August 21st, 2009
01:12 PM ET

Financial Dispatch: Fed chief says economy is on the mend

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Andrew Torgan
CNN Financial News Producer

Fed Chairman Ben Bernanke says that the economy is about to start growing again, although he cautioned it will be a slow recovery with continued high unemployment in the near term.

Speaking at an annual symposium in Jackson Hole, WY, Bernanke echoed a statement made by the Fed earlier this month, saying that "economic activity appears to be leveling out, both in the United States and abroad."

Bernanke went a step further though, indicating that "prospects for a return to growth in the near term appear good."

But the central bank chief warned that problems remain in financial markets around the globe, and that with banks facing "substantial" additional losses ahead, businesses and consumers will continue to have trouble accessing credit.

Home sales spike

Sales of previously-owned homes, the biggest portion of the housing market, soared more than 7% in July - the largest monthly increase in 10 years.

The National Association of Realtors says home sales rose 7.2% to a seasonally adjusted annual rate of 5.24 million last month, from a pace of 4.89 million in June. That’s the fourth-straight monthly increase and the highest level of sales since August 2007.

Of course, homes should be selling. Prices have fallen more than 32% from their peaks, set in the summer of 2006. Plus, mortgage rates that are near historic lows make the cost of purchasing a home lower than they've been in nearly 20 years.

State unemployment rates improve

The number of states posting a decrease in the unemployment rate in July more than tripled from the previous month.

The Labor Dept. says 17 states and the District of Columbia reported a drop in unemployment rates in July, compared with 5 states in June. Increases in unemployment rates were reported in 26 states, and 7 states posted no change from the previous month.

While the report showed improvement for the battered labor market, the changes in unemployment rates were very modest across the board: overall, unemployment rates didn't change much from June to July.

Michigan had the highest unemployment rate at 15%, but that was down 0.2 percentage point from June. Michigan has been especially hard hit by the collapse of the U.S. auto industry and the housing meltdown.

Rhode Island posted the second highest unemployment rate at 12.7% and Nevada rounded out the top three with a 12.5% rate.

The national unemployment rate fell to 9.4% from 9.5% in June, the first decline in that reading since April 2008.

Oil surges to 10-month high

Oil prices soared to their highest level since October today as investors grow hopeful that a recovery of the world economy is in sight.

Crude topped $74 per barrel. Oil hasn't traded that high since Oct. 20, 2008, when it reached an intra-day peak of $76.12.

All told, oil has surged by two-thirds this year after closing out 2008 at $44.60 per barrel.

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Filed under: Economy • Finance • Gas Prices • Oil • Wall St.
soundoff (11 Responses)
  1. Annie Kate

    More attention should be given to job creation – a jobless recovery is not a recovery at all – there are still too many people who cannot provide for themselves and their families because of unemployment. I am truly concerned about what we counsel our young people to go into when it seems that every industry is shedding jobs right and left.

    As for credit cards – pay them off and cut them up and don't use them. I did that and I finally paid off the last one. You cannot imagine how much simpler it makes your life and how liberating it feels to not have to pay that bill month after month. Try it – you'll like it.

    August 21, 2009 at 8:30 pm |
  2. Heather,ca

    I just love politically motivated reports on the state of our economy with sole purpose of influencing consumer confidence. How insulting. How out of touch can they be. I live in California. The state is a disaster. Unemployment and bankruptcies continue to rise. But its just typical politicans trying to paint the picture not so bad. Its total you know what.

    August 21, 2009 at 5:43 pm |
  3. JC- Los Angeles

    As we learned from Greenspan and his fraud producing, gluttonous consumption inducing, mindless leadership, the heads of the Federal Reserve know nothing.

    Our morally bankrupt, culturally corrupt, racially charged cesspool of a nation is nowhere near a recovery since we produce and manufacture nothing that the global economy needs.

    With our nation now unable to rely on mortgage fraud; questionable financial instruments; corporate malfeasance; and dirt cheap money, our recovery rests solely on innovation, accountability and self respect.

    August 21, 2009 at 5:01 pm |
  4. Enough

    Unemployment in California just rose again to 11.9%.........that's hardly recession over! Nice try, but the words don't match the facts.

