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Investing Specialists

U.S. Consumers Have Gas in the Tank

Wage and income growth should drive consumption higher in the months ahead.

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Because we are writing this report midday Wednesday, and markets around the world are open on Thursday and Friday, we didn't think it made a lot of sense to report our normal full market summary by category. However, most equity markets were flat to slightly down at that halfway point, and U.S. Treasuries and commodities were both stronger, most likely because of the downing of a Russian plane by Turkey.

It was an unusually big week for U.S. economic releases despite the holiday. As expected, none of the data was particularly market-moving and a lot of it was dead-on expectations. Housing data was largely consistent with expectations and existing-home sales, new home sales, and single-family housing permits all showed convergence to something that looks like an 8% year-over-year growth rate. That rate may prove difficult to improve on in 2016 as home inventories are low, prices are high (our 5%-6% home-price increase forecast for 2015 is looking a tad low after this week’s data), and interest rates are likely to be higher.

Robert Johnson, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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