July 1, 2010 in Business

Business update: Data suggest recovery is fizzling

Associated Press

Fears that the economic recovery is fizzling grew Thursday after the government and private sector issued weak reports on a number of fronts. Unemployment claims are up, home sales are plunging without government incentives and manufacturing growth is slowing.

1.3 million unemployed won’t get benefits restored: More than 1.3 million laid-off workers won’t get their unemployment benefits reinstated before Congress goes on a weeklong vacation for Independence Day. And hundreds of thousands more will lose their benefits in the coming weeks. For the third time in as many weeks, Republicans in the Senate successfully filibustered a bill Wednesday night that would have continued unemployment checks to people who have been laid off for long stretches.

U.S. auto sales, in weak recovery, drop in June: Most automakers saw their U.S. sales drop from May to June, a sign that this year’s slow recovery in the industry may be stalling. Americans are delaying big-ticket purchases because they’re worried about their jobs in an environment of high unemployment. Nervous consumers could mean a tough summer for automakers, who hope to improve sales after a dismal 2009.

Job worries hurt stocks at start of 3rd quarter: Stocks began the third quarter with more selling after disappointing reports on jobs, housing and manufacturing deepened concerns about the economy. The Dow Jones industrial average fell about 60 points in afternoon trading Thursday. It was off its lows of the day after five straight days of losses drew in some buyers.The weaker economic numbers followed a bad second quarter for investors and came a day ahead of the government’s June jobs report. That’s an important date on investors’ calendars because a rebound in jobs is needed for the economy to recover.

Home tax credit extension relieves tardy buyers: Homebuyers worried about closing their house purchases by the tax credit cutoff can relax after the government extended the deadline. Congress sent President Barack Obama a plan to give homebuyers an extra three months to finish qualifying for federal tax incentives that boosted home sales this spring. The House approved the measure on Tuesday and the Senate approved it Wednesday night. Obama is expected to sign it.

Mortgage rates drop to another low, 4.58 percent: Mortgage rates have sunk to the lowest level in more than five decades, but consumers aren’t rushing to refinance their loans or buy homes. Mortgage company Freddie Mac said Thursday the average rate for 30-year fixed loans sank to 4.58 percent this week. That’s down from the previous record of 4.69 percent set last week and the lowest since the mortgage company began keeping records in 1971.

May pending home sales tumble without tax credits: The number of buyers who signed contracts to purchase homes tumbled in May, a sign the housing recovery can’t survive without government incentives. The National Association of Realtors said Thursday its seasonally adjusted index of sales agreements for previously occupied homes dropped 30 percent in May from April. The index fell to 77.6 from 110.9. May’s reading was the lowest dating back to 2001.

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