- The Washington Times - Friday, September 18, 2009

U.S. household wealth increased $2 trillion during the second quarter, fueled by the biggest quarterly jump in stock prices in more than 10 years and the first increase in home values in more than two years, the Federal Reserve reported Thursday.

Household net worth, which peaked above $64 trillion in 2007 before plunging by $13 trillion during last year’s financial collapse, increased from $51.1 trillion in the first quarter to $53.1 trillion in the second quarter.

The recent gain in real estate values was just one indication that the housing market has begun to recover. In another sign, housing starts reached a nine-month peak in August as a big jump in groundbreaking for multi-family dwellings overwhelmed a slight decline in starts for single-family homes.

Meanwhile, first-time claims for unemployment benefits unexpectedly fell last week, indicating that the deterioration in the labor market may be slowing as the economic recovery begins to gain traction.

New residential construction increased 1.5 percent last month to an annual rate of 598,000 homes, the Commerce Department reported Thursday. Building starts for multi-family units, such as apartments and condominiums, increased 25.2 percent in August, more than offsetting a 3 percent decline in single-family homes.

It was the first decline in single-family starts in seven months, signaling that builders may be preparing for a fall in demand after the $8,000 tax credit for first-time homebuyers expires at the end of November.

Despite reaching a nine-month peak last month, housing starts in August were still 30 percent below their year-earlier level.

Residential construction, which had been plunging for more than three years, was a major factor in the steepness of the recession. But that trend is now reversing.

“Homebuilding should make a slight contribution to second-half [economic] growth,” said Mark Vitner, senior economist at Wells Fargo. “The impact, however, may be muted by the larger share of smaller homes being built for first-time home buyers.”

In the labor market, initial claims for jobless benefits fell 12,000 to 545,000 for the week ending Sept. 12, the Labor Department reported Thursday. However, continuing claims lasting more than one week jumped by 129,000 to 6.23 million for the week ending Sept. 5.

“The gradual downward trend in initial unemployment claims over the last several months continued this past week, illustrating that the road to labor-market stability will be long,” said Andrew Gledhill, an economic analyst at Moody’s Economy.com.

For workers who exhaust their state jobless benefits, which normally last 26 weeks, the federal government finances two other programs - the Extended Benefits program and the Emergency Unemployment Compensation (EUC) program. Participation in those two programs increased by 32,000 for the week ending Aug. 29, according to the Labor Department report.

Compared to 1.5 million workers who collected EUC benefits a year ago, more than 3.1 million received benefits in late August.

Since the latest recession began in December 2007, the economy has shed 6.9 million jobs, the most since the Great Depression. But the pace of job losses has slowed in recent months. After averaging nearly 650,000 per month from November through April, job losses averaged 315,000 during the past four months, and totaled just 216,000 in August. However, economists estimate that the economy must generate about 150,000 jobs per month just to keep the unemployment rate from rising.

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