Confidence, Housing Point To Stronger U.S. Economy

By Agence France-Presse Hopes for a second-half economic rebound got a lift May 27 from reports showing a robust housing market and a modest increase in consumer confidence. The Conference Board said its Consumer Confidence Index edged up to 83.8 from 81.0 in April. Although this was below some expectations on Wall Street, it was the highest level since November. In addition to climbing confidence, two other reports showed the U.S. housing market remained a pillar of strength for the U.S. economy. The Commerce Department said sales of new homes rose 1.7% in April to an annualized pace of 1.028 million units. Sales are now at their highest level since December 2002. A separate survey released by the National Association of Realtors showed existing home sales rose 5.6% in April to a seasonally adjusted annual rate of 5.84 million units. Wall Street rallied on the news, which fueled hopes of a strong recovery for the sputtering U.S. economy by the second half of the year. "The market definitely rose on the confidence data and new homes sales," said Art Hogan, chief market strategist at Jefferies & Co. Inc, a New York-based investment bank a securities firm. "Two of the most important parts of the economy -- confidence and the real estate market -- are holding up." Housing strength was attributed to the lowest interest rates in a generation, encouraging people to put more of their cash into real estate. Analysts said the end of the Iraq war helped lift U.S. consumer spirits but that many remain worried about weak economic and job market conditions. "The end of fighting in Iraq, lower energy prices, a rising stock market and low interest rates have consumer confidence on the upswing," said Sung Won Sohn, chief economist at Wells Fargo Bank. "However, stagnant business conditions and a weak labor market have tempered the rise. A lack of job creation is proving to be the biggest stumbling block for the economy right now." Copyright Agence France-Presse, 2003