Reports point to fragility
10/26/2010NEW YORK — Reports released Tuesday showed the U.S. economic recovery is still fragile, with consumer confidence remaining weak and home prices falling again after gaining earlier in the year.
The reports reinforced the belief that the Federal Reserve will embark on another round of monetary policy stimulus to support the economic recovery next week.
U.S. consumer confidence rose slightly in October but remained near historically low levels as concerns about the labor market persisted. The U.S. unemployment rate remains stubbornly high at 9.6 percent, according to the Labor Department.
The Conference Board, an industry group, said its index of consumer attitudes rose to 50.2 in October from a revised 48.6 in September.
Prices of U.S. single-family homes fell for a second straight month in August, hovering around recent lows after the expiration of popular home buyer tax credits, according to a Standard & Poor's/Case-Shiller home price report Tuesday.
“At this point the big factor out there is the foreclosure situation and it certainly doesn't look very good. We have a lot of excess supply to work through, a lot of potential foreclosures and what appears to be an increasing legal mess,” said David Blitzer, chairman of the index committee at Standard & Poor's. “It's going to take quite a while to get housing back on its feet,” he said.
Another report Tuesday showed price gains in August. The U.S. Federal Housing Finance Agency home price index is calculated using purchase prices of houses financed by Fannie Mae and Freddie Mac. The housing market, however, remains highly vulnerable, and most economists believe a recovery will be elusive until the labor market improves.