It is reported that incomes in the United States are up, but new home sales are down, continuing a pattern of mixed economic data indicating a tentative and fragile recovery from a prolonged and deep recession.
US personal incomes rose last month at the fastest pace in half a year. The Commerce Department said that a USD 16 billion rise in wages and salaries translated into a 0.4% boost in incomes. That, in turn, helped propel spending, which rose 0.5% in November.
Mr Craig Thomas senior economist at PNC Financial Services Group said that "When we look at all the indicators, we think that consumers are in a much better place financially than they were a year ago, and these sorts of numbers confirm that."
Ms Michelle Myer economist at Barclays Capital said that consumer spending accounts for more than two thirds of US economic activity. After slashing spending to weather the longest recession of the post World War II era, Americans are beginning to open their wallets again.
She added that "Consumers cut back on spending during the recession, during that financial shock period. And now they are slowly starting to return. They are doing so in a conservative manner in that they are still looking for discounts out there bargain hunting. I think there is a lot of pent-up demand, and as the economy continues to recover, consumer spending should increase, as well."
One thing Americans are not stampeding to buy is newly constructed homes. Although sales of existing homes were up according to the latest data, new home sales fell more than 11% in November to the lowest level since April. The median sales price fell nearly 2% from a year ago.
Mr Michelle Myer economist said that the US housing market continues to be plagued by mortgage delinquencies and rising inventories of unsold homes. He added that "We are looking for a large wave of foreclosures over the next several years. There are a lot of homes, distressed properties with owners in financial trouble] that are going to enter the market and add to inventory."
In corporate news, America's second largest carmaker Ford, said that it has reached an agreement to sell its Volvo unit to privately-held Chinese automaker Geely Group, with a final deal expected next year. Ford acquired the Swedish carmaker in 1999. During the past year, Ford has been looking to sell Volvo to raise cash and focus on its core brands. Ford has already sold off two British units Jaguar and Land Rover.