This Week's Economic Roundup
Shrugging off increasingly gloomy economic forecasts, consumers were in a far better mood in September. Here's a look at this week's economic developments and how they may impact your business.
Consumer Mood Rebounds
Despite further signs of an economic slowdown ahead, lower gas prices helped boost consumer confidence in September from recent lows, the Conference Board reported Tuesday.
Of 5,000 households surveyed in September, 27.4 percent described economic conditions as "good," compared to just 26.2 percent in August, while those claiming conditions were "bad" dropped to 15.4 percent from 16.6 percent, the New York-based private research group said.
Their outlook for the next six months was also rosier, with fewer expecting things to get any worse and the number anticipating improvements remaining steady, the group said.
Among those households surveyed, more were expecting job openings and increased income in coming months.
Yet, despite the brighter mood, there was "little to suggest a significant change in economic activity as we enter the final quarter of 2006," according to Lynn Franco, the director of the Conference Board Consumer Research Center.
Personal Income Falls
Following two straight quarters of gains, personal income growth fell in the second quarter to 1.7 percent, while inflation -- measured by the national price index for personal consumption -- increased to 1.0 percent, the Commerce Department reported Tuesday.
The slowdown hit all regions of the country except the Great Lakes, which remained steady at 1.8 percent, the report said.
Still, strong consumer spending boosted second-quarter gross domestic product growth by 2.6 percent, the department said on Thursday.
Over the last four quarters, the economy has grown by 3.6 percent on average, the department said.
Durable Goods Down
New manufacturers' orders for durable goods in August fell by 0.5 percent to $209.7 billion, the second straight month of declines and the first back-to-back monthly losses since 2003, the Commerce Department said on Wednesday.
Excluding transportation, new orders fell by 2 percent, with the biggest declines reported by computer and electronics producers -- dropping by $1.5 billion alone, the report said.
Declines in July were also revised lower to 2.7 percent, the department said.
New Home Sales Up
Amid signs of a slumping housing market, sales of new family homes rose unexpectedly in August by 4.1 percent, the first increase in sales since March, the Commerce Department said in separate report on Wednesday.
While the sales pace in August reached an annual rate of 1.05 million units, the gains were still 17.4 percent below the same period last year, the department said.
The median price for new homes in August was $237,000, with 568,000 remaining unsold by month's end -- enough for a 6.6 month supply at the current sales rate, the department said.
Meanwhile, existing homes -- including single-family, townhouses, condominiums, and co-ops -- fell by 0.5 percent in August to 6.30 million, 12.6 percent fewer than in August 2005, the National Association of Realtors said on Monday.
By the end of August, there were 3.92 million existing homes on the market, representing a 7.5-month supply at the current sales rate -- the highest level since April 1993, the report said.
With the inventory growing, the median price for all types of existing homes dropped in August by 1.7 percent for the previous year to $225,000, the report said.
"This is the price correction we've been expecting," David Lereah, the group's chief economist, said in a statement. "With sales stabilizing, we should go back to positive price growth early next year."
Jobless Claims Down
The number of new claims for unemployment benefits fell by 6,000 to 316,000 in the week ending Sept. 23, the Labor Department reported Thursday.
The insured unemployment rate has hovered around 1.9 percent for most of September, with about 2.4 million people drawing benefits, the department reported.
The largest increase in new claims in the week ending Sept. 16 was reported in Kentucky, California, and South Carolina, while the biggest declines were in Texas, Illinois, and North Dakota, the department said.