    August 21, 2009 at 4:46 pm |
  5. lampe

    Yes, Bush and Paulsonand Bernanke helped to get us in the fix we wre now. But, adding more debt on top of what we already have is not the right thing to do either. Things are not looking that great for anyone right now. And, when Obama and The Dems passed the Stimulus Bill, it was said " If we didn't do it, then the unemployment rate would rise." Well guess what it is now past 9%. And, maybe Obama and the Crew weren't being that honest with us for the beginning?

    August 21, 2009 at 3:54 pm |
  6. earle,florida

    Mr. Ben Bernanke just gave the consumer a six month head start ,"dash", to pay off their credit card debt,for in Q2/2010 be prepared for a interest hike. Pathetic,when you think about what the (Big Banks,etc.) credit card issuer's are currently doing to the consumers before the late 2010 new credit card regulations become effective? Finally ,there's talk about re-appointing Fed. Chair Bernanke for another term because of his past exemplary performance,...? Whoa Nellie! Wasn't it Mr.Bernanke, Mr.Paulson, and the former Bush Administration that got us in this mess in the first place,those beautiful unforgettable past eight years,so we reward failure with another "Four Years" ,seems like the normal thing to do today? Where's, Sheila Beir ,current FDIC Chairwoman as a nominee,or Larry Summers! For "God's Sake",has this countries democratic leaders gone totally insane,or are they experiencing a preordained surrealistic euphoric breakdown, to become unwrapped disguised as temporarily paralysis,where their "Status-Quo" minds will be exposed come Nov/2010,...!

    August 21, 2009 at 3:12 pm |
  7. Tommy Fowlkes

    How can Bernake say that our economy is on the mend? Groceries are spiraling out of control, gasoline is going back up,credit card companies are raising interest rates and people are still losing there jobs. AMEX sent me a letter stating that they are uping my APR by 4% due to the economic enviornment. That is B*** S***. Companies like AMEX are just screwing the customers. I"ve never been late with a payment and have been with them since 1973. Something should be done about it. Well I guess its business as usual with the fat cats. You can"t fight greed. I have faith in President Obama, but there are too many politicians against him. Thanks

    August 21, 2009 at 2:52 pm |
  8. anita

    I find it interesting we are stating that our economy is on the rise when even the Federal Government is laying off people, at this moment 1000's of career Military have or are being cut 500 in Navy alone this month, these are individuals who loose all benefits and retirement because they were not fired for cause but laid off. We talk of an improving economy and now we have to find jobs for our men and women who have been since 911 fighting on several fronts for us. Yes things have a momentary upraise but when even with the stimulius the government is laying off it can't be doing that good.

    August 21, 2009 at 2:10 pm |
  9. Joe G. (Illinois)

    If Obama were to get Bernie Madoff out of jail then maybe Bernie could help him raise expectations and revamp the economy quicker.. Doesn’t Obama understand that people are in a hurry and want to invest in the market? But that they need confidence and good expectations that they would make up or recoup their losses? Why does Obama want to take all the credit for the DOW going slowly back up? Sure he was the one who signed the check and infused the 750 billion in the market.. But why can’t he share in pride?

    August 21, 2009 at 1:44 pm |
  10. Michael C. McHugh

    He did the right thing by following Keynesian policies in a depression instead of following free market fundamentalism. He at least prevented a total collapse. I am definitely not a Fed Abolitionist, but I think it needs to be reformed and strengthened, so it can do do more things to develop and stabilize the economy–like assisting the state and local governments, funding a green bank, a national housing bank, and a public sector in banking in general. I also think it can do more to help teh Medicare and Social Security Trust Funds.

    Of course, it goes without saying that I'd prefer to see a progressive and Keynesian to get the Fed job rather than a Republican free marketeer.

    August 21, 2009 at 1:43 pm |
  11. Carlos Garcia

    Alright I hope I'm not the only one that recognizes this, but it seems that the economy is bouncing back, the only reason this is happening is because of the government spending. But why are the corporations that got bailed out still doing the same thing that got us in this Jam in the first place. I hate to be alive to see what the next recession looks like. It will just be a matter of time before it comes to an end. We need a new stratagey and banking system, as well as more honest people not looking to rip off someone for their own personal gain. In my opinion we are still in a hole and its getting deeper everyday.

    August 21, 2009 at 1:30 pm |