Archive for the ‘Economic News’ Category

NEW YORK (AP) — Stock futures rose Tuesday, a day after fears about European debt sparked …

US stock futures edge up after steep declines
May 24, 2011, 8:44 a.m. EDT
Associated Press

Journal By Calvin Lee Ledsome Sr.,

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NEW YORK (AP) — Stock futures rose Tuesday, a day after fears about European debt sparked steep declines in financial markets around the world.

Ahead of the opening bell, Dow Jones industrial average futures are up 39, or 0.3 percent, at 12,401. Standard & Poor’s 500 futures are up 5, or 0.4 percent, at 1,319. Nasdaq 100 futures are up 7, or 0.3, at 2,322.

The modest advance in futures trading came despite more troubling news about the state of European debt management.

Greece‘s main opposition party said it opposed the government’s new austerity measures. The announcement dashed hopes that the country might be able to repair its finances enough to get another loan package from the International Monetary Fund.

Ratings agency Moody’s warned that a Greek restructuring of its debt would constitute a default. Moody’s said such a move would hurt the credit ratings of Greece and other debt-laden European countries. The ratings agency also said it would review 14 British financial institutions for a possible downgrade.

Nonetheless, European stocks recovered Tuesday after Monday’s declines.

The FTSE 100 index of leading British shares rose 0.4 percent in midday trading. Germany’s DAX rose 0.7 percent and the CAC-40 in France was 0.2 percent higher. The euro also rose slightly against the dollar after falling to a two-month low Monday.

In economic news, the Commerce Department is expected to report at 10 a.m. Eastern on how many new homes were bought in April, offering traders a glimpse at the housing market.

Analysts expect sales to have been roughly flat, rising slightly to an annual rate of 303,000 from 300,000 in March. That is still far below the 700,000 in annual sales seen as representing a healthy market.

New homes are unappealing to budget-conscious families because their median price is nearly 31 percent higher than previously-occupied homes. That’s twice the price difference typical of a healthy economy. At their current rate, new-home sales are on track to experience a sixth straight year of declines.

The Dow fell as much as 180 points Monday before paring back some of its losses after Greece, Italy and Spain suffered weekend setbacks in their attempts to control their debt. The Dow fell 130.78 points, or 1 percent, to close at 12,381.26.The S&P 500 index lost 15.90, or 1.2 percent, to 1,317.37. The Nasdaq dropped 44.42, or 1.6 percent, to 2,758.90.


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2 out of 5 Americans believe the economy will get better

Americans more upbeat about economy
May 12, 2011, 10:01 a.m. EDT
Associated Press

Journal By Calvin Lee Ledsome Sr.,

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WASHINGTON (AP) — Americans are growing more optimistic about the U.S. economy, a sentiment that is benefiting President Barack Obama despite public disenchantment with his handling of rising gasoline prices and swollen government budget deficits.

An Associated Press-GfK poll shows that more than 2 out of 5 people believe the U.S. economy will get better, while a third think it will stay the same and nearly a fourth think it will get worse, a rebound from last month’s more pessimistic attitude. And, for the first time since the 100-day mark of his presidency, slightly more than half approve of Obama’s stewardship of the economy.

Both findings represent a boost for Obama, though he still must overcome ill will over government red ink and the price of gas at the pump, now hovering around $4 a gallon.

But the public’s brighter economic outlook also could signal a boost to the current recovery, which relies to a great degree on consumer behavior. A public that is confident about economic performance is more likely to spend more and accelerate the economy’s resurgence.

The poll was conducted May 5-9 in the aftermath of the U.S. commando raid that killed Osama bin Laden, the al-Qaida leader behind the Sept. 11, 2001, terrorist attacks. The spike in public esteem for Obama as a result of that successful clandestine mission may have helped Obama’s standing on issues other than national security.

The poll coincides with renewed attention in Washington to the nation’s growing debt and the federal government’s long-term budget deficits, so any positive signs from the public could help Obama push his policy proposals. A bipartisan team of lawmakers is working with Vice President Joe Biden to identify spending cuts. Meanwhile, lawmakers also are discussing major structural changes to the tax system and to the government’s mammoth benefits programs of Medicare, Medicaid and Social Security.

