Encouraging Data Along Bumpy Road To U.S. Recovery

By John S. McClenahen Perhaps it's a reflection of the current economic pessimism to phrase a summary judgment this way, but the most recent U.S. economic data could have been terribly discouraging. They weren't. Indeed, sales of new one-family homes in August were up 1.9% from July to a better-than-expected seasonally adjusted annual rate of 996,000, according to U.S. Commerce Department and Department of Housing & Urban Development estimates. Initial claims for unemployment insurance, after rising for several weeks, dropped by 24,000 to 406,000 during the week ending Sept. 21, reports the U.S. Labor Department's Employment & Training Administration. (However, initial claims continue to be above 400,000 each week, suggesting that the economy is not generating many new jobs.) August orders for manufactured durables offered the biggest and most pleasant surprise. Although last month they declined 0.6% to $178.4 billion, that was nowhere near the 3.2% decline economists generally expected following July's unprecedented 8.6% increase in durable orders. This "clearly shows that business investment is beginning gradually to improve," contends Jerry J. Jasinowski, president of the Washington, D.C.-based National Association of Manufacturers.

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