Consumer Confidence Drops While Housing Starts Spike

Reports on consumer confidence and new home construction offered diverging views of the U.S. economy Friday as the University of Michigan said in a survey consumer sentiment had declined, while the federal government reported housing starts had spiked.

The University of Michigan’s preliminary index of consumer sentiment showed a decline in April to 93.2 from 95.8 in March.

The Commerce Department said that housing starts rose 6.4% in March to an annualized rate of 2.007 million

The University of Michigan report fell to its lowest point of the year and was down nearly 10% from its January high of 103.8. It’s indices of economic conditions and economic outlook both fell as well during April.

The increase in housing starts was the largest May 2003 and the rate of 2.007 million homes was the fastest since December 2003.

Consumer sentiment oftentimes can be a harbinger of future consumer spending and an indicator of future shipments of goods and materials.

Home building increases can signal increases in raw material shipments for use in construction and shipments of domestic goods for when the homes are completed.