MilePost: housing, consumer debt, consumer expectations

A good week for housing
After a series of numbers on US housing this week, that market still looks like it is a core part of the US growth story. Both the Case-Shiller home price indices and the FHFA house price index came in at expectation with prices rising lately at an annualized rate of between 5% and 6%. Existing home sales came in slightly above expectations at an annualized 5.47 million. New home sales, a volatile number, disappointed at 594,000. The Fed has cited housing as a core source of growth, with falling unemployment and low interest rates helping support that market. That looks unlikely to change.

The graying of American debt
Older Americans today carry much more debt than they did a decade ago, according to recent New York Fed research, and that may be a plus for the credit quality of bank loan portfolios. From 2003 through 2015, debt per capita among older borrowers grew in most major categories – mortgages, home equity, auto and even student loans. Only per capita credit card debt stayed roughly the same. The graying of American debt could reflect the credit boom of the 2000s and the tightening that started in 2008, which tended to lock younger borrowers out. The generally stronger credit scores of older borrowers, relatively stable income streams and experience with debt should bode well for aggregate bank loan credit quality. The Fed post is at Liberty Street Economics.

 Not-so-great expectations
A rising share of Americans expect unemployment to be higher a year from now, according to a new data series released this week by the New York Fed. Public expectations of higher unemployment rose throughout 2015, with the public seeing a 33% chance in early 2015 but a 38% chance in early 2016. The Fed also released data showing weakening consumer expectations of being financially better off a year out, stable expectations for stock prices, falling expectations for gold prices and a falling expected growth rate for government debt. The post on consumer expectations is at Liberty Street Economics.