Consumer confidence and housing market look up

Americans are beginning to look up after the recession, with expectations of consumer sentiment for the next six months to hit the highest point since the recession began.

On Tuesday, Aug. 25, the national gauge of home prices posted its first quarterly increase in three years. While the news is encouraging, home prices and confidence levels must continue to steadily rise in order to see the economy back on the healthy track.

People's spending decisions depend more on whether they have money in their pocket than on how they feel," says Bill Cheney, chief economist at John Hancock Financial. This is not very good news, and increased spending is very much needed in order to see a healthy economy once again.

Consumer confidence is monitored closely because 70 percent of the economic activity in the U.S. is from consumer spending. According to a Yahoo News article, consumer confidence is looking up, and is showing signs of life.

Anything above a reading of 90 is good. In February, consumer confidence was down to 25.3. Consumer Confidence for August is at 73.5, up 10.1 from July's 63.4. The good news: More people are considering buying a home or car in the next six months than they were willing to in July.

Also, the housing market seems to be slowly coming back to life. Home prices are at levels that were last seen in 2003, alhough they are still down 15 percent from last year. Consumer are still hoping for rising home prices.

"An upturn in prices has to ease some of the pain and may even get some people to loosen up on their wallets a touch," says Joel Naroff, chief economist at Naroff Economic Advisors. "An improving housing market coupled with better consumer spending could ensure that the recovery takes hold."