The United States received a mixed batch of economic reports Thursday with positive word on employment but discouraging news on housing, a troubled sector that many analysts blame for current economic weakness. From Washington, VOA's Michael Bowman reports.
Economic slowdowns usually throw people out of work, or at least do not permit the economy to absorb all those who seek a job. As a result, unemployment typically rises when the economy weakens, and unemployment statistics are a key indicator economists examine when attempting to determine whether the United States is entering a recession.
But the latest unemployment figures show the number of people filing for government benefits has declined for a fourth consecutive week, pushing unemployment claims down to their lowest level in four months. Nevertheless, the official unemployment rate stands at five percent, having risen sharply in December, and most economists expect the jobless rate to increase further in the coming year.
Meanwhile, woes continue in America's closely-watched housing sector. The latest statistics show sales of existing homes fell by more than two-percent in December, capping a dismal year in which sales of single family homes plunged by the largest amount in more than two decades. Median home prices were also down for the year.
For many Americans, their home is their biggest financial investment. Before last year, housing prices had boomed, giving millions of Americans added equity that many used to secure loans for purchases, thereby boosting economic activity. Economists worry that a decline in housing values will have the reverse effect, causing many people to feel "poor" and constrain consumer spending. In addition, a mortgage crisis that has seen record numbers of foreclosures has rattled financial markets and caused a credit crunch that is extending beyond U.S. borders.
Amid worrying economic signals and concerns of a possible recession, the White House and congressional leaders are reported to be putting the final touches on a government stimulus package that would give taxpayers a rebate to encourage spending and promote business investment. Mark Zandi, an economist at Moody's Economy-Dot-Com research firm, says the U.S. economy could use a boost.
"I think the economy is struggling. It needs all the help it can get -- lower interest rates and fiscal stimulus -- and this seems like a reasonably good stimulus plan."
For the first time this week, U.S. financial markets opened the day with gains, and remained in positive territory at midday. Stock analyst Eugene Peroni of the Philadelphia-based firm Janney Montgomery Scott says the panic selling seen in markets around the world just days ago has ended -- at least for now.
"I think that the attitude among investors is swinging from worry to opportunity."
The U.S. dollar fell against most major currencies in European trading, while gold prices rose.