LIVE MARKETS-Fed feast: Consumer confidence, durable goods, new home sales, et al
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FED FEAST: CONSUMER CONFIDENCE, DURABLE GOODS, NEW HOME SALES, ET AL
Tuesday's economic data offered a smorgasbord of hot and cold dishes to investors and the Federal Reserve, which convenes today for its penultimate 2026 policy meeting.
But first, the mood of the American consumer, whose spending accounts for about 70% of the US economy, has lightened considerably this month, according to the Conference Board (CB).
CB's October consumer confidence index USCONC=ECI jumped 7.5 points to land at 91.7, or 1.7 points north of consensus.
Digging deeper, survey participants' assessment of present conditions improved by 7.7%, while near-term expectations grew 10.5% cheerier.
"Despite the increase in October, consumer confidence remained on the long-term downward trend that’s persisted over the past few years," says Fergus McCormick, senior economist at CB. "Consumers planned less spending on services and durable goods over the next six months."
"This likely reflected higher price levels and persistent inflation, which eroded consumers’ purchasing power,” McCormick adds.
Data geeks will appreciate the narrowing gap between the present situation and expectations, which — as seen in the graphic below — is often a harbinger of recession.
An uptick in job confidence — or the share of respondents saying jobs are "plentiful" minus the share saying jobs are "hard to get" — follows the improved labor market participation rate, which has bounced off multi-year lows.
New orders for long-lasting, US-made goods increased by 1.8% last month, an acceleration from August's upwardly revised 0.1% gain. That's a tad stronger than the 1.8% increase analysts anticipated.
As is often the case, much of the lift was provided by airplanes.
Drilling below the headline of the Commerce Department's report — which covers everything from waffle irons to attack drones — a 28.4% surge in commercial aircraft and a 5.7% increase in defense aircraft helped boost the topline. Excluding transportation items, new orders rose by a less impressive 0.5%.
The 3.9% rise in orders for computers and computer-related items gave evidence of the ongoing AI buildout.
"The strong AI spending continues to drive business investment, and there are spillovers and strengthening capex outside of tech even amid higher borrowing rates and energy costs," says Kathy Bostjancic, chief economist at Nationwide.
New orders for core capital goods — which exclude aircraft and defense categories and are considered a barometer of US corporate capex plans — increased by 0.5%, weaker than the 0.7% consensus, and a marked slowdown from the prior month's 1.6% gain.
"Survey measures of capex intentions, however, also suggest that core equipment investment will lose momentum ahead, with a slowdown especially likely if the recent surge in borrowing costs is sustained," writes Oliver Allen, senior US economist at Pantheon Macroeconomics.
Crossing the street to the housing market, sales of freshly constructed single-family US homes USHNS=ECI dipped by 0.6% in September to 676,000 units at a seasonally adjusted annualized rate (SAAR), according to the Commerce Department.
That's not as bad as economists feared, printing an even 4% north of the 650,000 units SAAR analysts predicted.
The decrease marks a fractional reversal of August's downwardly revised 5.1% increase.
Regionally, a 28.0% jump in the Northeast and a 21.4% gain in the West were held in check by declines in the South and Midwest of 6.6% and 7.3%, respectively.
At September's sales rate, it would take 8.4 months to sell every new single-family home on the market, down from 8.5 months in August.
The average 30-year fixed mortgage rate has hovered north of 6% for well over four years. That, in combination with record home prices, is pushing the prospect of home ownership beyond the realm of affordability, particularly for would-be first-time buyers.
In other housing news, home prices in major US cities increased in August, catching up with core inflation in the process.
The Case-Shiller 20-City Composite USSHPQ=ECI rose by 0.3%, nailing expectations and repeating July's monthly number. Year-on-year, the composite increased 2.7%, an uptick from the previous month's 2.5% gain and a bit hotter than the 2.6% consensus.
Despite the upside surprise, home price growth remained weaker than headline inflation for the 15th consecutive month.
"Looking ahead, we expect home price growth to slow as mortgage rates above 7% weigh on demand," says Nancy Vanden Houten, lead US economist at Oxford Economics. "Higher rates are also likely to send sellers to the sidelines, limiting the downside for prices and preventing an outright decline at the national level."
Among the cities in the composite, Chicago and New York again led the year-over-year gainers, rising 6.6% and 6.2%, respectively. On the other end of the scale, home prices in Seattle and Las Vegas were down between 1.3% and 2.0% from last year.
(Stephen Culp)
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