NEW YORK – More plans to build homes, higher stock prices and fewer people filing first-time claims for jobless aid sent a private-sector forecast of U.S. economic activity higher than expected in June.
A government report last week showed construction of new U.S. homes in June rose to the highest level in seven months. That was the "most positive housing report in ages," said IHS Global Insight economist Patrick Newport.
Where are these houses being built? And how is lending the money to make this possible?
Seven of the Conference Board index's 10 indicators rose in June, including building permits, stock prices, manufacturers' new orders for consumer goods and positive readings on jobs. Consumer expectations, manufacturers' orders for capital goods and the real money supply weighed down the forecast.
What sort of consumer goods are being produced? To use stock prices as an economic indicator reflects poorly on the Conference Board--as if they don't really have a clue of what signifies what. The problems of over-quantifying.
The biggest gainer was the "interest rate spread." That's the difference between yields on 10-year Treasurys and the federal funds rate, at which banks lend to one another, which is at a record low near zero. A big difference between the two is viewed as positive because investors are willing to lend for longer periods.
Willing to lend for longer periods? Do they have any choice, if they are trying to get some sort of return?