by Calculated Risk on 8/29/2012 09:51:00 PM

A few excerpts from Michelle Meyer at Merrill Lynch: Home is where the heart is

The turn in home prices, although modest at the start, will help to boost consumer confidence. Simply believing that prices have stopped falling should provide a sense of relief to households. It will also allow households to have greater mobility, generating a more efficient labor market and greater churn in the housing stock.
...
While the housing market is far from normal, the bottoming in home prices marks an important shift for the economy. Home-price appreciation will slowly start to support household balance sheets and improve confidence, creating a positive feedback loop with the credit market and broader economy. It is gradual and fragile, but we believe it has finally begun.

I made a similar argument a few weeks ago: The economic impact of a slight increase in house prices.

On Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 370 thousand from 372 thousand.

• Also at 8:30 AM, the BEA will release the Personal Income and Outlays report for July. The consensus is for a 0.3% increase in personal income in July, and for 0.4% increase in personal spending. And for the Core PCE price index to increase 0.1%.

• At 11:00 AM, the Kansas City Fed regional Manufacturing Survey for August will be released. The consensus is for an a reading of 5, unchanged from 5 in July (above zero is expansion). This is the last of the regional surveys for August, and all of them have been weak.



A question for the August economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).