The recovering housing market has boosted performance at Home Depot Inc. and Lowe’s Cos., the largest and second-largest U.S. home improvement retailers. Lowe’s surged the most in more than three years yesterday after fiscal third-quarter profit topped analysts’ estimates. Last week, Home Depot also posted third-quarter profit that topped analysts’ estimates.
“Recently, the housing market has shown some clear signs of improvement,” Bernanke said, echoing remarks from a Nov. 15 speech in Atlanta.
“It seems likely that, on net, residential investment will be a source of economic growth and new jobs over the next couple of years,” he said today, quoting that tight terms from lenders and underwater borrowers will prevent “the sort of powerful housing recovery that has typically occurred in the past.”
President Barack Obama’s re-election this month set up a showdown over the federal budget with the Republican-controlled House of Representatives. Economists including Bernanke have voiced concern that if not averted, the so-called fiscal cliff could cause a recession.
Many participants at the last Federal Open Market Committee meeting said doubts over resolution of the U.S. fiscal challenge is “likely to restrain the pace of economic growth in coming months,” according to the minutes said. Officials said the fiscal contraction would put the economic expansion at risk, and that businesses have already reported “delaying or cutting back on hiring and capital spending” because of the uncertainty, according to the minutes.