Saturday, December 16, 2017

Reports reflect Fed's message of stronger economy

WASHINGTON — The U.S. housing recovery is strengthening. Factories are fielding more orders. And Americans' confidence in the economy has reached its highest point in 5½ years.

That brightening picture, captured in four reports Tuesday, suggests that the economy could accelerate in the second half of the year. It underscores the message last week from the Federal Reserve, which plans to slow its bond-buying program this year and end it next year if the economy continues to strengthen. The Fed's bond purchases have helped keep long-term interest rates low.

Investors appeared to welcome the flurry of positive data. The Dow Jones industrial average surged more than 86 points in afternoon trading, and broader stock indexes also rose. Those gains made up only a fraction of the markets' losses since Chairman Ben Bernanke said last week that the Fed will likely scale back its economic stimulus within months — a move that would send long-term rates up.

But the rising confidence of U.S. consumers shows that most Americans are focused on a better job market, said Beth Ann Bovino, deputy chief economist at Standard & Poor's.

"Maybe households agree with the Fed: The economy is improving," Bovino said.

The Conference Board said its consumer confidence index jumped this month to 81.4, the highest reading since January 2008. The New York-based research group said consumers appear more encouraged by economic conditions and more optimistic about where the economy and job market are likely headed over the next six months.

Last month, U.S. employers added 175,000 jobs, which almost exactly matched the average increase of the previous 12 months. Steady job growth has gradually reduced the unemployment rate to 7.6 percent from a peak of 10 percent in 2009. And rising home and stock prices since the recession ended four years ago have made many Americans feel wealthier.

The combination has kept consumers spending this year despite higher Social Security taxes and steep government spending cuts that took effect this year.

The survey was completed June 13, so it didn't reflect the past week's plunge in stock prices. The market turmoil might lower July's consumer confidence. Still, many economists say they doubt that any drop in confidence would be dramatic.

For most Americans, the biggest investment is a home. And a steady rise in prices is allowing them recover much of the wealth they lost during and immediately after the recession.

U.S. home prices jumped 12.1 percent in April compared with a year ago, according to the Standard & Poor's/Case-Shiller 20-city home price index. That was the biggest year-over-year gain since March 2006.

For a fourth straight month, prices rose from a year earlier in all 20 cities in the index. Twelve cities posted double-digit price gains.

More buyers and a limited supply of available homes have lifted prices in most cities. Higher prices have, in turn, fueled further sales and encouraged builders to ramp up construction. A more sustainable housing recovery is contributing to economic growth and creating more jobs.

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