That is saying something, especially against the backdrop of the considerable uncertainty inhibiting investment intentions and job creation on the part of the corporate sector, an uncertainty arising over US fiscal policy and the fiscal cliff in particular. Behind the uncertainty is also the concern expressed by the corporate sector over the eurozone, the slowdown throughout the global economy and, of course, the resulting loss of earnings momentum that is now likely to be reflected in the earnings season that gets underway in earnest next week.
It may be that the better tone in the US housing market is boosting consumer confidence. House prices are now on the turn and mortgage rates are at all-time lows, thanks to the Fed’s efforts to support the economy. The interesting feature is that the climb in the headline index of the survey was driven by the expectations component to new highs not seen since 2007. That suggests an optimistic ‘look ahead’ into next year, either through rose tinted glasses, or on the basis of the hugely reflationary power of the housing market, which would be great for consumer spending, investment and jobs. The point was developed persuasively in an article in this morning’s Financial Times (page 15). A little time will tell which of the two it is. However, the latter is part of what the Fed is aiming for and the stability in the housing market suggests it may well be the more likely prospect.