The results of the AP-GfK poll stood out because other surveys taken after bin Laden’s death, while showing a spike in support for the president, continued to indicate dissatisfaction by a majority for his handling of the economy. Still, like the AP-GfK poll, other surveys also found American attitudes about the state of the nation improving.

Forty-five percent of those polled in the AP-GfK survey said the country was now moving in the right direction, an increase of 10 percentage points from five weeks ago. And attitudes about life in general remained positive, with 4 out of 5 respondents saying they were happy or somewhat happy with their circumstances.

“Once you hit bottom the only one way to go is up,” said John Bair, 23, a photographer and filmmaker from Pittsburgh. “Everybody that I come in contact with seems to be on the upswing. I consider that a pretty good thing.”

But Bair, who describes himself as a moderate to conservative independent, doesn’t believe Obama deserves re-election. He strongly disapproves of the president’s handling of gasoline prices and says Obama should do more to increase domestic production of oil.

“When I’m paying $4 for a gallon of gas, it gets me wondering what’s going on,” he said.

Obama has tried to appear engaged on gas prices even though there is little presidents can do to alter market fluctuations. He has called for new renewable energy policies and for eliminating tax breaks for oil and gas companies, while conceding those steps will not address the current price increases. The efforts have not given the public much to cheer about, however. A total of 61 percent disapprove of Obama’s approach to the rising cost of gasoline.

Indeed, for all the long-term confidence that the economy will recover, the public is hardly upbeat about the current state of things. Only 21 percent describe the economy as good and 73 percent describe it as poor. About 1 in 5 thought the economy got better during the past month; an equal number thought it got worse.

A favorable jobs report last Friday showed that private companies had exceeded expectations by creating 268,000 jobs last month, the third month of at least 200,000 new jobs. And while unemployment has dropped from a high of 10.1 percent nationally in October 2009, it is now 9 percent, the same as in January.

“We haven’t done anything to create the jobs that (Obama) promised —that all of them promised,” said John Grezaffi, 60, a rancher from Pointe Coupee Parish, La.

Grezaffi, taking a short break from working to shore up his land against a rising Mississippi River on Wednesday, said he somewhat supports Obama but does not support his handling of the economy and believes the country is moving in the wrong direction.

Approaching retirement age, he said he wasn’t eager to see his upcoming benefits shortchanged.

“I’m willing to give up a little, but not everything when you see the waste that occurs in so many other areas,” he said.

Deana Floss, 39, a Springfield, Ohio, restaurant cook and owner of a cleaning business, voiced lukewarm approval for Obama even though she doesn’t care for the state of the economy or Obama’s handling of the nation’s budget deficits.

“I don’t think he has done a very bad job with the economy,” she said. “It was already going downhill when he took the reins.”

The Associated Press-GfK Poll was conducted by GfK Roper Public Affairs and Corporate Communications. It involved landline and cell phone interviews with 1,001 adults nationwide and had a margin of sampling error of plus or minus 4.2 percentage points.


Associated Press Deputy Polling Director Jennifer Agiesta contributed to this report.




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Economy slowed by high gas prices, bad weather

Economy slowed by high gas prices, bad weather

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WASHINGTON (AP)The economy slowed sharply in the first three months of the year. High gas prices cut into consumer spending, bad weather delayed construction projects and the federal government slashed defense spending by the most in six years.

The 1.8 percent annual growth rate in the January-March quarter was weaker than the 3.1 percent growth in the previous quarter, the Commerce Department reported. And it was the worst showing since last spring when the European debt crisis slowed growth to a 1.7 percent pace.

Federal Reserve Chairman Ben Bernanke and other economists say the slowdown is a temporary setback. They generally agree that gas prices will stabilize and the economy will grow at a 3 percent pace in each of the next three quarters.

But gas prices are still going up. The housing market has shown little signs of recovering. And lawmakers are proposing some of the steepest cuts in federal spending in a generation. Those cuts would filter down to state and local governments, which are already wrestling with their own budget crises.

