After unexpected strength, consumer spending spiked retail sales to end the week. However, Thursday’s report caused little reaction. Beyond that, major economic news held scarce this week. Thus, mortgage rates ended nearly unchanged.
Consumer Spending Spikes Retail Sales
Consumer spending accounts for about 70% of all economic activity in the U.S. Therefore, investors closely watch the retail sales data for growth indications. In March, consumer spending spiked retail sales. In fact, retail sales jumped 1.6% from February. This greatly surpassed the consensus forecast of 1.0% and the largest monthly increase since September 2017. This followed a small decline in February.
Analysts attribute numerous factors to this outcome. During the fourth quarter, the stock market experienced unusually high levels of volatility. Also, the government shut down in December and January. In addition, tax refunds saw a different size and pace of issuance. Changes in the withholding tables resulted in smaller refunds on average. Beyond that, the IRS slowed its pace of distribution.
Home Builder Confidence Rebounds
Aside from consumer spending spiking retail sales, the latest The monthly survey of home builder confidence from the National Association of Home Builders (NAHB) showed a further rebound from the weakness seen at the end of last year.
During the fourth quarter, the index unexpectedly plunged from the upper 60’s to the mid-50’s. However, home builder since returned to levels around the current reading for April of 63. When the index is above 50, it generally indicates positive sentiment among home builders.
Looking Ahead After Consumer Spending Spikes Retail Sales
After consumer spending spiked retail sales, investors look ahead to Monday’s Existing Home Sales report and Tuesday’s New Home Sales report. Durable Orders, an important indicator of economic activity, come out on Thursday.
First quarter GDP, the broadest measure of economic growth, releases on Friday. In addition, news about trade negotiations between the U.S. and China holds the potential to affect mortgage rates. Mortgage markets close on April 19th in observance of Good Friday.
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