U.S. Economy: Service Industries Expand More Than Anticipated

From Bloomberg.com:

Service industries in the U.S. accelerated in February more than anticipated, indicating the economic expansion may soon create jobs following the worst employment slump in the post-World War II era.

The Institute for Supply Management’s index of non- manufacturing businesses, which covers almost 90 percent of the economy, increased to 53 from 50.5 in January. Last month’s reading was the highest since October 2007 and exceeded all estimates of 73 economists surveyed by Bloomberg News.

The factory rebound that helped the economy emerge from the recession is starting to filter to other industries, giving a boost to companies such as Macy’s Inc. Stocks climbed as another report showed job losses cooled in February and pointed to gains in employment as soon as this month.

“We’re starting to see a broadening of the economic recovery,” said Richard DeKaser, chief economist at Woodley Park Research in Washington, whose forecast of 52.9 was the highest in the Bloomberg survey. The data “are encouraging, to say the least.”

The Standard & Poor’s 500 Index rose 0.4 percent to 1,123.14 at 12:13 p.m. in New York. The 10-year Treasury note fell, pushing the yield up to 3.64 percent from 3.61 percent late yesterday.

Economists forecast the ISM index to rise to 51, according to the median estimate in the Bloomberg survey. Estimates ranged from 48.5 to 52.9.

Homebuyer Tax Credit Extended and Expanded

After weeks of uncertainty, the Senate and House of Representatives have both passed legislation to extend and expand the homebuyers credit. In addition to extending the deadline through April 30, 2010, it will also include a $6,500 credit to homebuyers who have lived in their current residence more than 5 years. According to the Associated Press, the White House even announced that Obama would promptly sign the bill into law.

Examiner.com publish an article with more details of the new credit. They also raise several valid questions as to whether this extension and expansion will actually help or hurt the ailing economy. You can read a segment of their post below, or find the full text here.

The National Association of Realtors had been pushing hard to extend the credit, as well as include non-first-time home buyers, saying the legislation has helped stabilize the housing market and increased home sales, projected at 5.1 million for the year.

Supporters of the tax credit say that it has helped to boost existing home sales in recent months and that the housing market, and broader economy, would suffer if it is allowed to expire. They contend that extending the credit would help further support sales, stabilize housing prices and generate jobs in the face of an expected increase in foreclosures next year, which is expected to put ongoing downward pressure on prices.

"Tax credits like this only work by creating the sense of urgency to take advantage of them," Sen. Johnny Isakson (R-GA), the measure's main sponsor, said in a statement. "This is the last extension of the home buyer tax credit, and I urge all Americans whether they're first-time buyers who've always dreamed of having a home of their own or someone who's been gridlocked in the failure of our move-up market to take advantage of this opportunity."