“The economy has lost its modest upward momentum, and headwinds such as rising gasoline prices and further budget cuts suggest the recovery will continue at only a moderate pace going forward,” said Sal Guatieri, senior economist at BMO Capital Markets.

The national average for a gallon of gas was $3.88 on Thursday. That’s an increase of 30 cents in the first month of the April-June quarter.

An inflation gauge in the report showed consumer prices rose last quarter at the fastest pace in nearly three years. Most of the increase came from higher fuel costs.

Rising gas prices are draining most of the extra money that Americans are receiving this year from a Social Security payroll tax cut.

That’s a major reason why consumer spending cooled off in the January-March quarter. Consumers boosted spending at a 2.7 percent pace, down from the previous quarter’s 4 percent pace and the weakest since last summer. Consumer spending is important because it accounts for roughly 70 percent of overall economic activity.

“All things considered, it could have been worse,” said economist Paul Dales at Capital Economics. Even though consumers spent less, the pace of spending by historical standards is decent. “Nevertheless, in a quarter when the economy began to benefit from additional monetary and fiscal stimulus, we had originally expected a lot more,” he said.

Pump prices weren’t the only reason spending slowed. Harsh winter weather also kept people from shopping in many parts of the country.

Winter storms — including rare snow that blanketed the South — also forced builders to delay construction projects, a big factor holding back overall economic activity. Builders slashed spending on commercial construction, such as office buildings and factories, at a 21.7 percent annualized pace, the deepest cuts since late 2009.

Residential construction was also affected. Builders cut spending on housing projects by a 4.1 percent annualized rate.

The housing market’s collapse thrust the economy into a deep recession, and economists say it will take years for the industry to heal. Two years after the recession has ended, the housing market remains depressed.

Bernanke suggested at a news conference Wednesday that the crippled housing market will continue to drag on economic growth. He pointed out that home building and commercial construction were both “very weak” in the first quarter. Normally, construction spending is much stronger at this stage of an economic recovery.

The government is also spending less. The federal government cut military spending at an annualized rate of 11.7 percent last quarter — the deepest cut since 2005.

Bernanke and other economists expect government defense spending and consumer spending will rebound in the next quarter.

Economists in a new Associated Press survey predict the economy is growing at a 3.2 percent pace this quarter and that growth will steadily improve over the remainder of the year.

One concern is the rise in prices. An inflation gauge tied to the report showed that consumer prices rose at an annual rate of 3.8 percent. That’s the biggest gain since the summer of 2008, when gasoline prices hit a record high of $4.11 a gallon nationwide.

Stripping out energy and food prices, inflation rose at a rate of 1.5 percent. That’s at the low end of the range of inflation the Federal Reserve believes is needed for a healthy economy.


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Poll: US economy improving despite global events

Poll: US economy improving despite global events
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WASHINGTON (AP)Economists say the U.S. economy is gaining strength despite political unrest in North Africa and the Middle East and last month’s devastating earthquake and tsunami in Japan.

A survey from the National Association for Business Economics finds that economists are hopeful that the broader economy is substantially improving, with rising employment reported for the fifth quarter in a row. The survey found that “companies appear to be positioning themselves for a firming economic environment,” said Shawn DuBravac, an economist with the Consumer Electronics Association, who analyzed the findings.

The outlook for employment rose slightly, reaching a 12-year high. No firms reported significant layoffs, with the only reductions coming from already planned cuts.

Sales increased for the third consecutive quarter, profit margins continued to improve and the number of economists whose firms increased spending over the previous quarter held steady. Nearly all of the 72 economists surveyed, about 94 percent, now expect the economy to grow at least 2 percent in 2011.

The quarterly survey includes the views of economists for private companies and trade groups who are NABE members. The data are reported by broad industry groupings. Many results in the survey are expressed through the Net Rising Index, or NRI — the percentage of panelists reporting better outlooks minus the percentage whose outlook is bleaker.

The survey looked at two new questions for its April survey, gauging the financial impact of anti-government unrest in the Arab world and the deadly Japanese earthquake and tsunami.

