Last Week in the News (February 23, 2009)

On Tuesday, February 17, it was announced that the National Association of Home Builders/Wells Fargo housing market index rose one point to nine in February, after falling to an all-time low of eight in January. An index reading higher than 50 indicates positive sentiment about the housing market.

On Tuesday, President Barack Obama signed into law a $787 billion economic stimulus plan designed to spur consumer spending and create millions of jobs. The American Recovery and Reinvestment Act contains numerous provisions: roughly $300 billion in tax breaks for individuals and businesses, more than $250 billion in aid to distressed states, and almost $200 billion to upgrade the nation’s infrastructure. The package also includes an $8,000 tax credit for first-time homebuyers, which does not have to be repaid unless you sell your home within three years.

The Commerce Department reported Wednesday that construction of new homes and apartments fell 16.8% in January to a seasonally adjusted annual rate of 466,000 units, the lowest on record. Economists had anticipated a decline to 530,000 units. Meanwhile, building permits fell 4.8% to a rate of 521,000 units.

The Federal Reserve reported Wednesday that industrial production at the nation’s factories, mines and utilities fell 1.8% in January. Economists had expected a 1.5% decline. Manufacturing, which accounts for about four-fifths of industrial production, decreased 2.5%, utilities posted a 2.7% gain and mining output dipped 1.3%.

On Wednesday, Obama unveiled the $75 billion Homeowner Stability Initiative. The multi-step plan would help struggling homeowners by providing incentives to lenders, servicers, mortgage holders and borrowers to help modify mortgage loans. The goal is to prevent as many as nine million Americans from losing their homes to foreclosure.

The Labor Department reported the producer price index, which tracks wholesale prices, rose by 0.8% in January. It was the largest increase since July 2008. Economists had expected a 0.2% increase.

Upcoming on the economic calendar are reports on consumer confidence on February 24, and durable goods orders and new home sales on February 26.