World markets rallied sharply Monday amid positive U.S. economic data and an upbeat projection for U.S. economic expansion.
The beleaguered U.S. housing market got a boost last month as Americans rushed to purchase homes ahead of an anticipated end to government subsidies for first-time buyers. U.S. home sales rose just over 10 percent in October to an annual rate of 6.1 million units, the highest level in more than two years.
Walter Maloney is a spokesman for the National Association of Realtors, which reported the sales figure.
"If you just look at single-family sales, it [the October total] is the biggest monthly increase since January of 1983,said Walter Maloney.
In addition to government incentives, which Congress recently extended, home buyers have been enticed by continued low interest rates and depressed housing prices. The median sales price last month stood at $173,000, down more than 7 percent from a year ago. Despite the recent uptick in demand for homes, housing prices are expected to remain in check due to stubbornly high foreclosure rates in the United States.
Economists say one key to reducing foreclosures is an improvement in America's labor market. U.S. unemployment stands at 10.2 percent, the highest level in more than 25 years. Joblessness has continued to rise even though the U.S. economy expanded at a better-than-expected 3.5 percent annual rate in the third quarter of the year.
Monday, a private research group predicted U.S. employment gains beginning in the first half of 2010, fueled by economic growth of 3.2 percent for the entire year.
Lynn Reaser heads the National Association for Business Economics, which issued the projections.
"We are looking for [predicting] a pretty good, solid [economic] upturn," said Lynn Reaser. "We believe by the second quarter [of 2010] we will see positive job growth. And while we have been losing jobs on the order of about 200,000 per month recently, by the end of next year we will be adding jobs on that order of about 200,000 per month."
But others see the recovery as fragile and tentative. David Weiss is chief economist at Standard and Poor's.
"If we get a major [oil] shock from the Middle East, for example, we could easily move back into recession next year," said David Weiss. "Six months ago, people were convinced that we were heading off a bottomless cliff [plunging into economic catastrophe]. Now we are at the bottom and starting to come back up. But it takes a lot longer to climb out of a hole than it takes to fall into one."
The consensus view among economists is that the U.S. recovery will be slower and weaker than those of developing nations, and that America's long term economic outlook is clouded by massive debt that continues to grow.