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

Treasury Secretary Steven Mnuchin welcomes a weak U.S. dollar amid pervasive fears of an open trade war between America and China.

James Campbell

2018-01-15 07:35:00 Monday ET

Treasury Secretary Steven Mnuchin welcomes a weak U.S. dollar amid pervasive fears of an open trade war between America and China.

Treasury Secretary Steven Mnuchin welcomes a weak U.S. dollar amid pervasive fears of an open trade war between America and China. At the World Economic For

+See More

Facebook introduces a new cryptocurrency Libra as a fresh medium of exchange for e-commerce.

Dan Rochefort

2019-07-21 09:37:00 Sunday ET

Facebook introduces a new cryptocurrency Libra as a fresh medium of exchange for e-commerce.

Facebook introduces a new cryptocurrency Libra as a fresh medium of exchange for e-commerce. Libra will be available to all the 2 billion active users on Fa

+See More

Addendum on USPTO fintech patent protection and accreditation

Andy Yeh Alpha

2023-01-11 09:26:00 Wednesday ET

Addendum on USPTO fintech patent protection and accreditation

Addendum on USPTO fintech patent protection and accreditation As of early-January 2023, the U.S. Patent and Trademark Office (USPTO) has approved our U.S

+See More

The Trump team blocks Broadcom's bid for Qualcomm due to national security concerns and 5G telecom network issues.

James Campbell

2018-03-06 11:35:00 Tuesday ET

The Trump team blocks Broadcom's bid for Qualcomm due to national security concerns and 5G telecom network issues.

The Trump team blocks Broadcom's bid for Qualcomm due to national economic security concerns and 5G telecom network issues. Broadcom makes microchips fo

+See More

Netflix has an unsustainable business model in the meantime.

Becky Berkman

2019-05-02 13:30:00 Thursday ET

Netflix has an unsustainable business model in the meantime.

Netflix has an unsustainable business model in the meantime. Netflix maintains a small premium membership fee of $9-$14 per month for its unique collection

+See More

Disruptive innovators compete against luck by figuring out why customers hire products and services to accomplish specific jobs.

John Fourier

2020-05-14 12:35:00 Thursday ET

Disruptive innovators compete against luck by figuring out why customers hire products and services to accomplish specific jobs.

Disruptive innovators can better compete against luck by figuring out why customers hire products and services to accomplish jobs. Clayton Christensen, T

+See More