Nearly 60 percent of those polled said they expected higher costs because of political turmoil in Bahrain, Egypt, Tunisia, Libya and Syria and about 52 percent said they expected economic growth to be weaker in 2011 because of the protests and fighting.

The March 11 earthquake and tsunami, which left nearly 28,000 people dead or missing and sparked a crisis at a nuclear plant, had less of an impact on the economic forecasts. About 31 percent said costs would be higher and 40 percent said it would weaken the broader economic recovery.

In the first quarter of this year, 63 percent of economists said sales rose from the previous quarter — the highest percentage since 1994. The NRI rating for sales rose 11 points from the previous quarter to 54, and the improvement was across all industry sectors: goods, utilities, information and communications, finance, insurance and real estate, and services.

Profit margins rose to an NRI figure of 31 — the highest rating since 1983. The number of economists reporting rising profits has almost doubled over the past year, to 45 percent from 25 percent.

Prices rose, with about one third of those surveyed saying their firms had made increases over the past three months. Two-thirds of the goods-producing industry, which includes farming, mining, construction and manufacturing, reported their firms had raised prices. Similarly, the costs paid for materials rose for the third quarter in a row and wages and salaries jumped to the highest reading since a survey in October 2007.

The survey was conducted between March 16 and 31.


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Deep spending cuts by state and local governments pose a growing threat to US economy

State and local budget cuts are slowing US economy
Feb. 25, 2011, 7:09 p.m. EST
Article Published by Associated Press
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WASHINGTON (AP) — Deep spending cuts by state and local governments pose a growing threat to an economy that is already grappling with high unemployment, depressed home prices and the surging cost of oil.

Lawmakers at state capitols and city halls are slashing jobs and programs, arguing that some pain now is better than a lot more later. But the cuts are coming at a price — weaker growth at the national level.

The clearest sign to date was a report Friday on U.S. gross domestic product for the final three months of 2010. The government lowered its growth estimate, pointing to larger-than-expected cuts by state and local governments. The report suggested that worsening state budget problems could hold back the recovery by putting more people out of work and reducing consumer spending.

Across the country, governors and lawmakers are proposing broad cutbacks — lowering fees paid to nursing homes in Florida, reducing health insurance subsidies for lower-income Pennsylvanians, closing prisons in New York state and scaling back programs for elderly and disabled Californians.

“The massive financial problems at the state and local levels have and will continue to restrain growth,” said economist Joel Naroff of Naroff Economic Advisors.

State and local governments account for 91 percent of all government spending on primary education, according to the Brookings Institution. And they provide 71 percent of higher-education spending. States also account for more than 70 percent of spending on roads, bridges and other infrastructure.

But those same governments cut spending at a 2.4 percent rate at the end of last year. And economists predict they will slash their budgets by up to 2.5 percent this year — potentially the sharpest reduction since 1943. The deepest cuts are expected to occur in the first six months of this year.

The worst cuts so far— 3.8 percent — came in the January-to-March period of 2010. That was the sharpest quarterly drop since late 1983, when the U.S. economy was recovering from a severe recession. Most economists think the cutbacks this year will exert an even bigger economic drag than last year.

Newly elected Republican governors are leading the charge. They’re acting on campaign pledges to shrink government to meet budget gaps. They favor smaller governments with lower taxes and less regulation, which they say will boost private-sector growth and job creation.

Some Democrats — including Govs. Andrew Cuomo of New York and Jerry Brown of California — have followed suit. They’re pushing for cuts to social programs and concessions from unions.

The governors’ push for painful cuts comes just as they gather in Washington this weekend for their winter meeting.

“We have to balance our budgets. We have to address costs. And we also have to move forward at the same time,” Maryland Gov. Martin O’Malley, head of the Democratic Governors Association, said after his group met with President Barack Obama and Vice President Joe Biden at the White House.

No state has attracted more attention than Wisconsin. Pointing to the state’s projected $3.6 billion gap, Republican Gov. Scott Walker wants to strip state workers of collective bargaining rights. He also wants them to contribute more to their pensions and health insurance costs.

The budget fight has taken center stage in Congress. Democrats are bending to Republican demands for spending cuts to avoid a shutdown of the federal government next week.

