MONEY

Healthy U.S. consumer takes spotlight this week

Paul Davidson
USA TODAY
Consumer spending likely rose modestly in February.

The American consumer takes center stage in a relatively light week of economic news. Reports will highlight the latest data on consumer confidence and spending, home prices, and the final estimate of economic growth in the fourth quarter.

Consumer confidence surged to a 15-year high in February on strong job and income growth and lofty stock and home values. But gasoline prices edged higher this month, notes PNC Financial Services Group. Economists estimate the Conference Board will report Tuesday that its index of consumer confidence dipped slightly in March but remained near the recent record.

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While climbing house prices have brightened the outlook of homeowners, they’ve made purchasing a house more challenging, especially for first-time buyers. Home prices in 20 of the largest metro areas were up 5.6% annually in December, faster than the previous month’s 5.2% pace, according to the S&P CoreLogic Case-Shiller index. Low housing supplies have been pushing up prices, and there’s little letup in sight. Economists reckon S&P will report the index maintained its 5.6% annual pace in January.

The Commerce Department left its initial estimate of fourth-quarter economic growth unchanged at a 1.9% annual rate as business investment was weaker than first believed, offsetting stronger consumer spending. In its third and final estimate, Commerce will likely revise up business investment and stockpiling, says Lewis Alexander, Nomura’s chief U.S. economist. But he says government spending could be trimmed. All told, economists expect Commerce to announce Thursday that the economy grew at a slightly faster 2% pace, in line with the recovery average and down from 3.5% in the third quarter.

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A more recent snapshot of consumer spending comes Friday. Household outlays generally have been strong as consumers respond to the improved labor market and rising stocks. But retail sales slowed sharply last month, a shift that economists attributed to delays in tax refunds. That likely filtered into consumer spending overall, Alexander says, though he notes that outlays for services  helped offset some of the weakness. Economists expect Commerce to report that consumer spending increased a modest 0.2% in February.