Wikinvest Wire

Home prices and consumer sentiment

Tuesday, March 02, 2010

Here's another chart from the long dormant series of charts that put the S&P Case-Shiller Home Price Index up against a variety of other economic indicators. In this version, home prices are shown on the same chart as consumer sentiment with an unsurprising result.
IMAGE With the exception of the early-2007 period, the two track pretty well.

In fact, if you smooth the consumer sentiment curve as shown below, the two are nearly identical, save for a delayed reaction in the outlook of Americans in 2007 leading up to the fateful events of 2008.

This is a 12-month moving average that not only takes out the month-to-month volatility but reflects the average sentiment over the last year, a metric that would seem to match up better with the change in home prices over that same period.
IMAGE Any way you look at it, that mid-decade high for the mood of the consumer now seems like a distant memory - about the only thing we had to worry about then was a war that was going badly and gasoline prices that were rising toward $3 a gallon.

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Ted S. said...

These are pretty neat charts. I can understand why you stopped updating them last year, but, with the economic "recovery" now underway, they have gotten interesting again.

Anonymous said...

Don't forget Debt. If you think deleveraging is over. Then that uptick is sustainable. If you think it is not - it is a bubble or dead cat bounce.

Obviously, I think it is a dead cat bounce.

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