By Martin Crutsinger
AP Economics Writer
WASHINGTON (AP) — Gains in housing and manufacturing propelled the U.S. economy over the winter, according to reports released Tuesday, and analysts say they point to the resilience of consumers and businesses as government spending cuts kick in.
U.S. home prices rose 8.1 percent in January, the fastest annual rate since the peak of the housing boom in the summer of 2006. And demand for longer-lasting factory goods jumped 5.7 percent in February, the biggest increase in five months.
February new-home sales and March consumer confidence looked a little shakier. But the overall picture of an improving economy drove stocks higher on Tuesday. The Dow Jones industrial average rose 99 points in late-afternoon trading. The Standard & Poor’s 500 index gained 10 points.
“There is nothing in this data that says the economy is falling back,” said Joel Naroff, chief economist at Naroff Economic Advisors.
A recovery in housing has helped lift the economy this year and is finally restoring some of the wealth lost during the Great Recession.
The year-over-year rise in home prices reported by the Standard & Poor’s/Case Shiller 20-city index was the fastest since June 2006. Prices rose in all 20 cities and eight markets posted double-digit increases.
Home prices nationwide are still 29 percent below their peak reached in August 2006. Still, steady gains should encourage more people to buy and put their homes on the market, keeping the recovery going.
Manufacturing is also boosting the economy this year, and factories were busier in February, according to the Commerce Department report on durable goods orders.
February’s increase was driven by a surge in commercial aircraft orders, which tend to be volatile. Still, orders for motor vehicles and parts increased solidly, suggesting demand for cars and trucks remains strong.
Tax increases and government spending cuts weighed on consumers’ minds in March.
The Conference Board, a New York-based private research group, said its Consumer Confidence Index fell to 59.7 this month, down from 68 in February. The decline was mainly due to a drop in expectations for the economy over the next six months, though consumers also were more pessimistic regarding current economic conditions.
Some economists think the timing of the survey may have exacerbated the decline.
The survey was conducted from March 1 through March 14, just as $85 billion in automatic spending cuts began.