Watching the Road Signs for a Look Ahead

Retail sales last month were sluggish, especially when compared to a year ago (down 0.1% year-over-year).  It would be tempting to think that the seemingly weak performance was tied to the tax hike that working Americans experienced beginning in January.  While this can’t be totally discounted, it doesn’t appear to the the case. 

As was reported in the Wall Street Journal, the personal finance website Bankrate.com survey showed that 48% of consumers didn’t notice a change in their 2013 paychecks.  It is either nice to be blissfully unaware, or perhaps some folks that took the survey didn’t actually get paychecks. 

The bottom line is don’t expect dramatic foreboding from consumer data for a while yet; it is too soon to see the trends turn problematic in accordance with our 2014 macroeconomic forecast.

February New Home Sales came out, and the year-over-year increase of 10.0% was apparently a stimulant to the stock market on March 26.  However, when we look at the trend, we see that a 10.0% year-over-year gain is the slowest pace in 12 months. 

Continuing that trend will mean that a cyclical reversal is developing in New Home Sales.  We should have a statistically significant transition around midyear and that will be the road sign for 2014.

Plan for growth in most markets in 2013, but don’t be blind to the road signs that may tell us we have a different trend ahead for 2014.