Home Prices in Feb Showed First Annual Gain in 3 Years

In the last few days there have been a handful of announcements with good new for our economy. In addition job growth, home prices in the U.S. showed a rise in the month of February, which is the first time we have seen an increase in three years. As this ABC News story explains, although this is a good sign, many economists have been quick to warn Americans not to assume the housing market is rebounding already.

Despite the 0.6 percent increase on a non-seasonally adjusted basis, 11 of the 20 cities in the Standard & Poor's/Case-Shiller home price index showed declines.

The last time prices rose on a year-over-year basis was December 2006. But economists polled by Thomson Reuters had predicted prices to rise 1.2 percent in February.

Home prices are up more than 3 percent from the bottom in May 2009, but still are 30 percent below the May 2006 peak.

Las Vegas saw the largest annual drop at almost 15 percent. San Francisco posted the biggest gain, at about 12 percent.

"These data point to a risk that home prices could decline further before experiencing any sustained gains," David Blitzer, chairman of the S&P index committee, said in a statement.

Higher Jobless Rates Could Be “New Normal”

Some economists are shedding a new and interesting light on the economic recovery and the future of job losses by saying it could be the “new normal”. They assert that we cannot expect to recover from this recession like we have from those before because of heavy losses in the banking and automobile industry. Check out the following article on the “new normal” from the Associated Press.

Even with an economic revival, many U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years.

That could add up to a "new normal" of higher joblessness and lower standards of living for many Americans, some economists are suggesting.

The words "it's different this time" are always suspect. But economists and policy makers say the job-creating dynamics of previous recoveries can't be counted on now.

Here's why:

• The auto and construction industries helped lead the nation out of past recessions. But the carnage among Detroit's automakers and the surplus of new and foreclosed homes and empty commercial properties make it unlikely these two industries will be engines of growth anytime soon.

• The job market is caught in a vicious circle: Without more jobs, U.S. consumers will have a hard time increasing their spending; but without that spending, businesses might see little reason to start hiring.

• Many small and midsize businesses are still struggling to obtain bank loans, impeding their expansion plans and constraining overall economic growth.

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