Delhi, India (PressExposure) September 03, 2009 -- Larger-than-expected improvements in U.S. housing prices [http://www.zameen-zaidad.com/] and consumer confidence on Tuesday lent new weight to signs the economy is emerging from the longest and deepest recession since the 1930s.
U.S. home prices rose for the second month in a row in June, according to a closely watched S&P index, and consumer confidence jumped in August.
In addition, President Barack Obama nominated Ben Bernanke to a second term as chairman of the Federal Reserve, removing some niggling doubt from investors' minds as the decision promised a consistent approach to monetary policy in the years ahead.
The developments helped buffer the blow of projections for the U.S. budget deficit to reach its highest level in 2009, relative to the total economy, since World War 2. "The recession appears to be over, with consumer attitudes lagging behind broad economic developments," said Steven Wood, chief economist at Insight Economics in Danville, California.
Major U.S. equities indexes climbed to new 2009 highs on the day's events, while bond prices fell as signs of a resurgent economy reduced interest in safer investments.
The Conference Board, an industry group, said consumer confidence climbed to a reading of 54.1 in August from 47.4 in July, handily outpacing forecasts, on an improved outlook for the job market and the overall economy.
The rise sent the index to its highest level since May. Still, some analysts warned not to get carried away. "Confidence remains well below its historical average of 95 and it has not even regained the level of 61 seen before the collapse of Lehman almost a year ago," said Paul Dales, U.S. economist at Capital Economics in Toronto.
The weak labor market remains a sticking point to recovery, and especially a revival in consumer spending. Even the Fed has conceded the likelihood of a "jobless recovery," with the unemployment rate staying high long after growth resumes.
Americans saying that jobs were "hard to get" in August dropped to 45.1 percent from 48.5 percent but those saying jobs were plentiful were just 4.2 percent.
"Most of the strength was in the 'expectations' component, so it looks like even though the near-term conditions are still a bit rocky, there is hope for the future," said Kim Rupert, managing director, global fixed income analysis, Action Economics LLC in San Francisco
Other data supporting recovery hopes came from the Standard & Poor's/Case-Shiller index, with prices of U.S. single family homes rising by 1.4 percent in June from May, after creeping up by 0.5 percent in April.
The data gave fresh evidence that the three-year housing slump is finally easing. The housing market is considered a critical component to a broad economic recovery. Courtesy:- BS dt:- 26-08-09