Consumer Confidence Unfazed by Interest Rates

Consumer Confidence Unfazed by Interest Rates

It’s time for another check in on Consumer Confidence. Here’s the data as of July:

Consumer Confidence

At 73.6, the Present Situation Index increased 7% between June and July and has gained 264% from its December 2009 low point. The Present Situation Index now sits at its highest level since May 2008. The Expectations Index fell slightly in July, losing 7% from its June level.

Still no apparent detrimental effect on consumer confidence from the big surge in interest rates that we had in June. Despite interest rates rising from 3.4% in late May to 4.4% in late July, the Present Situation Index has gained 14% over the same period.

Click below for the interactive chart (only works in Google Chrome).

You can use the sliders under the interactive chart below to zoom in on the data for a specific period.

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

23 comments:

  1. 1
    Jacob says:

    Interesting how expectations dropped 7%, I wonder what the correlations with expectations & the slight miss on retail sales are….

    Rate this comment: Thumb up 0

  2. 2
    Blurtman says:

    Baaaa…baaaaaa….tasty grass today, eh Bob. Say, isn’t that the weirdest looking sheep. Dog like. Bob?

    Rate this comment: Thumb up 0

  3. 3

    The consumer confidence expectations sure doesn’t seem to be accurately predictive, does it?

    Rate this comment: Thumb up 0

  4. 4
    David Losh says:

    You may have also noticed that those consumers are using credit cards less in this round of purchasing.

    I feel very strongly that the economy is growing at the consumer level, and would grow more if the Fed were to get out of the way.

    Rate this comment: Thumb up 0

  5. 5
    Ron says:

    Consumer confidence fell significantly after the last debt ceiling charade. Let’s see if the republicons are successful, yet again, at trashing our reputation in the world. Maybe they can even get our debt downgraded again in an attempt to gain power…..partly loyaly, at all costs.

    Rate this comment: Thumb up 0

  6. 6
    Blurtman says:

    Not sure if the homeless participate in the consumer confidence polling.

    Rate this comment: Thumb up 0

  7. 7
    Macro Investor says:

    Confidence went sky high during the dot com bubble. When dot com bombed, confidence crashed. The thing to notice is the real estate bubble only brought it back HALF WAY.

    When the real estate bubble popped, confidence melted down into the sub basement. The 5 years of recovery brought it back again HALF WAY.

    People aren’t as forgetful as some like to believe. Despite a 3 year rally in stocks and 24×7 media happy talk, confidence is still below average.

    Rate this comment: Thumb up 0

  8. 8
    Nachiket says:

    It is clear what the expectation index and confidence index is. I don’t know how is Present situation calculated. Don’t see it explained in this post. Anyone care to explain?

    Rate this comment: Thumb up 0

  9. 9
    Erik says:

    RE: Ira Sacharoff @ 3
    “I think one of your assumptions might be wrong. For NOI purposes, does that 1035 number include principal and interest? Because it’s not supposed to.. Does that 1035 include taxes, HOA, insurance, and other expenses but not principal and interest? Water/sewer/garbage I’m assuming is covered by the HOA dues?
    Just guessing here that taxes might be 2400 per year, insurance 800, and HOA 2400, and let’s say another 1200 for other expenses. That’s around 570 per month. What am I missing here?
    The two ways people “get rich” in real estate is either through positive cash flow, or by appreciation. generally speaking, a property that’s thought of as having more appreciation potential is going to have a lower CAP rate. Apartment buildings in prime areas have very low CAP rates, where in lesser areas with less stable tenants the CAP rate is going to be higher. You can make a lot of money being a slumlord. You can also make a lot of money if the property appreciates, but there’s no guarantee. In 2007, multi unit buildings were selling for a lot, with very low CAP rates, and then proceeded to take a nose dive, so there’s clearly risk involved. What would be ideal would be to find a property in an area that is not yet thought of as desirable, but will be, so the current CAP rates are high and there’s potential for appreciation. There’s all kinds of theories on how to do that. Look at the demographics of an area. Is the median income growing quicker than other areas? Is the education level of the residents rising? Are the schools improving?
    My own theory is to look at where artists are moving, and where there’s an emerging gay community.”

    Ira- I am posting here because I ran out of comments on the open forum.

    $1035 includes Principal, Interest, Taxes, Insurance, HOA dues (which include water, sewer, garbage). I think principal and interest is $460/mo. Taxes and Insurance is $175. HOA dues are $400.

    So, $575 for HOA dues and taxes and Insurance. I don’t know about all these calculations, but it seems like renting it would be a pretty good deal since I would be paying it off and it would supply me with extra cash every month.

