Despite a trend of surprisingly upbeat homebuilder confidence during the past several months, the index remained unchanged in January. The monthly survey of homebuilder sentiment, (often referred to as the homebuilder confidence index ) conducted by the National Association of Home Builders (NAHB) has been surprisingly upbeat during the past several months.  This survey usually serves as a tipoff on what to expect in the Commerce Department’s reports on New Home Sales and initial housing starts.  The homebuilder confidence index rose to 47 in December – its highest level since April of 2006.  A result above 50 indicates that the majority of builders see conditions as favorable.  Many commentators were hoping for a break above 50 this month, although the consensus of economists had been expecting an increase to only 48.  The actual result for January remained unchanged at 47. From the report: “Conditions in the housing market look much better now than at the beginning of 2012 and an increasing number of housing markets are showing signs of recovery, which should bode well for future home sales later this year,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla.  “However, uncertainties stemming from last month’s fiscal cliff negotiations contributed to the pause in builder confidence and continuing discussions among policymakers related to spending cuts and the future of the mortgage interest deduction could put a damper on housing demand in the coming months.” “Builders’ sentiment remains very close to the index’s tipping point of 50, where an equal number of builders view conditions as good and poor, and fundamentals indicate continued momentum in housing this year,” said NAHB Chief Economist David Crowe.  “However, persistently tight mortgage credit conditions, difficulties in obtaining accurate appraisals and the ongoing stalemate in Washington over critical economic concerns continue to impede the housing recovery.” The Consumer Price Index for December also remained unchanged from the prior month.  Just as economists had expected, the Department of Labor’s Bureau of Labor Statistics disclosed that the December CPI remained unchanged and core CPI (excluding food and energy costs) increased by 0.1 percent.  During calendar year 2012, the all items index increased 1.7 percent before seasonal adjustment.  Real Retail Sales and Industrial Production Both Rise The Federal Reserve’s report on Industrial Production and Capacity Utilization for December beat economists’ expectations.  The consensus had been anticipating a 0.2 percent increase in industrial production and for capacity utilization to rise to 78.5 percent.   Industrial Production Increased Moderately in December From the report: Industrial production increased 0.3 percent in December after having risen 1.0 percent in November when production rebounded in the industries that had been negatively affected by Hurricane Sandy in late October.  For the fourth quarter as a whole, total industrial production moved up at an annual rate of 1.0 percent.  Manufacturing output advanced 0.8 percent in December following a gain of 1.3 percent in November; production edged up at an annual rate of 0.2 percent in the fourth quarter.  The output at mines rose 0.6 percent in December, and the output of utilities fell 4.8 percent as unseasonably warm weather held down the demand for heating. At 98.1 percent of its 2007 average, total industrial production in December was 2.2 percent above its year-earlier level.  Capacity utilization for total industry moved up 0.1 percentage point to 78.8 percent, a rate 1.5 percentage points below its long-run (1972–2011) average. The Federal Reserve also released its Beige Book for January on Wednesday.  The Federal Reserve’s Beige Book is based on comments received from business and other contacts outside the Federal Reserve, as reported to the twelve Federal Reserve Districts.  The January Beige Book (based on information obtained before January 4) disclosed that reports from the twelve Federal Reserve Districts indicated growth in consumer spending and real estate.   The Really, Really Big Picture From the Beige Book: Reports from the twelve Federal Reserve Districts indicated that economic activity has expanded since the previous Beige Book report, with all twelve Districts characterizing the pace of growth as either modest or moderate. Since the previous Beige Book, activity in the New York and Philadelphia Districts rebounded from the immediate impacts of Hurricane Sandy . Growth in the Boston , Richmond , and Atlanta Districts appears to have increased slightly, while the St. Louis District reports some slowing. The major ETFs expected to respond to the Wednesday’s economic reports are: SPDR S&P Homebuilders ETF (NYSEARCA:XHB)  -0.83% Industiral Select Sector SPDR Fund ETF (NYSEARCA:XLI)  -0.41% SPDR S&P Retail ETF (NYSEARCA:XRT)  +0.33% Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP)  -0.14% Consumer Descretionary Select Sector SPDR Fund ETF (NYSEARCA:XLY)  -0.22% Bottom line:  All of Wednesday’s economic reports demonstrated the slow – often halting – pace of the economic recovery. Sign up for Wall Street Sector Selector’s FREE Stock Market Timing Indicator!    Disclaimer: The content included herein is for educational and informational purposes only, and readers agree to Wall Street Sector Selector’s Disclaimer , Terms of Service , and Privacy Policy before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group, LLC.