Consumer Confidence Plummets, New Home Sales Sink

Posted on

While April showers may bring cheery May flowers, U.S. consumers took a decidedly more dour approach to their finances and the economy this spring. Consumer confidence and new home sales data revealed widening cracks in the economy amid still-high interest rates and elevated inflation.Gold on American dollar bills

Gold continues to trade to ever-higher levels in 2024 and hit another new record high in May climbing above $2,400 an ounce. Investors are turning to gold in droves, piling into the safe-haven investment as economic uncertainty increases.

Consumer Sentiment Tumbles 10% in May

Consumer sentiment slid 10% in May as Americans worry the job market could weaken and as high interest rates took a toll, according to the final University of Michigan Surveys of Consumers. The Consumer Sentiment Index slid to 69.1 in May, down from 77.2 in April.

The Michigan sentiment report revealed that Americans are worried that unemployment could rise, and that interest rates will remain high. Consumers aren’t happy about the ongoing high level of prices for so many everyday goods and services. The still-high inflation is straining lower-income household’s budgets which is seen by a rising in credit card debt levels.

In recent months, a larger number of Americans have pointed to high interest rates and tight credit conditions which make it difficult to buy homes and cars.

“Consumers expect interest rates to remain high in the future, which will make it even more difficult for consumers to make large purchases,” said U-M economist Joanne Hsu, director of the Surveys of Consumers.

High Mortgage Rates Keep Homebuyers Sidelined This Spring

The 2024 home sales season is off to a disappointing start amid a fresh jump in mortgage rates and high home prices. The just released April single family new home sales fell a bigger-than-expected 4.7% in April to 634,000 units, the Commerce Department said.

The sharper-than-expected decline in homes sales coincided with a resurgence of higher mortgage rates and reveals that the housing market is losing steam during what should be prime home buying season for Americans.

The average 30-year fixed mortgage rate climbed again in April topping the 7% mark, according to Freddie Mac. The median sale price of a new home stood at $433,500 in April.

Gold’s Shining Moment

The new economic reports adds to the growing evidence that the U.S. economy is facing headwinds as we head into the second half of the year. Rising concerns among Americans about their own personal financial balance sheet could have a big impact on the economy ahead as consumer spending is a major driver of overall economic growth.

Investors have been trading their dollars for gold this year at a brisk pace, driving gold up as much as 18% year-to-date at the May price peak. Wall Street remains positive on the outlook for gold ahead as the 2024 gold rush is just getting started.

How is your personal financial balance sheet? If you are concerned about the economy or your portfolio, the time is ripe to increase your allocation to gold. We are here to help.

Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world and the latest tangible assets news delivered to your inbox weekly.