September 27, 2023

Good Wednesday to you, markets faithful.

  • Today's newsletter is 1,081 words, 4 minutes.

1 big thing: 🌏 As the vibes turn

U.S. consumer sentiment index
Data: Morning Consult; Chart: Tory Lysik/Axios Visuals

A few measures of consumer sentiment are flashing warning signs that show the American vibe shifting downward again, Emily writes.

Why it matters: The data show that the recent reversal in gas prices (heading up) and in the stock market (heading down) are weighing on our mood. So is the continuing reality of living in a higher-price world.

Driving the news: After rising for much of 2023, consumer sentiment fell in September, according to polling out today from the Morning Consult/Axios Inequality Index.

  • Consumer sentiment fell 4.3% in September for higher-income households β€” earning at least $100,000 a year. It fell 2.8% for middle-income folks and 0.5% for low-income households.
  • Sentiment is measured by asking consumers how they're feeling about their personal finances and business conditions, now and in the future. Pollsters also ask if now is a good time to make a major household purchase.

"I think this is a cause for concern," said Jesse Wheeler, a senior economist at Morning Consult.

  • And there are economic headwinds to watch, he points out, including an auto strike that could grow more widespread and the potential government shutdown.

Meanwhile, the Conference Board's measure for consumer confidence fell in September for the second straight month and is now at a four-month low.

  • The group's expectations index, which measures people's short-term outlook for income, business and job market conditions β€” declined below 80 in September β€” a level that has historically signaled a recession within the year (see chart below).

The big picture: Our national mood took a hit in 2020 and though there have been swings back up, the mood hasn't yet come back to where it was pre-pandemic.

  • Inflation is playing a big role here. Though the rate of price increases has certainly come down from the highs we saw last year, prices are still higher overall β€” and they aren't going back down.
  • As Catherine Rampell at the Washington Post recently wrote, "People sometimes ask me when prices are going to 'come back down' to what they were pre-pandemic ... the short answer is: probably never."
  • And though that's good for the economy β€” deflation is generally considered a bad thing at the macro level β€” higher prices are effectively a continual bummer for consumers.

Zoom out: The consumer sentiment data tracks with political polling that shows voters in a dark mood about the economy.

  • That's a major issue for President Biden, who's tried to turn the term "Bidenomics" into something positive.
  • In one poll out this week, 44% of voters said they're worse off financially under Biden β€” the most for any president since Ronald Reagan in 1986.
  • Yes, but: Conditions swung in Reagan's favor after that, and Reaganomics ultimately proved to be a winning term.

Reality check: This is just a few months' data.

Bonus chart: Not-so-great expectations

Data: The Conference Board; Chart: Axios Visuals

2. Catch up quick

🚨 U.S. Senate, House take dueling tacks as shutdown looms. (Reuters)

🎬 Agreement to end writers' strike includes landmark rules for AI use in Hollywood projects. (Axios)

πŸ‡¨πŸ‡³ China Evergrande chairman is under police control. (Bloomberg)

3. Home prices touch new highs

Data: FactSet; Chart: Axios Visuals

A yearlong respite from rising home prices is clearly over, as a recent string of accelerating increases pushed key price metrics to new highs, according to new data out yesterday, Matt writes.

Why it matters: Housing costs are a huge issue for everyday Americans struggling with record-low affordability β€” an issue that continues to contribute to the sour public mood.

By the numbers: The S&P CoreLogic Case-Shiller national home price index for 20 large cities posted its fifth straight monthly increase in July. It is now up a slight 0.1% compared to this time last year.

  • The firm's national home price index is also now at a fresh record high, up 1% from last year.
  • Meanwhile, another closely watched gauge, the Federal Housing Finance Agency's home price index, was 4.6% higher in July compared to the prior year.

Yes, but: While the uptick in housing prices is dismaying for those hoping to get on the first rung of the property ladder, it isn't yet a threat to upsetting the steady drop in inflation statistics.

  • That's because it takes roughly six to 12 months for increases in home prices to indirectly filter into official inflation figures like the Consumer Price Index.
  • The 7.3% rise in shelter inflation in August, for example, is still reflecting the surge in home prices seen between 2020 and 2022.
  • The yearlong decline in housing prices, which lasted from February 2022 to February 2023, will be filtering into inflation numbers for months to come.

The bottom line: These housing numbers underscore the difference between the kinds of statistical readings that policymakers focus on and the on-the-ground stress that Americans continue to feel about rising costs of living.

4. U.S. Latino GDP

Data: LDC U.S. Latino GDP Report; Chart: Axios Visuals

The total economic output of U.S. Latinos reached $3.2 trillion in 2021 β€” only four countries produced higher GDP, according to a report released this morning, Axios' Russell Contreras writes.

  • Why it matters: The report shows the magnitude of U.S. Latino buying power and economic output, which grew by more than 14% in 2021 despite the pandemic's disproportionate impact on Latino communities.

Go deeper

5. Health care's "pink tax"

Average out-of-pocket medical spend, by age
Reproduced from Deloitte; Chart: Axios Visuals

At every age, women have higher out-of-pocket expenses for their health care than men despite having similar health insurance, according to a new Deloitte report, Axios' Tina Reed writes.

Why it matters: Much has been made about a "pink tax" when it comes to higher costs for women's consumer products. The new analysis argues there's a similar burden when it comes to women's health coverage.

By the numbers: Even when removing maternity care from the equation, women each year are paying $15.4 billion more out of pocket for health care, according to Deloitte's actuarial analysis of more than 16 million people who have employer-sponsored coverage.

Between the lines: Women use health care more often, with 10% more in total health expenditures relative to men. But they still saw out-of-pocket expenditures that were 18% higher after removing maternity costs, the authors wrote.

  • The authors said this may be partly explained by the different kinds of care recommended for women, such as earlier annual checkups and gynecological examinations.
  • They also cited the relatively high cost of breast cancer imaging compared to screening for other cancer types, and costs associated with the effects of menopausal transitions.
  • The authors recommend an examination of benefit design with an analysis of how it impacts different genders.
  • They also recommend employers consider increased spending β€” an estimated $133 per enrolled employee annually β€”Β to create financial equity in their health care benefits.

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Today's Axios Markets was edited by Kate Marino and copy edited by Mickey Meece.