The reduction in federal spending has a direct effect on states and municipalities. They depend on money from Washington to keep schools operating, put police officers on the street and subsidize public services like job training. The end of federal stimulus programs is also widening state deficits.

Many governors, including those in Florida, New York and Colorado, are pursuing tighter budgets. Their proposals include laying off public workers and teachers, reducing spending for education and health care, and ending some social services. They’re also targeting public pension funds and health insurance plans and seeking larger contributions from public employees.

State and local budget experts fear the cutbacks will intensify this year. States are struggling to close budget gaps of about $125 billion for the upcoming budget year, according to the Center on Budget and Policy Priorities.

That’s a smaller gap than states faced in the past two years. But this time, governors won’t have federal stimulus funds to help close the deficits. And state governments, in turn, are reducing the aid they send to local governments.

“We suspect that these cutbacks are going to deepen over the next couple of quarters,” said Mark Muro, a senior fellow at the Brookings Institution. “It’s likely we’re only beginning to see the state and local drag.”

In Florida, newly elected Republican Gov. Rick Scott wants to reduce the state’s budget 5 percent. To get there, he wants to slash 8,600 state jobs and reduce Medicaid costs through a 5 percent cut in fees paid to hospitals and nursing homes, but not doctors.

Health-insurance cuts are popular with many Republican governors. Pennsylvania Gov. Tom Corbett, facing a projected $4 billion-plus deficit, said he can’t find the cash to extend a program that subsidizes health care for 41,000 lower-income adults and is nearly out of money.

Arizona Gov. Jan Brewer is suggesting that the state drop Medicaid coverage for 250,000 low-income people to make up about half of the state’s projected shortfall of about $1 billion.

It’s not just Republicans demanding tough fiscal medicine. In New York, Gov. Cuomo has said up to 9,800 state employees could be laid off if public-employee unions don’t agree to millions of dollars in concessions.

The newly elected Democrat has also proposed $1 billion in cuts to New York’s Medicaid program, with its 4.7 million recipients. He also wants to close some prisons, freeze wages for nearly 200,000 state workers, cut $1.5 billion in aid to public schools and chop 10 percent from the state’s operating budget.

In California, Brown has imposed a state hiring freeze and is proposing cuts to a host of social programs that serve the poor, elderly and disabled. He is also seeking more than $12 billion in tax extensions and fees. The state is grappling with a $26.6 billion fiscal crisis.

State spending represents just a fraction of the nation’s economic activity. Consumers typically spend roughly six times more than state and local governments do. So a big increase in consumer spending can offset public-sector cuts.

U.S. consumers boosted spending at a 4.1 percent annual rate in the final quarter of 2010 year; state and local governments cut spending at a 2.4 percent pace. If consumers had spent just 0.4 percentage point more, they would have offset the state and local government cutbacks.

That said, layoffs hurt consumer spending. And states and local governments are cutting their payrolls. State and local governments have cut more than 400,000 jobs in the past two years. Budget pressures will force an average of 20,000 more job cuts each month for the rest of this year, estimates Jon Shure of the Center on Budget and Policy Priorities, a left-leaning think tank.

State tax revenue has begun to grow again after falling sharply in recent years. But many governors are now proposing tax cuts as a way to encourage business activity, Shure said. That’s likely to escalate pressure for spending cuts because most states must balance their budgets each year.


Contributing to this story were Associated Press writers Christopher S. Rugaber in Washington; Sandra Chereb in Carson City, Nev.; Juliet Williams in Sacramento, Calif.; Paul Davenport in Phoenix; Geoff Mulvihill in Haddonfield, N.J.; Michael Virtanen in Albany, N.Y.; Colleen Slevin in Denver; Marc Levy in Harrisburg, Pa.; Jim Davenport in Columbia, S.C.; Bill Kaczor in Tallahassee, Fla.; and Jonathan Cooper in Salem, Ore.

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State spending cuts slow US economic growth in Q4

State spending cuts slow US economic growth in Q4
Feb. 25, 2011, 10:28 a.m. EST
Article Published by Associated Press Writers
Article Posted Here by Calvin Lee Ledsome Sr.,

WASHINGTON (AP) — Deeper spending cuts by state and local governments weighed down U.S. economic growth in the final three months of last year.

