EconomicCrisis.US

Sales of  U.S. previously owned homes dropped more than forecast in February and the median purchase price declined to the lowest since April 2002, indicating the housing market is struggling to recover.

Purchases decreased 9.6 percent to a 4.88 million annual rate, less than the 5.13 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price declined 5.2 percent from a year earlier, and 39 percent of the sales were distressed properties.
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Consumer confidence fell last week to the lowest level in a month as surging gasoline prices soured Americans’ outlook about their finances and the economy.

The Bloomberg Consumer Comfort Index dropped to minus 44.5 in the period to March 6, from the prior week’s minus 39.7, which was close to the highest in almost three years. Sentiment suffered the most among respondents who lacked a full-time job or any employment and those earning less than $50,000 a year.

Gasoline costs have increased every day except one since mid-February, dealing a financial blow to households just as the labor market shows signs of improvement. The added burden of higher prices at the pump may restrain the gains in consumer spending that are bolstering the expansion.
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Nouriel Roubini, the economist who predicted the financial crisis, said U.S. stocks may gain in the next few months as company earnings remain resilient.

“I think tactically for the next few months equities could rise because corporate profits are still strong,” Roubini, who is chairman and co-founder of Roubini Global Economics LLC, said in an interview on CNBC today, when asked for his outlook for the Standard & Poor’s 500 Index. “But the question is whether the economic recovery is going to be sustained and whether some of the risks we’re seeing down the line on the financial markets are going to materialize.”
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Consumer spending in the U.S. rose more than forecast in December, giving the world’s largest economy a lift heading into 2011.

Purchases, which account for about 70 percent of the economy, increased 0.7 percent after climbing 0.3 percent the prior month, Commerce Department figures showed today in Washington. Another report showed businesses expanded in January at the fastest pace in two decades.

Rising incomes and a cut in payroll taxes this year will probably continue to drive household demand, benefiting companies from Coach Inc. to Ford Motor Co. Today’s spending report also showed the Federal Reserve’s preferred inflation gauge rose at the slowest pace on record, one reason policy makers are pushing ahead with a second round of monetary stimulus worth $600 billion.
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