America to require regular touchpoints to ensure Sino-U.S. trade deal enforcement.

Daisy Harvey

2019-03-17 14:35:00 Sunday ET

U.S. trade envoy Robert Lighthizer proposes America to require regular touchpoints to ensure Sino-U.S. trade deal enforcement.

U.S. trade rep Robert Lighthizer proposes America to require regular touchpoints to ensure Sino-U.S. trade deal enforcement. America has to maintain the thr

+See More

Blue-ocean strategists shift focus from current competitors to alternative non-customers with new market space.

Apple Boston

2020-05-21 11:30:00 Thursday ET

Blue-ocean strategists shift focus from current competitors to alternative non-customers with new market space.

Most blue-ocean strategists shift fundamental focus from current competitors to alternative non-customers with new market space. W. Chan Kim and Renee Ma

+See More