The government’s new estimate for the October-December quarter illustrates how growing state budget crises could hold back the economic recovery.

The Commerce Department reported Friday that economic growth increased at an annual rate of 2.8 percent in the final quarter of last year. That was down from the initial estimate of 3.2 percent.

The weaker figure was disappointing and prompted some economists to lower their forecasts for economic growth in the current January-March quarter.

State and local governments, wrestling with budget shortfalls, cut spending at a 2.4 percent pace. That was much deeper than the 0.9 percent annualized cut first estimated and was the most since the start of 2010.

Consumers spent a little less than first thought. Their spending rose at a rate of 4.1 percent, slightly smaller than the initial estimate of 4.4 percent. Still, it was the best showing since 2006. And it suggests Americans will play a larger role this year in helping the economy grow, especially with more money from a Social Security tax cut.

One of the crucial questions is whether consumers can spend enough this year to help offset negative forces in the economy — notably struggling state and local governments and a wobbly housing market that has depressed homes values.

Rising energy prices also pose a danger. If oil prices were to rise to $150 or more a barrel and then stay there for months, another recession is possible, economists said. Gasoline prices would near $5 a gallon. Consumers and businesses would spend much less, and some employers might slash jobs.

“Consumers stumbled a bit to start the year, and while we expect them to pick up the pace some in coming months, the recent rise in energy prices poses a notable headwind,” said economist Michael Feroli at JP Morgan Chase Bank.

Overall economic growth in the October-December quarter was marginally better than the 2.6 percent pace logged in the prior quarter. The economy has steadily grown after hitting a difficult patch last spring. But rising oil prices and budget cuts by state and local government are creating headwinds.

Feroli and other analysts now predict the economy will grow at a pace around 3.5 percent in the January-March quarter. That’s down from earlier estimates in the 4 percent-plus range.

Government stimulus is fading and budget cuts at the federal level could further hamper economic growth.

The federal government trimmed spending at the end of the year, entirely reflecting cuts to defense spending. And a showdown over the U.S. budget is taking place on Capitol Hill between Democrats and Republicans, threatening a government shutdown.

For all of last year, the economy grew 2.8 percent, the most in five years, according to revised figures. That was down a bit from the 2.9 percent growth first estimated a month ago. However, it was an improvement from 2009 when the economy suffered its worst decline in more than 60 years.

Still, economic growth must be stronger to make a noticeable dent in unemployment, which was 9 percent last month. The economy would need to grow 5 percent for a whole year to significantly bring down the unemployment rate. Economic growth of just 3 percent a year would hold the unemployment steady and keep up with population growth.

Looking ahead the economy is expected to grow by 3.2 percent this year, according to an AP Economy Survey.

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Home prices are hitting new depths in most major U.S. cities – Feb. 22, 2011

Home prices plummet in most big US cities
Feb. 22, 2011, 6:17 p.m. EST
Article Published by Associated Press Writers
Article Posted Here by Public News Blog Posting Service Group

WASHINGTON (AP) — Home prices are hitting new depths in most major U.S. cities and are expected to fall further over the next six months.

In a majority of metro areas tracked by Standard & Poor’s/Case-Shiller, prices have fallen to their lowest points since the housing bubble burst.

High unemployment, stricter lending rules and fears that prices will continue to fall are among the reasons why few people are buying homes. A rising number of foreclosures are also weighing down prices. And as more people get stuck in depreciating homes, housing could slow the economy.

Across the country, the housing industry is recovering unevenly. Many of the cities now setting new lows have been struggling with high unemployment, more foreclosures and, in some cases, a delayed response to the housing bust in 2006 and 2007.

Homes in more established areas — those that had little room to build during the housing boom — are doing a better job holding their value. Coastal cities in California and Northeast are seeing much smaller price declines. In Washington and San Diego, home prices even rose over the past year.

Still, many people who want to buy can’t. Nearly 25 percent of households cannot move because they owe more on their mortgage than their home is worth, according to Capital Economics. An additional 25 percent can’t qualify for a new mortgage because selling their homes would leave them with too little money for a down payment.

