Dallas and other housing markets yet to recover from poor consumer spending

Real estate business anywhere in the country is reeling under pressure, because of the weak economy. The national scenario reflected by many housing markets convey the same message of dullness – with minor changes here and there in markets like Dallas, Austin and similar others in Texas. People should have surplus money for investments like home buying and this is where it is lacking – as witnessed by recent reports.

The Commerce Department’s latest report says personal spending was unchanged in June, because personal incomes did not increase for the month. For a third month in succession, consumer demand as well as income for households did not show a change and remain flat. For a nine months period taken for study, the lack of growth is the weakest in June.

For the quarter ended June, the economy ended on a weak note – since there was no apparent growth for consumer spending and personal incomes.  Financial analysts are not in favor of good things to happen in the second half of the year either. They point out as the reasons – high unemployment; consumer confidence is shaky; and housing markets of the country are facing renewed troubles of delinquencies etc.

As for personal savings rate –  it rose in the month of June to 6.4 percent of after-tax incomes, showing that people are getting ready to meet tough times ahead. Compared to the year of 2007, when the U.S. economy was not facing recession as of now, the personal savings rate was 2.1 percent on an average. Now it has increased three times in 2010.

Economists indicate that 70 percent of total economic activity, depends upon consumer spending and therefore it should be monitored closely, to assess the growth or decline of the economy.

According to government reports last week, the economic growth, which is measured by gross domestic product, showed a slowing trend of 2.4 percent during the quarter of April to June. Compared to the previous quarter it is a decrease – there was a growth rate of 3.7 percent in the first 3 months and 5 percent spurt in the last quarter of 2009.

Summing up, the growth in employment is the key to personal incomes, which will induce consumer spending and bring back the economy on to its original track.

Posted by Amitesh Kumar on Aug 11 2010. Filed under Housing. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry