Home prices fall, Consumer Confidence declines, Inflation up.

February 26, 2008 - Forex Economic News

There was a number of major news releases out of the U.S. today which were a drag for the U.S. economy. Home Prices continued to fall, Consumer Confidence fell and PPI data showed that inflation is up. The inflation data promises to give the Fed Policy Committee headaches in their upcoming interest rate decisions. The U.S. dollar has been in retreat against all the major currencies from the news releases today and it is approaching all time lows verses the euro. The EUR/USD pair is trading at 1.4929 today in the U.S. afternoon session.

Home Prices fall in S&P/Case-Shiller Index.

Home prices in the U.S. continue to decline as the Standard & Poors/Case-Shiller index released today showed that home prices fell 9.1 percent in December compared to a year ago. The S & P’s/Case-Shiller Home Price Index measures sale prices of existing single-family homes nationally and tracks 10-city and 20-city composite home price measurements. The 4th quarter of 2007 declined 8.9 percent compared to the 4th quarter of 2006 and marked the largest decline in the history of the index. Overall for the year of 2007, single-family homes registered a decrease in prices. A 10-city composite declined a record 9.8 percent annual rate while the 20-city composite declined 9.1 percent. Robert J. Shiller, Chief Economist at MacroMarkets LLC summed up the housing statistics in the report, "We reached a somber year-end for the housing market in 2007."

Consumer Confidence drops in February Survey.

Consumer confidence declined in data released today by the Conference Board, which produces the Consumer Confidence Index. In a survey of 5,000 households, the index showed that consumer confidence declined from 87.3 in January to 75.0 in February. The Present Situation index dropped from 114.3 in January to 100.6 in February while the Expectations index fell from 69.3 in January to 57.9 in February. According to the survey, consumers saw a more negative outlook for February in the present-day conditions, short-term expectations and the job market than the January survey results. The survey also registered lower scores this month in business conditions as more consumers rated business conditions as bad and the outlook for business conditions as worse for 6 months from now.

Inflation on the rise.

The U.S. Department of Labor released data on Producer Prices that showed inflation increased in January. The Producer Price Index for Finished Goods showed an increase of 1.0 in January after a decline of 0.3 in December. The index for energy goods increased by 1.5 percent in January after declining 3.0 percent in December. This latest inflation data follows last week's consumer prices data released by the Labor Department that showed a 4.3 percent increase from last year. These new inflation increases will complicate matters for the U.S. Federal Reserve who have been steadily cutting interest rates to spur new economic growth and now must contend with rising inflation.

Tags: S&P/Case-Shiller Index, Producer Price Index, Finished Goods, inflation data, U.S. Department of Labor, Consumer Confidence Index, Conference Board

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