Why is the Atlanta Fed so bullish?
Housing activity up in southeast, other indicators soft
The housing market in the Southeast ended 2013 on a somewhat positive note, according to the latest Data Digest, from the Regional Economic Information Network, a part of the Federal Reserve Bank of Atlanta, and 2014 should restart solid after a first quarter falter.
The report provides a state-by-state snapshot of economic conditions in the Southeastern states.
Builder and broker respondents to the Atlanta Fed's December poll reported flat or slightly stronger home sales and slightly higher prices on a year-over-year basis.
After reporting slower buyer traffic for several months, mortgage brokers and home builders indicated in December that buyer traffic was ahead of year-ago levels.
Surveyed businesses were mostly positive about the outlook for sales over the next three months, with more than half of builders and brokers expecting an increase. However, fewer contacts expected an improvement compared to one year ago, the Digest noted.
Atlanta Federal Reserve President Dennis Lockhart said the recent spurt of unusually harsh winter weather is helping to cast a bit of a shadow on estimates of underlying economic conditions at the start of 2014.
“Mixed incoming data on economic activity in December and January have raised concerns about whether the economy has traction at [the] faster growth pace [that we saw in the second half of 2013],” Lockhart said. “There appears to have been a slowdown. Weather effects may very well have dampened retail sales, auto sales, housing starts, manufacturing activity, and of course transportation, among others.”
The Old South region's labor markets continued to make some progress in December. Employment in the government sector remained weak, but other industries such as professional and business services and leisure and hospitality have seen a stronger recovery.
“...the current quarter is difficult to read as an indication of the most likely story for the full year 2014 and first part of 2015. The recent mixed data could be just a temporary thing—as the weather explanation suggests—or something more fundamental going on. While I am tracking the numbers carefully, at the moment I think it's too early to draw a conclusion,” Lockhart said. “Even though the first quarter this year may turn out to be soft, I am ‘looking through’ the recent information to a full year of sustained higher growth. In that sense, my outlook remains optimistic for the full year.”