“We’re likely to see new lows hit across most major markets at some point in 2011,” said Mark Vitner, a senior economist at Wells Fargo Securities. “We’re afraid of all this turning into another vicious cycle.”

Housing prices in all but one of the 20 cities tracked by Standard & Poor’s/Case Shiller fell in December from November. And the overall index declined for the sixth straight month. Washington was the only metro area where prices rose month to month.

Eleven of the markets hit their lowest point since the housing bubble burst in 2006 and 2007: Atlanta, Charlotte, N.C., Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Seattle, Tampa, Fla., and Portland, Ore.

The housing sector is struggling even while much of the economy is recovering slowly but steadily. The latest evidence of the divide came Tuesday when the Conference Board said its Consumer Confidence Index rose in February to its highest point in three years. The report suggested that many people are more hopeful about hiring and income gains over the next six months.

By contrast, the outlook for housing this year is dim. Construction of new homes is on pace for little more than half the million units a year that economists consider to be healthy. And the number of vacant homes is near a record high.

Some of the worst declines in home prices are in cities hit hardest by high unemployment and foreclosures. A home that sold for $250,000 in Detroit in 2000, for example, now sells for roughly $163,150, according to the housing report. The unemployment rate there was 11.1 percent.

One in 24 Detroit-area homes with a mortgage was at risk of foreclosure last year, according to foreclosure tracker RealtyTrac Inc. — the fifth highest rate among major cities.

Homes in Las Vegas, on average, have lost more than half their value since 2006. They now sell for less than they did in 2000. The city had a record-high 14.9 percent unemployment rate in December. It also led the nation in foreclosures last year.

Three out of every four sales in southern Nevada are foreclosures or “short sales.” These sales occur when a bank lets a homeowner sell a home for less than what’s owed on the mortgage.

“You can see how many people’s dreams just didn’t make it,” said Karin Wilson, a real estate agent with Century 21 in Las Vegas.

For many, the problem is getting worse. In Phoenix, about 70 percent of all homes with a mortgage were at risk of foreclosure in January, according to the Arizona Regional Multiple Listing Service.

The median home price has dropped by half since 2008, to roughly $110,000. Prices in one central Phoenix zip code have plunged 81 percent in the past three years.

In Tampa, foreclosures and short sales dominate the housing market. One in 20 households with a mortgage was at risk of foreclosure last year. Home buyers are mainly interested in distressed properties, real estate agents say.

“They all want to steal them,” said Stephanie LeFew, owner of Tampa Home Buy Realty. “I had someone call me from Australia the other day wanting an inexpensive property for $20,000.”

Tougher lending rules have scared away some potential home-buyers. Banks have been hesitant to extend new credit. Many are demanding that buyers put down a larger down payment. During the housing boom, people in many cases were able to buy homes with little or no money down.

In many depressed markets, a significant percentage of buyers are really investors and private equity firms looking to cash in on cheap real estate, Realtors say.

The federal government is trying to deter this practice, at least in cities hit hardest by foreclosures. In Detroit, the city is using money from the U.S. Department of Housing and Urban Development to offer suburban homes to police officers with only a $1,000 down payment.

But locals have yet to take advantage. The average home price in Detroit fell 7.5 percent in the October-December quarter, to $73,200, the lowest in the nation, according to

“People don’t qualify for loans anymore, and banks have continued to price homes lower and lower,” said Mike Shannon, a suburban Detroit real estate agent who specializes in foreclosures.

Millions of foreclosures are also expected to flood the market this year. That will force prices still lower. For many, the big question is, when will prices bottom? Some have tried to time their purchases to buy at the bottom. It often hasn’t worked.

Matthew Hartman, a 38-year-old sales manager in Chicago, thought he was getting a steal in 2009 when he bought a four-bedroom house for $395,000. He sold it last month for $370,000.

“We kind of thought that the market was toward the bottom, especially when we moved here in August of last year,” he said. “We thought we got a great deal on this house.”


AP Business Writer Alex Veiga in Los Angeles contributed to this report. Herron reported from New York.

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