Economists Once Again Underestimated Consumer Spending

Economists on average expected far less spendi🌳n🎐g from consumers in March.

It's the latest in a string of hotter-than-expected reports on the economy and economists had thoughts on how today's retail sales numbers were so much stronger than they predicted. Below, we've rounded up a few comments from experts.

Good Times Roll On For Homebuilders In April

Hardly anyone wants to sell their house—and that suits homebuilders just fine, a measure of builder confidence indicated Monday.

The National Association of Home Builders/Wells Fargo Housing Market Index, which measures market conditions for builders, stayed at 51 in April, the same as in March, the NAHB said Monday. The report was in line with forecasts and showed confidence stayed above the “breakeven” point of 50, indicating a favorable market.

New houses are in demand, possibly because high interest rates on mortgages have “locked” many homeowners in place. Those with fixed-rate mortgages secured during times of low interest rates are reluctant to give them up as the average rate ticks up closer to 7%.

“The gap between the very low rates that most homeowners locked in from 2020-to-21 has made it prohibitively expensive for many people to move home,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a commentary. “This has allowed homebuilders to grab market share, and the current level of the NAHB Index is consistent with a further uptick in new home sales over the next couple of months.”

Business Inventories Expand in February, Meeting Expectations

After coming in 澳洲幸运5开奖号码历史查询:lower than expected last month, 澳洲幸运5开奖号码历史查询:business inventories in February grew 0.4% to meet economists'⭕ expectations.

Data from the Census Bureau showed wholesalers and manufacturers had $2.57 trillion in inventory at the end of February, higher by 1% than the same period last year The inventories-to-sale ratio, an indication of how quick🎃ly 🐲wholesalers can sell their warehoused products, came in at 1.38, a tick better than the February 2023 ratio.

While inventories grew in February, the rate of change in the first quarter is lower when compared with the final months of 2023, which could weigh on 澳洲幸运5开奖号码历史查询:gross domestic product (GDP), Oxford Economics wrote in a report. 

“It is the ch♏ange in꧟ inventories that matters for growth, so inventories are poised to weigh on Q1 growth to a similar extent as they did in Q4 2023,” wrote Bernard Yaros, lead U.S. economist at Oxford Economics. 

The Census Bureau data comes as U.S. retail sales data released today shows 澳洲幸运5开奖号码历史查询:customers continue to spend. 

“Retail inventories posted the fastest gain, followed by wholesalers' stocks,” Yaros wrote. “Manufacturers' inventories increased at their strongest pace since August and ended a two-month streak of declines.”

-Terry Lane

Consumers Spent More in March Than Expected

March was a month of full shopping carts at shops and online stores, as cons🌸umers spent enough money to cause another surge in retail sales. 

Sales of food and retail goods rose 0.7% in March from February, the Census Bureau said Monday. That was more than double the 0.3% increase forecasters had expected according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. On top of that, February’s monthly sales increase was upwardly revi🌱sed to a 0.9% gain from 0.ﷺ6%.

The report was the latest in a string of data showing U.S. consumers continue to spend freely despite high prices and high borrowing costs putting pressure on household budgets. Surprisingly resilient consumer spending has 澳洲幸运5开奖号码历史查询:kept the economy growing in recent months, fending off a long-anticipated recession, as 澳洲幸运5开奖号码历史查询:a good job market and heavy consumer spending continue to boost one another.

"This report should dispel any thoughts that consumer spending has downshifted,” Robert Frick, corporate economist with Navy Federal Credit Union, wrote in a commentary. “Given the various stimulus programs have stopped and money from them has ๊been spent, consumer spending now rests firmly on incomes from paychecks, which continue to expand along with the labor market. This means a solid expansion should continue."

Read more about Monday's retail sales report here.

Reduced Workweeks Are An Old Idea—But They're Gaining Traction

Ever since the industrial age began, economists have theorized ꧑that the intꦇroduction of machinery and other labor-saving devices would do just that—save labor, and allow us all to work less while enjoying the same or better standard of living.

In 1930, economist John Meynard Keynes looked at the astonishingly fast improvement of industrial technology during the 20th century🌊 and theorized that in the future, the major economic problem would be keeping busy.

“We shall do ﷽more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines,” he said. “But beyond this, we shall endeavor to spread the bread thin on the butter—to make what work there is still to be done to be as widely shared as possible. Three-hour shif♍ts or a fifteen-hour week may put off the problem for a great while,” he wrote in an essay.

Th𒐪is idea is gaining traction in the U.S. once again nearly 100 years later in the form of a four-day workweek.

Today, the prospect of artificial intelligence technology supercharging automation is fueling dreams of a more leisurely work life, whether that arrives by a🐈 federal law, or by employers adopting it voluntarily.

Some U.S. companies have adopted four-day workweeks after a s෴uccessful trial of the concept in Great Britain. Businesses that have adopted the reduced schedule cite numerous benefits including improved recruitment and in some cases improved productivity. Some also point to increased spending on travel and leisure that an extra day off would spur as a benefit to the economy.

Read more about the impact on the economy if the four-day workweek was instated here.