Home prices are surging. Job growth is strengthening. And stocks are setting record highs.
All of which explains why US citizens are more hopeful about the economy than at any other point in five years.
Consider Michael Quintos, head of a Chicago advertising agency that helps small businesses market themselves through social media. Quintos sees more optimism at work and among friends and relatives.
Photo: AFP
“A year ago, I had more friends asking me if I knew anybody who was hiring,” he says. “Now I have more people who are hiring asking me if I know anyone looking for a job.”
At work, Quintos is finding it easier to land customers. In the past few months, businesses that have asked about his services have been more likely to follow through and hire him. A year ago, most were wary.
“I’ve had more work than I can handle,” Quintos says. As a result, he hired a Web designer last week.
Investors on Tuesday celebrated the latest buoyant reports on consumer confidence and housing prices, which together suggest that growth could accelerate in the second half of this year.
A report from the Conference Board, a private research group, showed that consumer confidence jumped this month to a reading of 76.2, up from 69 last month. That is the highest level since February 2008, two months after the Great Recession officially began.
A separate report showed that US home prices jumped nearly 11 percent in March compared with a year ago, the sharpest 12-month increase since April 2006. Prices rose year-on-year in all 20 cities in the Standard & Poor’s/Case-Shiller home price index.
The economic news helped send the Dow Jones Industrial Average up 106 points to close at a record. The Dow has rocketed nearly 18 percent this year. And the Standard & Poor’s 500 Index is on track for its seventh straight monthly gain, the longest winning streak since 2009.
Surging stock prices and steady home-price increases have allowed Americans to regain the US$16 trillion in wealth they lost to the Great Recession.
Higher wealth tends to embolden people to spend more. Some economists have said the increase in home prices alone could boost consumer spending enough to offset a Social Security tax increase that has reduced paychecks for most Americans this year.
The Conference Board survey said consumers are also more optimistic about the next six months. That should translate into greater consumer spending, substantial growth in hiring and faster economic growth in the second half of this year, says Thomas Feltmate, an economist with TD Economics.
The board’s survey found that optimism is growing mostly among those earning more than the median household income of roughly US$50,000. For those households, the confidence index jumped to 95.1 from 85.3.
Consumers’ outlook on the job market also improved last month. The percentage who said jobs are plentiful rose, and the percentage who said they are hard to find declined. Economists say the shift suggests that the pace of hiring could pick up.
The economy has added an average of 208,000 jobs a month since November last year. That is well above the monthly average of 138,000 during the previous six months. The job growth has helped reduce the unemployment rate to a four-year low of 7.5 percent.
The economy grew at an annual rate of 2.5 percent in the January to March quarter, up from a rate of just 0.4 percent in the October to December quarter last year. The fastest expansion in consumer spending in more than two years drove the economy’s growth.
Many economists think growth is slowing slightly in the current quarter to an annual rate between 2 percent and 2.5 percent. However, plenty of analysts say growth should strengthen in the second half of the year, boosted by the gains in housing and employment.
One potential obstacle to further economic gains is that workers’ pay is rising only modestly. Without faster growth in pay, some consumers may be reluctant to keep spending more.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts