News and Information from Strategic Real Estate Opportunities

Real gross domestic product (GDP) decreased at an annual rate of 0.7% in the second quarter of 2009, according to today’s third estimate.  This follows a decrease of 6.4% in the first quarter.

The Conference Board Consumer Confidence Index, which had improved in August, dipped in September. The Index now stands at 53.1 (1985=100), down from 54.5 in August. The Present Situation Index decreased to 22.7 from 25.4. The Expectations Index declined to 73.3 from 73.8 last month.

Consumers’ assessment of current conditions was less favorable in September. Those claiming business conditions are “bad” increased to 46.3 percent from 44.6 percent, while those claiming conditions are “good” increased to 8.7 percent from 8.5 percent. Consumers’ appraisal of the job market was also less favorable. Those claiming jobs are “hard to get” increased to 47.0 percent from 44.3 percent, while those claiming jobs are “plentiful” decreased to 3.4 percent from 4.3 percent.

Consumers’ short-term outlook was also slightly more pessimistic. Those anticipating an improvement in business conditions over the next six months decreased to 21.3 percent from 22.2 percent, while those expecting conditions to worsen decreased to 15.0 percent from 15.2 percent.

The labor market outlook was virtually unchanged. Those expecting more jobs in the months ahead edged down to 17.9 percent from 18.0 percent, while those expecting fewer jobs remained the same at 23.1 percent. The proportion of consumers expecting an increase in their incomes increased slightly to 11.2 percent from 10.8 percent.

New orders for manufactured durable goods in August 2009 decreased 2.4%, to $164.4 billion.  Excluding transportation, new orders were virtually unchanged.  Overall shipments declined 1.4%, while non-defense capital goods shipments decreased 2.4%.  Inventories declined 1.3% in August.

Employers took 2,690 mass layoff actions in August that resulted in the separation of 259,307 workers,seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month,the U.S. Bureau of Labor Statistics reported today. Each action involved at least 50 persons from a single employer. The number of mass layoff events in August increased by 533 from the prior month, and the number of associated initial claims increased by 52,516. Over the year, the number of mass layoff events increased by 803, and associated initial claims increased by 70,356. Year-to-date mass layoff events (21,184) and initial claims (2,162,202) both recorded program highs through August. In August, 900 mass layoff events were reported in the manufacturing sector, seasonally adjusted, resulting in 93,892 initial claims. Over the month, the number of manufacturing events increased by 279, and associated initial claims increased by 21,626.

The Conference Board Consumer Confidence Index, which had retreated in July, rebounded in August. The Index now stands at 54.1 (1985=100), up from 47.4 in July. The Present Situation Index increased slightly to 24.9 from 23.3 last month. The Expectations Index improved to 73.5 from 63.4 in July.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world’s largest custom research company. The cutoff date for August’s preliminary results was August 18th.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer confidence, which had posted back-to-back monthly declines, appears to be back on the mend. The Present Situation Index increased slightly, mainly the result of an improvement in consumers’ assessment of the job market. The Expectations Index improved considerably and is now at its highest level since December 2007 (Index, 75.8). Consumers were more upbeat in their short-term outlook for both the economy and the job market in August, but only slightly more upbeat in their income expectations. And, as long as earnings continue to weigh heavily on consumers’ minds, spending is likely to remain constrained.”

Consumers’ assessment of current conditions improved slightly in August. Those claiming business conditions are “bad” decreased to 45.6 percent from 46.5 percent, however, those claiming conditions are “good” decreased to 8.6 percent from 8.9 percent. Consumers’ appraisal of the job market was more favorable this month. Those saying jobs are “hard to get” decreased to 45.1 percent from 48.5 percent, while those claiming jobs are “plentiful” increased to 4.2 percent from 3.7 percent.

Consumers’ short-term outlook was much improved from last month. Those expecting an improvement in business conditions over the next six months increased to 22.4 percent from 18.4 percent. Those anticipating conditions to worsen decreased to 15.8 percent from 19.0 percent.

The labor market outlook was also more upbeat. The percentage of consumers expecting more jobs in the months ahead increased to 18.4 percent from 15.5 percent, while those expecting fewer jobs decreased to 23.3 percent from 26.1 percent. The proportion of consumers expecting an increase in their incomes increased slightly to 10.6 percent from 10.1 percent.

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residential
construction statistics for July 2009:

BUILDING PERMITS

Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 579,000.
This is 2.7 percent (±1.2%) above the revised July rate of 564,000, but is 32.4 percent (±1.3%) below the August 2008 estimate of
857,000.

Single-family authorizations in August were at a rate of 462,000; this is 0.2 percent (±1.1%)* below the revised July figure of
463,000. Authorizations of units in buildings with five units or more were at a rate of 98,000 in August.

HOUSING STARTS

Privately-owned housing starts in August were at a seasonally adjusted annual rate of 598,000. This is 1.5 percent (±7.9%)* above
the revised July estimate of 589,000, but is 29.6 percent (±6.0%) below the August 2008 rate of 849,000.

Single-family housing starts in August were at a rate of 479,000; this is 3.0 percent (±5.7%)* below the revised July figure of 494,000.
The August rate for units in buildings with five units or more was 115,000.

HOUSING COMPLETIONS

Privately-owned housing completions in August were at a seasonally adjusted annual rate of 760,000. This is 5.5 percent (±14.0%)*
below the revised July estimate of 804,000 and is 25.3 percent (±9.6%) below the August 2008 rate of 1,018,000.

Single-family housing completions in August were at a rate of 489,000; this is 1.6 percent (±12.7%)* below the revised July figure of
497,000. The August rate for units in buildings with five units or more was 256,000.

New Residential Construction data for September 2009 will be released on Tuesday, October 20, 2009, at

On a seasonally adjusted basis, the Consumer Price Index increased 0.4 percent in August after being unchanged in July.  The index for all items less food and energy increased 0.1 percent in August, the same increase as in July.

Real average hourly earnings fell 0.2 percent from July to August 2009. This decline stemmed from the Consumer Price Index for Urban Wage Earners and Clerical Workers, up by 0.6 percent, outpacing 0.3 percent growth in average hourly earnings. Over the year real average hourly earnings increased 4.5 percent.

Business inventories in July 2009 declined 1.0% from the prior month and decreased 11.8% from the prior year, to $1,332.5 billion.  Sales rose 0.1% from June but declined 17.8% from July 2008, to $978.4 billion.

Retail sales in August 2009 rose 2.7% from July but declined 5.3% from August 2008, to $351.4 billion.  Excluding automobiles, August 2009 retail sales increased 1.1% from the prior month but decreased 6.2% from the prior year, to $287.2 billion.