WASHINGTON â€”Â The U.S. housing recovery is strengthening. Factories are fielding more orders. And Americansâ€™ confidence in the economy has reached its highest point in 51/2 years.
That brightening picture, captured in four reports Tuesday, suggests that the economy could accelerate in the second half of the year. It underscores the message last week from the Federal Reserve, which plans to slow its bond-buying program this year and end it next year if the economy continues to strengthen. The bond purchases have helped keep long-term interest rates low.
Investors appeared to welcome the flurry of positive data.
The Dow Jones industrial average rose 100 points to close at 14,760, and broader stock indexes also ended higher. Those gains made up only a fraction of the losses since Chairman Ben Bernanke said last week that the Fed will likely scale back its economic stimulus within months â€” a move that would send long-term rates up.
But the rising confidence of U.S. consumers shows that most Americans are focused on a better job market, said Beth Ann Bovino, chief economist at Standard & Poorâ€™s.
â€œMaybe households agree with the Fed: The economy is improving,â€ Bovino said.
Spending still strong
The Conference Board said its consumer confidence index jumped this month to 81.4, the highest since January 2008. The New York-based research group said consumers appear more encouraged by economic conditions and more optimistic about where the economy and job market are headed over the next six months.
Last month, U.S. employers added 175,000 jobs, which almost matched the average increase of the previous 12 months. Steady job growth has gradually reduced the unemployment rate to 7.6 percent from a peak of 10 percent in 2009. And rising home and stock prices since the recession ended four years ago have made many Americans feel wealthier.
The combination has kept consumers spending this year despite higher Social Security taxes and steep government spending cuts.
The survey was completed June 13, so it doesnâ€™t reflect the past weekâ€™s plunge in stock prices. The market turmoil might lower Julyâ€™s consumer confidence. Still, many economists say they doubt that any drop would be dramatic.
For most Americans, the biggest investment is their home. And a steady rise in prices is allowing them to recover much of the wealth lost during and immediately after the Great Recession.
U.S. home prices jumped 12.1 percent in April from a year ago, according to the Standard & Poorâ€™s/Case-Shiller index.
That was the biggest year-over-year gain since March 2006.
The home front
For a fourth straight month, prices rose from a year earlier in all 20 cities in the index. Twelve cities posted double-digit gains, led by San Francisco, Las Vegas, Phoenix and Atlanta. Dallas-Fort Worth prices gained 7.4 percent.
More buyers and a limited home supply have lifted prices in most cities. Higher prices have, in turn, fueled sales and encouraged builders to ramp up construction. A more sustainable housing recovery is contributing to economic growth and creating jobs.
Sales of new homes rose in May to a seasonally adjusted annual rate of 476,000, the Commerce Department said. That was the fastest pace since July 2008. Though sales of new homes remain below the 700,000 annual rate that most economists consider healthy, the pace has jumped 29 percent from a year ago.
Last week, the National Association of Realtors said sales of previously occupied homes in May surpassed 5 million for the first time since November 2009.