The Federal Reserve’s Beige Book is out, and it’s showing a spate of good news for the economy, including one often overlooked indicator of consumer confidence and the U.S. housing market.
The Beige Book, released by the Federal Reserve of St. Louis on July 29, shows that the U.S. economy is coming together in some parts of the country but unraveling somewhat in other parts of the country (particularly in Atlanta and Chicago).
Overall, manufacturing and service sectors are holding their ground (albeit shakily), but it’s the tourism and travel sector that may tell the story about the housing market going forward. According to the Beige Book, tourism activity has increased in the U.S. across the board, with some weakness along the Gulf of Mexico after the BP oil spill.
"Tourism activity increased in the San Francisco, New York, Minneapolis, Richmond, Kansas City and Atlanta Districts," the Beige Book says. "Atlanta reported that leisure travel decreased in the Gulf Coast, but some of the lost tourist traffic was offset by the presence of cleanup crews, oil company workers and the National Guard.”Tourism is a key benchmark of U.S. consumer confidence. With U.S. home values in free fall since 2008, consumers have had a Vulcan death grip on their wallets and pocketbooks.
But if the Beige Book is spot on, then we may be seeing a reversal of fortune for the housing market, as Americans feel slightly more comfortable about spending money on things like flights to San Francisco or golf trips to Myrtle Beach.
Here’s the thinking on tourism and housing. If consumer sentiment has finally hit bottom, and Americans are hitting the road again in greater numbers, that should help propel the economy forward, and maybe even trigger more home sales that would reduce bloated inventories and stabilize the U.S. housing market.