National Association of Realtors® Forecast: Imports & Exports, Wholesale Prices, Consumer Sentiment

What does the forecast mean to Realtors and consumers

Palm Coast, FL – September 11, 2009 – The National Association of Realtors® research department provides periodic forecasts of economic activity. Todays report covers Imports & Exports, Wholesale Prices, Consumer Sentiment.

Daily Forecast Update

• NAR’s monthly official forecast as of September 1st
• GDP 2009 Q3: +2.3%
• GDP 2009 Q4: +1.6%
• GDP 2010 Q1: +2.8%
• Unemployment rate by the end of 2009: 10.5%
• Average 30-year fixed mortgage rate by the end of 2009: 5.5%

What does today’s data mean for REALTORS® and consumers?

• Good news! The demand for U.S. wholesalers’ goods has increased for the 3rd consecutive month and means wholesalers are clearing excess supply.
• Since wholesalers make up about a quarter of all business inventories and their inventories are a component of GDP, this comes as very good news. Liquidated inventories mean businesses will be purchasing new inventory, consequently increasing production and creating demand for workers.
• Another piece of good news today – Americans’ perception of the current financial conditions is more positive, and consumers believe it is a good time to buy big-ticket items like cars and homes!
• Bad news on import prices, which are showing that foreign goods are more expensive. However, this was mostly driven by higher energy prices. Prices of foreign manufactured goods, and particularly goods from China, were also higher last month. This still does not mean serious inflation pressures as the bulk of inflation measure comes from housing, medical and other services which are not traded internationally and are not showing upward pressure on prices.
• A bit of both: the dollar is down about 3% since the beginning of the year. A weaker dollar makes imports relatively more expensive and makes U.S. exports more competitive in global markets.

Today’s Data on Import and Export Prices

• The weak dollar is reflected in higher import prices. Import prices rose 2.0 percent in August largely reflecting increase in energy prices. But, even excluding energy, prices increased 0.4 percent, and manufactured goods jumped 0.6 percent from industrialized and non-industrialized countries. Chinese goods were also up, 0.2 percent, which is somewhat unexpected.
• Import prices have risen 7.6 percent so far in 2009 as energy prices have rebounded, though still 15 percent down from August last year.
• U.S. export prices rose 0.7 percent from July, though they were down 6.1% from last year levels. Prices of agricultural exports increased 0.2 percent since last month due to higher fruit and corn prices. Prices of nonagricultural exports increased 0.8 percent, the biggest rise since July 2008.

Today’s Data on Wholesale Inventories

• Wholesalers’ inventories dropped 1.4 percent, higher than economists expected. This is 3rd consecutive month-to-month drop. In addition, sales of wholesalers rose 0.5 percent in July to a seasonally adjusted $314.5 billion. These numbers were driven by the durable goods category.
• These two figures indicated that the inventory-to-sales ratio dropped to 1.23 from 1.25 in June – which is number of months it would take a wholesaler to deplete current inventory.

Today’s Data on Consumer Sentiment

• U.S. consumer confidence increased, more than forecasted, to 70.2 this month from 65.7 in August. This is a significant boost in consumer confidence mostly stemming from the slower pace of job losses and better overall economic news.
• The measure of consumer’s perception of their current financial situation rose to 71.8 from 66.6. Consumer expectation for the next six months also increased to 69.2 from 65 in August.