20 August 2009

Economy, manufacturing showing some life

More signs the U.S. economy was on the verge of exiting its worst recession in 70 years emerged this week with reports showing confidence rising among homebuilders, factory activity perking up in New York state, and credit card defaults slowing.

The National Association of Home Builders and Wells Fargo said their Housing Market Index edged up one point to 18 in August, the highest level since June 2008 and the second consecutive monthly gain.

A separate report from the New York Federal Reserve showed activity at New York state factories grew for the first time since April 2008, suggesting manufacturers could lead the economy out of its worst downturn since the Great Depression.

Industry data showing U.S. credit card defaults stabilized in July suggested consumers are in better financial shape than feared.

The last Fed quarterly survey of senior loan officers showed U.S. loan demand fell in the second quarter for every major category except prime residential mortgages, while banks tightened credit standards at a less-intense pace than in the first quarter.

A string of data has now hinted the recession that began in December 2007 is near or at a close, but worries of an anemic, short-lived recovery have been hard to shake as consumers battle with high unemployment and dwindling incomes.

The Federal Reserve extended to mid-2010 an emergency program aimed at boosting lending to the commercial real estate market.

For related information, go to www.isa.org/productivity.