As markets have rallied sharply so far this year — demonstrating the best quarterly start since 1998 — the economic backdrop continues to be a steady stream of better-than-expected data. Unemployment is trending lower, factory orders are up, auto sales are sizzling and the housing market is showing clear signs of rebounding. It would appear that conditions may be finally getting back to normal.


Yet entering the second quarter, we all must be prepared for a “new normal” with high oil prices, the potential for re-flaring of the Eurozone and even a Chinese hard landing.


Weekly initial jobless claims have now fallen to their lowest level in four years which is contributing to a steady recovery in consumer confidence, now at a 13-month high. Residential remodeling this winter was as strong as it has been in more than five years. While warmer-than-expected weather is often cited, I’m much more impressed that bank credit – a key to underlaying economic momentum – was already accelerating before the winter season even began. This suggests that the economic recovery is likely both durable and sustainable. According to Burns Home Value Index, home prices have been rising for more than three months in 90 of the 97 markets analyzed… based on signed contracts. The National Association of Realtors (who reported median prices up in February) by contrast tracks closings, which can lag 2-4 months for data recording. What’s more, apartment rents have risen 2.7% while vacancy rates have fallen below 5%, building a foundation for home ownership that has not been this compelling since 2001.


So are we there yet? Our clients in the home and building products channel certainly are echoing confidence with renewed innovation in R&D and launches with increasing investments in new marketing initiatives. We’re looking forward to the Kitchen and Bath Show later this month, where I’d be pleased to focus attention on your unique opportunities.


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