honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Thursday, April 26, 2001



Record home sales reported

USA Today

Just a day after a key measure of consumer confidence nose-dived, new numbers showed that consumers were still confident enough to buy houses at a record rate in March — strong evidence that the economy could escape an outright recession this year.

"Watch what (consumers) do, not what they say," said Jay Feldman, an economist with Credit Suisse First Boston. The record home sales numbers are "a sign that consumers are a lot more confident than they are probably letting on in the surveys."

But if consumers are getting a little anxious — and a sharp drop in the Consumer Confidence Index on Tuesday suggested they might be — a new gauge of factory activity suggested why.

Orders for durable goods — cars, refrigerators, computers and other items designed to last at least 3 years — shot up unexpectedly in March. But the bad news was that virtually all the gain came in aircraft and defense orders, while other areas shrank.

Taken together, yesterday's data continue to depict a two-speed economy, with the battered manufacturing sector mired in its own recession, while consumer spending remains strong enough to keep the overall economy growing.

The key to what happens next is whether consumers keep spending. The hot home sales numbers suggest they will, because home buyers typically also buy appliances, furniture and other items to fill up their new homes.