• No new economic data is out today, but strong corporate earnings reports seem to have US stock markets on track for a good close to the week.  What does that mean for households?
• According to data from the Federal Reserve, US households and non-profits had about $19.2 trillion in equity shares at market value, either directly or indirectly held at the end of the second quarter.  This means that a 1 percent gain or loss in the market (which can sometimes occur in an hour day) translates into a $150 to $200 billion gain or loss for household wealth.
• By comparison, households alone (excluding non-profits) had $16.2 trillion in real estate at the end of the second quarter.  This means that a 1 percent change in the market value of housing has a similar $150 to $175 billion effect on household wealth.
• Why does household wealth matter?  Studies suggest that when household wealth increases, people spend a small portion of this additional wealth.  Stabilizing home prices and stabilizing stock markets are both good for households because it may translate into more stable consumer spending which may be reflected in next week’s consumer sentiment and confidence readings.
• One potential drawback to this phenomenon is that as stock markets go up, oil prices often move in conjunction.  As oil prices go up, consumer spending rises on oil-related goods, but falls on other items.  For this reason, despite the market’s improvement since the beginning of the month, the consumer outlook improvement may be a bit muted.

Weekly Forecast

At a glance, this table shows the forecast for some of the most pertinent weekly data for REALTORS® to keep in mind. This changes from week to week as new data becomes available. For the full forecast from the latest Pending Home Sales release, click here (PDF).