Economic reports show signs of strength in U.S. recovery
06/19/2014 9:58 PM
06/19/2014 9:59 PM
The U.S. economy is showing strength in a range of areas. A few signs that the recovery is solid emerged Thursday. Here’s a look:
Americans’ outlook of the U.S. economy rose in June to a one-year high, driven by an improving job market that has the potential to boost spending.
The monthly Bloomberg expectations gauge rose to 48.5, the highest since June 2013, from 42.5 the month prior, data Thursday showed. The weekly Bloomberg Consumer Comfort Index for the period ended June 15 advanced to 37.1, approaching the strongest level of the year.
Gains in payrolls that have exceeded 200,000 workers in each of the past four months will probably give households the confidence to spend, bolstering the economy in the second half of the year. A pickup in hiring, and the wages that go with it, will be needed to help consumers cope with the biggest increase in consumer prices in more than a year.
“Sustained improvement in the labor market and modest wage gains appear to be offsetting rising food and gasoline costs,” said Joseph Brusuelas, senior economist at Bloomberg LP. The employment increases are giving Americans “a sunnier disposition,” he said.
Average U.S. rates on fixed mortgages eased slightly this week, remaining near historic lows.
Mortgage buyer Freddie Mac said Thursday the average rate for a 30-year loan declined to 4.17 percent from 4.20 percent last week. The average for the 15-year mortgage dipped to 3.30 percent from 3.31 percent.
Rising prices and higher interest rates beginning in mid-2013 have made homes less affordable for would-be buyers. At the same time, a limited supply of homes is available to buy. Sales of new homes are running about half the rate of a healthy housing market.
Mortgage rates are about a quarter of a percentage point higher than they were at the same time last year. But if they continue to fall and slip below 4 percent again, it could drive more home sales in a flat market.
Fewer Americans sought unemployment benefits last week, as the number of people collecting jobless aid fell to its lowest level in more than six years.
The Labor Department said Thursday that weekly applications for unemployment benefits fell 6,000 to a seasonally adjusted 312,000. The four-week average, a less volatile measure, declined to 311,750.
There are 2.56 million people receiving benefits. That’s the lowest total since October 2007, about two months before the recession began.
Applications are a proxy for layoffs, so the relatively low number of people seeking benefits shows that employers are letting go of fewer workers. When businesses are confident enough to keep staff, they may also hire more workers. Job gains should feed stronger economic growth.
Future economic health
A gauge designed to predict the economy’s future health increased for a fourth month in May, providing further evidence that the economy is gaining strength after a harsh winter caused activity to go into reverse.
The Conference Board says its index of leading indicators increased 0.5 percent in May, an improvement from a revised 0.3 percent gain in April. The strength was broadly based with positive contributions from all the financial and labor components of the index.
Conference Board economist Ken Goldstein says that the economy continued to gain traction in May. He says the biggest challenge going forward will be to sustain a rise in income growth to drive consumer spending.
The Associated Press and Bloomberg News contributed.
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