A Commerce Department report today showed that the economy expanded faster than its initial estimate of a 1.5 percent rate, reflecting gains in consumer spending and exports.
Most districts said housing “exhibited signs of improvement” as sales and construction continued to increase, the report said. Dallas saw “significant levels of buyer traffic” while Richmond reported “strong pending sales.” Minneapolis and St. Louis cited increases in building permits.
Americans signed more contracts to purchase previously owned homes in July, a sign housing will keep strengthening in the second half, figures from the National Association of Realtors showed today.
The index of pending home resales climbed 2.4 percent, exceeding the 1 percent gain median forecast of 39 economists surveyed by Bloomberg. The gauge rose to 101.7, the highest since April 2010.
The jobless rate climbed to 8.3 percent in July even as employers added 163,000 workers for the month. The pace of payroll growth slowed to an average of 73,000 a month in the second quarter from 226,000 in the first.
Chairman Ben S. Bernanke has an opportunity to describe his outlook on policy and the U.S. economy in a speech to central bankers and economists Aug. 31 at a Fed symposium in Jackson Hole, Wyoming.
The Fed has expanded its balance sheet with two rounds of bond purchases, known as quantitative easing. In the first, starting in 2008, the Fed bought $1.25 trillion of mortgage- backed securities, $175 billion of federal agency debt and $300 billion of Treasuries. In the second round, announced in November 2010, the Fed bought $600 billion of Treasuries.
The S&P 500 has rallied 12 percent this year as European leaders worked to stem contagion from the region’s debt crisis and the Fed pledged to safeguard the U.S. economy. The benchmark is outpacing the 8 percent gain in 2012 for global stocks in the MSCI All-Country World Index.
Fed presidents Charles Evans of Chicago, San Francisco’s John Williams and Boston’s Eric Rosengren have said that they favor “open-ended” purchases of securities. Evans said in a Aug. 27 speech in Hong Kong that the central bank should begin a third round of bond purchases and continue buying until unemployment falls for at least six months.
Cleveland Fed President Sandra Pianalto said Aug. 27 that the recovery remains “frustratingly slow” and that additional “large-scale asset purchases can be effective” if the risks are managed. Pianalto and Williams vote on the FOMC this year, while Evans and Rosengren don’t.
Best Buy Co., the world’s largest electronics retailer, said the sluggish economy and depressed consumer confidence are hurting business. The Richfield, Minnesota-based company reported second-quarter profit Aug. 21 that trailed analysts’ estimates after sales of computers and televisions dropped.
“Economic conditions are soft and will probably remain so for the indefinite future,” interim Chief Executive Officer Mike Mikan said on a conference call after the report. “Consumers remain very cautious.”
Confidence among U.S. consumers fell in August by the most in 10 months as households grew more pessimistic about the economic outlook. The Conference Board’s index decreased to 60.6 from a revised 65.4 in July, figures from the New York-based private research group showed yesterday.