Economic Update

[Adam in CO]

Last Week in the News

Bolstered by bonus payments to high-income executives and pay raises for federal workers, personal incomes rose 1% in January, the largest advance since a 1.3% jump in January 2006, the Commerce Department reported March 1. The extra income helped support a better-than-expected 0.5% increase in consumer spending, the major force driving the U.S. economy.

The Institute for Supply Management's manufacturing index, which measures the nation's manufacturing activity, climbed to 52.3 in February, beating Wall Street's expectation of 50 and January's reading of 49.3. A reading above 50 indicates growth in the sector.

Sales of existing homes in January rose 3%, the biggest one-month increase in two years, the National Association of Realtors reported February 27. Median home prices, however, fell 3.1% from a year ago, the sixth straight monthly decline.

Sales of new homes dropped 16.6% in January, the sharpest monthly decline in 13 years, the Commerce Department said February 28. Yet, the median sales price of a new home rose $400 to $239,800 in January. The backlog of unsold new homes rose from a 5.7 months' supply in December to a 6.8 months' supply in January.

Meanwhile, the New York-based Conference Board said its Consumer Confidence Index increased to a rousing 112.5 in February, its highest level in five years. The better-than-expected gain reflected increased optimism about jobs and business prospects.

For the week ended February 28, interest rates on 30-year mortgages fell for a second straight week to the lowest level since the start of the year.

This week look for updates on February unemployment and the trade deficit on March 9.