U.S. Gasoline Prices Show Continued Strength

The price for a gallon of regular gasoline increased to $3.44 (-9.0% y/y) last week, the third consecutive week of increase from the $3.29 low. Nevertheless, prices remained below the $3.78 per gallon peak reached in February of last year. Haver Analytics constructs seasonal factors to account for seasonal volatility. The adjusted price ticked lower last week at $3.55 per gallon, down from $3.94 in February last year.

The per barrel cost of WTI crude oil also strengthened to $102.74 (9.0% y/y) last week but remained lower than the $108.67 high in early September. Yesterday, prices edged higher to $102.82 per barrel. Brent crude oil prices also rose  last week to $109.83 per barrel (-5.0% y/y) and yesterday held steady.

Natural gas prices moved lower last week to $5.98 per mmbtu but remained up sharply from prices twelve months ago. Yesterday, prices increased to $6.28 per mmbtu.

The demand for all petroleum products increased 3.0% y/y last week. Gasoline demand fell 1.1% y/y. Residual fuel oil needs, used for heating, strengthened 11.4% y/y while distillate demand jumped rose 4.4% y/y. Inventories of crude oil and petroleum products fell 3.4% y/y.

The energy price data are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY database. The daily figures are in DAILY and the petroleum demand and inventory figures are in OILWKLY.

The U.S. House Price Index from the Federal Housing and Finance Agency (FHFA) improved by 0.8% during December and lifted prices during all of last year by 7.7%. That was the strongest rise since 2005. During the last twelve months prices rose by double-digits in the Pacific and Mountain regions of the country. Prices remained down, however, by double digits from the pre-recession peaks.  

December home prices were strongest in the West South Central (7.2% y/y), East South Central (4.2% y/y) and Mountain (12.6% y/y) regions of the country. Not all regions of the country showed strength. Home prices declined during December in the Middle Atlantic (+2.1% y/y) and New England (+2.7% y/y) areas.

The FHFA house price index is a weighted repeat sales index. It measures average price changes in repeat sales or refinancings on the same properties. It is based on transactions involving conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single family properties are included. The FHFA data is available in Haver's USECON database.

Consumer confidence, as measured by the Conference Board, fell to an index reading of 78.1 this month (+14.9% y/y) from January's 79.4, revised down from 80.7. The latest figure fell short of the Action Economics Consensus Forecast reading of 80.1. During the last ten years there has been a 45% correlation between the level of confidence and the three-month change in real personal consumption expenditures.

By age group, confidence deteriorated amongst individuals over 55 years old. The 10.0% m/m decline (+3.2% y/y) reversed increases during the prior two months. Confidence amongst individuals aged less than 35 years old made up some of this decline with a 10.3% m/m rise (24.7% y/y). Respondents aged 35-54 years old became slightly more confident m/m (20.9% y/y).

The expectations confidence indicator led the overall reading lower with a 6.3% decline (+4.6% y/y) to 75.7. The present situations reading offset some of that downward pressure with a 5.7% rise (33.1% y/y) to 81.7. Business conditions were rated as good by 21.5% of respondents, an expansion high. Only 16.3%, however, thought they would be better in six months, down from 21.4% who thought so in June. Jobs were viewed as hard to get by a steady 32.5% of respondents, an expansion low. Only 13.3% thought that there would be more jobs in six months. A slightly improved 0.9% of respondents expected to buy a new home in six months. Just 45.5% were going to buy a major appliance, the least since early 2012. A very-much improved 5.2% of respondents planned to buy a new automobile within the next six months, the most since 2007. Expectations for the inflation rate held m/m at 5.2%, the lowest reading since late 2010.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON and the market expectations are in AS1REPNA.

Monetary Policy and Financial Stability from Federal Reserve Board Governor Daniel K Tarullo can be found here http://www.federalreserve.gov/newsevents/speech/tarullo20140225a.htm