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Economy Briefs: Moody’s says outlook for banks remains negative
Moody's Investors Service says its outlook for the U.S. banking industry remains negative, as low interest rates and tepid economic growth will continue to hurt banks’ finances over the next 12 to 18 months.
The rating agency also says in a report issued Tuesday that uncertainty over a plan to reduce the federal budget deficit as well as the debt crisis in Europe create a difficult environment for U.S. banks.
Moody's has raised its credit rating outlooks for most U.S. banks to “Stable” from “Negative” since early 2010 as banks have increased their cushions against losses. But Moody's says problems in the broader economy override that, as banks still carry many loans prone to default on their books and gains could be reversed if the economy turns downward.
Prices rise in July by most in 6 years
U.S. home prices jumped 3.8 percent in the 12 months ending in July, according to a private real estate data provider. The year-over-year increase was the biggest in six years, further evidence that the housing market is steadily recovering.
CoreLogic says home prices also rose 1.3 percent in July from June. That’s the fifth straight increase in both the monthly and year-over-year price indexes.
CoreLogic’s price index is the third national index to show steady increases. The Standard & Poor’s/Case-Shiller index posted its first annual increase in nearly two years last week. And a federal government housing agency has also reported annual increases.
Still, the housing market’s recovery is just beginning. Prices are still 27 percent below their peak in April 2006, CoreLogic says.
Construction spending fell 0.9%
U.S. construction spending fell in July from June by the largest amount in a year, weighed down by a big drop in home improvement projects.
But spending on construction of single-family homes and apartments increased again, a hopeful sign for the modest housing recovery.
The Commerce Department said Tuesday that overall construction spending declined 0.9 percent in July. It followed three months of gains, which were driven by increases in home and apartment construction.
The June decline left spending at a seasonally adjusted annual rate of $834.4 billion. That’s nearly 12 percent above a 12-year low hit in February 2011.
• From wire dispatches and staff reports
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