Economic signs cast doubt on recovery
(MoneyWatch) A new government report on unemployment claims is the latest in a string of indicators raising fears that the U.S. economy is stalling.
Although the Labor Department said Thursday that applications of jobless benefits declined by 2,000 last week, that number will almost certainly be worse when the agency releases final numbers on April 27. That would be consistent with the government revising up those totals every week for more than a year, including the previous weekly unemployment claims report. The less volatile four-week average of claims is now at 374,750, its highest level in three months.
Another key economic sector, housing, is also showing signs of slowing down. Although existing home sales in January and February rose to their highest level for those two months since 2007, that trend has stopped for now. The National Association of Realtors reported that existing home sales slipped 2.6 percent in March to an annual rate of 4.48 million units. The Mortgage Bankers Association's reported an 11.2 percent drop in home loan applications last week, suggesting that the dip in real estate sales is carrying on into April.
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This decline jibes with a slip in U.S. home builders' confidence in April, its first drop in seven months. The National Association of Home Builders' housing market index was 25 for April, its first decrease since September 2011. March's reading was unchanged at 28. A reading above 50 in the NAHB index means more builders view conditions as good rather than poor. The index hasn't been over 50 since April 2006.
The country's manufacturing output and exports also have slipped. An index of U.S. manufacturing output fell 0.2 percent in March after risng 0.8 percent the previous month, according to the Federal Reserve. Solid gains in auto production are being offset by decreases in other areas. The U.S. exported $181.2 billion worth of goods and services in February, not adjusting for inflation, according to the Commerce Department. That is about the same level as in January and below the pace of the previous two months.
The export numbers have dropped because of economic problems in Europe and China, along with indications that American consumers are growing more anxious about their financial prospects.. The Thomson Reuters/University of Michigan Consumer Sentiment Index, which gauges consumers' feelings about current economic conditions, fell to 80.6 in its preliminary April reading. It is down from 86 in March.
Treasury Secretary Timothy Geithner told ABC on Sunday that the economy is improving. "If you look at the evidence, the economy is getting stronger," he said. "We have a ways to go still, a lot of challenges still ahead. But the broad indicators are pretty encouraging. They show an economy still growing. We'd like it to be stronger and we've got a lot of work to do. But it's getting better."
