US consumer data fuel hopes for recovery

The US economy may have stabilised less than a month after being declared in recession, according to data released yesterday. The data aroused hopes that the US, which led the rest of the world into the current global downturn, may be one of the first economies to recover.

There was a sharp rebound in US consumer confidence, strong gains in home sales and only a slight reversal from recent improvements on the manufacturing and employment fronts, official reports said.

There were also signs that the plunge in business investment which presaged the US slowdown of last year and the outright recession of 2001 is nearing an end.

The Conference Board, a New York research group, said its index of consumer confidence, based on a survey of roughly 5,000 households, rose to 93.7 in December, just under September levels, from 83 in November after falling for five months.

A component measuring assessments of current conditions was up only modestly, but another measuring expectations rose sharply. Some economists credited recent US successes in its anti-terrorism campaign.

All indications suggest, however, that the US economy remains in the recession that began in March, well before the September attacks on New York and Washington. And despite widespread expectations for a resumption of economic growth in 2002, the timing, breadth and strength of any recovery remain uncertain. Corporate profits continue to fall, putting continued downward pressure on production, investment and employment. And risks remain among them, the threat posed to the US economy of rising unemployment, possible future terrorist attacks and growing weakness in important overseas markets, including Japan and Germany.

Sales of new homes were yesterday said to have jumped 6.4 per cent in November on gains in all regions but the west, following a 1.7 increase in October. Sales of previously owned homes were up 0.6 per cent in November after a 5.7 per cent gain in October. The housing market has been bolstered by low mortgage rates and the perception of housing as a relatively safe investment.

In another report, the Labour Department said new unemployment insurance claims rose to 392,000 in the week to December 22nd from 385,0000 in the week to December 15th, but this was less than expected. New claims had fallen for seven of the previous eight weeks, and remain close to levels last seen in July and far below the decade high of 535,000 shortly after September 11th, suggesting the worst of the current round of job cuts is over.