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

The Chinese Xi administration may choose to leverage its state dominance of rare-earth elements to better balance the current Sino-U.S. trade war.

Dan Rochefort

2019-06-13 10:26:00 Thursday ET

The Chinese Xi administration may choose to leverage its state dominance of rare-earth elements to better balance the current Sino-U.S. trade war.

The Chinese Xi administration may choose to leverage its state dominance of rare-earth elements to better balance the current Sino-U.S. trade war. In recent

+See More

President Trump criticizes the potential media merger between AT&T and Time Warner.

Chanel Holden

2017-11-05 09:45:00 Sunday ET

President Trump criticizes the potential media merger between AT&T and Time Warner.

President Trump criticizes the potential media merger between AT&T and Time Warner, the latter of which owns the anti-Trump media network CNN. President

+See More

President Trump sounds smart when he comes up with a fresh plan to retire $15 trillion national debt.

Peter Prince

2018-08-07 07:33:00 Tuesday ET

President Trump sounds smart when he comes up with a fresh plan to retire $15 trillion national debt.

President Trump sounds smart when he comes up with a fresh plan to retire $15 trillion national debt. This plan entails taxing American consumers and produc

+See More

China poses new economic, technological, and military threats to the U.S. and many western allies.

Joseph Corr

2024-02-05 11:26:00 Monday ET

China poses new economic, technological, and military threats to the U.S. and many western allies.

China poses new economic, technological, and military threats to the U.S. and many western allies. In the U.S. government assessment, China poses new eco

+See More

AYA fintech finbuzz analytic report on the global macro economic outlook Summer-Fall 2019

Andy Yeh Alpha

2019-08-07 08:32:00 Wednesday ET

AYA fintech finbuzz analytic report on the global macro economic outlook Summer-Fall 2019

Our fintech finbuzz analytic report shines fresh light on the current global economic outlook. As of Summer-Fall 2019, the current analytic report focuses o

+See More

President Trump remains optimistic about the Sino-American trade war resolution.

Monica McNeil

2019-02-05 10:32:00 Tuesday ET

President Trump remains optimistic about the Sino-American trade war resolution.

President Trump remains optimistic about the Sino-American trade war resolution of both trade deficit eradication and tech transfer enforcement. Trump now s

+See More