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  10. 10
    Erik says:

    RE: Ira Sacharoff @ 3
    Rent is $1500*12 = $18000
    Expenses $575*12 = $6900
    NOI = $18000-$6900 = $11,100
    Purchase Price = $92700
    CAP Rate = $11,100/$92,700 = 12%

    If I take 15% off for vacancy, fixes, etc, Cap Rate is still 9%

    In this case it should be rented.

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  11. 11
    David Losh says:

    RE: Erik @ 10RE: Erik @ 9

    Erik, this is complete nonsense taken directly from any old time get rich quick book. Is this Rich Dad, Poor Dad?

    The game is Monopoly, where you buy property, get an equity in the property, and buy more.

    It’s a business like any other, You’re either in the business or not, either way you will be dollars ahead by paying off your personal residence.

    You keep concocting recipes for disaster here.

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  12. 12
    wreckingbull says:

    I think we have ourselves some sick variant of Godwin’s Law going on in this blog now. As the number of comments increase, regardless of original topic, the probability of discussion about a Juanita condo approaches 1. Sure did not take long on this one. Next.

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  13. 13
    Erik says:

    RE: wreckingbull @ 12
    There are a bunch of real estate people on here that know a lot more than me. I’m trying to see the different perspectives so I can learn more and make a good decision. I am not directly in contact with someone that has done what I’m trying to do or knows anything about it. I will take all of the input I can get. I think this is the best way for me to form my scope and navigate my decision. I’m sure the questions and uncertainty I have will reduce as I learn more and become more confident that I can make the right decision. In the meantime, you could either input your ideas or skip the comments that have my name on them or reply to me.

    Rate this comment: Thumb up 0

  14. 14
    David Losh says:

    RE: Erik @ 13

    You don’t listen, because your situation has been discussed into the ground repeatedly, over, and over, and over again.

    It clogs every thread, every day, all day.

    So what’s the point?

    Rate this comment: Thumb up 0

  15. 15
    ChrisM says:

    http://juanitacondo.blogspot.com/ is currently available…

    Rate this comment: Thumb up 0

  16. 16
    wreckingbull says:

    RE: Erik @ 13 – That is what the weekly open thread is for. Do you understand that or do we need to explain that to you in simpler terms?

    Rate this comment: Thumb up 0

  17. 17
    The Tim says:

    Off-topic comments have been “buried.” Next time I’ll just delete them, per the posted Comment Policy.

    Rate this comment: Thumb up 0

  18. 18
    SMW says:

    Breaking news: 70% of those polled for consumer confidence are nimrods who don’t understand that increased rates = less borrowing = worse for the economy.

    Rate this comment: Thumb up 0

  19. 19
    Blurtman says:

    RE: SMW @ 18 – But they are American nimrods, by gum, and armed to the teeth.

    Rate this comment: Thumb up 0

  20. 20
    Erik says:

    RE: The Tim @ 17
    I was doing some good quality learning about how to calculate capitalization rate for a prospective rental property and I ran out of comments on the open thread, so I brang the conversation here since I had 5 comments left.

    A good idea for a future post could be how to evaluate the feasibility of a rental property. It seems like people including myself are unclear on the topic. You could discuss calculating capitalization rate and return on investment calculations. We could then freely discuss the assumptions and inputs that go into the calculation. It seems people are interested in that.

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  21. 21
    doug says:

    This consumer confidence chart is a classic 3 wave (Elliot Wave)
    My view and take on this chart says that the 3rd down wave also the fifth
    should be the deal breaker. I had hoped that maybe the big crash that is coming would hold off for a year. Unfortunately thats not going to be the case.

    The Elliot Wave mega-crash is coming this fall.

    To many neagtive big news stories and to many messes that were not cleaned up. We are all about to learn valuable lessons about greed and money.

    Rate this comment: Thumb up 0

  22. 22
    Azucar says:

    By wreckingbull @ 16:

    RE: Erik @ 13 – That is what the weekly open thread is for. Do you understand that or do we need to explain that to you in simpler terms?

    THIS is not the weekly open thread.

    And the real weekly open thread is not the “should I rent out my Juanita condo that I got a good deal on and was super smart to buy and fix because I’m up over $100,000 on it” thread, either. Topics like that could/should come up in it occasionally, but not every week, and, I could be wrong but I don’t think that The Tim’s intent with this overall blog was for it to be a place for YOU to get educated about what you want to learn about.

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  23. 23
    Erik says:

    RE: Azucar @ 22
    Why does me asking questions about how to proceed with my project make you so angry? If I had someone I could ask not on this website about these things I would.

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