Economic Update 08/03/09

On Monday, July 27, the Commerce Department reported new home sales jumped 11% in June

to a seasonally adjusted annual rate of 384,000 from an upwardly revised rate of 346,000 in May. It was the largest monthly increase in more than 8 years. Economists had expected a sales pace of 360,000 units.

The Standard & Poor’s / Case-Shiller 20-city housing price index dropped 17.1% from May 2008 to May 2009.

However, there was a 0.5% increase in housing prices in May compared to the previous month. It was the first rise in the monthly index since July 2006.

The consumer confidence index fell to 46.6 in July from 49.3 in June.

Economists had expected a slight decrease to 49. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.

Orders for durable goods - items expected to last three or more years - fell 2.5% in June, the first decrease in three months.

Economists had anticipated orders for durable goods would fall 0.6%. However, excluding automobiles and aircraft, durable goods actually rose a robust 1.1%, a much better performance than the flat reading economists had expected.

Initial claims for unemployment benefits rose by 25,000 to 584,000 in the week ending July 25.

The figure was higher than the 575,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending July 18 decreased by 54,000 to 6.197 million, the lowest level since April.

The Commerce Department announced that gross domestic product - the total output of goods and services produced in the U.S. - decreased at an annual rate of 1% in the second quarter of 2009.

This follows a 6.4% decline in the first quarter of 2009. Economists had expected a slightly larger 1.5% decrease.

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