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

Higher public debt levels, interest rate hikes, and subpar Chinese economic growth rates are the major risks to the world economy.

Daphne Basel

2019-01-23 11:32:00 Wednesday ET

Higher public debt levels, interest rate hikes, and subpar Chinese economic growth rates are the major risks to the world economy.

Higher public debt levels, global interest rate hikes, and subpar Chinese economic growth rates are the major risks to the world economy from 2019 to 2020.

+See More

Lyft seeks to go public with a dual-class stock ownership structure that allows the co-founders to retain significant influence.

Amy Hamilton

2019-03-11 10:32:00 Monday ET

Lyft seeks to go public with a dual-class stock ownership structure that allows the co-founders to retain significant influence.

Lyft seeks to go public with a dual-class stock ownership structure that allows the co-founders to retain significant influence over the rideshare tech unic

+See More

U.S. economic inequality increases to pre-Great-Depression levels.

Fiona Sydney

2019-02-17 14:40:00 Sunday ET

U.S. economic inequality increases to pre-Great-Depression levels.

U.S. economic inequality increases to pre-Great-Depression levels. U.C. Berkeley economics professor Gabriel Zucman empirically finds that the top 0.1% rich

+See More

Berkeley professor and economist Barry Eichengreen reconciles the nominal and real interest rates to argue in favor of greater fiscal deficits.

Joseph Corr

2019-05-23 10:33:00 Thursday ET

Berkeley professor and economist Barry Eichengreen reconciles the nominal and real interest rates to argue in favor of greater fiscal deficits.

Berkeley professor and economist Barry Eichengreen reconciles the nominal and real interest rates to argue in favor of greater fiscal deficits. French econo

+See More

Capital structure choices for private firms

James Campbell

2022-09-15 11:38:00 Thursday ET

Capital structure choices for private firms

Capital structure choices for private firms The Kauffman Firm Survey (KFS) database provides comprehensive panel data on 5,000+ American private firms fr

+See More

Nir Eyal and Ryan Hoover explain why keystone habits lead us to purchase products, goods, and services in our daily lives.

Fiona Sydney

2025-07-26 09:26:00 Saturday ET

Nir Eyal and Ryan Hoover explain why keystone habits lead us to purchase products, goods, and services in our daily lives.

Nir Eyal and Ryan Hoover explain why keystone habits lead us to purchase products, goods, and services in our lives. The Hooked Model can help shine new lig

+See More