Economy

Deficit reduction must take a backseat to policies driving economic growth, according to President Barack Obama’s economic team.

Sales of existing homes fell unexpectedly by 2.2 percent from April to May as analysts' estimates came up short that a federal tax incentive would boost sales beyond its expiration date. 

Demand decreased to a 5.66 million annual rate, as home sales most likely rallied before the April 30 deadline on a tax incentive worth as much as $8,000, according to data released Tuesday by the National Association of Realtors.

Despite the drop, NAR chief economist Lawrence Yun was upbeat on the news, saying, "We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings." 

Economists had estimated a more-than-6-percent increase and a pace greater than a 6 million annual rate. April's sales rate was revised up to 5.79 million from the 5.77 million reported last month. 

The move followed pressure from lawmakers including Sen. Schumer, who continues to push legislation.

Housing and Urban Development Secretary Shaun Donovan on Monday released a scorecard on the housing market showing that the sector has greatly improved. 

"There is no question that today's housing market is in significantly better shape than anyone predicted 18 months ago," he told reporters, adding, "Seventeen months after President Obama took office our housing market is stabilizing." 

The Senate Finance Committee will hold a hearing next week to examine the nation's trade relationship with China. 

The hearing, set for 2:30 p.m. Wednesday, will focus on China's policies that favor "indigenous" innovation, failure to effectively protect and enforce U.S. intellectual property rights, barriers to American agriculture and other imports and discriminatory government procurement practices.  

Senate Finance Chairman Max Baucus (D-Mont.) also plans to discuss the Obama administration's plan to double American exports within five years and getting better access for American ranchers, farmers and businesses to China's markets.

Commerce Secretary Gary Locke and U.S. Trade Representative Ronald Kirk will testify at the hearing. 

Baucus held a hearing with Treasury Secretary Timothy Geithner on June 10 to evaluate the direction of the U.S.-China economic relationship.   

The Economic Advisory Committee of the American Bankers Association this week said the economy is on a solid path toward recovery and predicted that bank credit to consumers and businesses would pick up this year and increase more rapidly in 2011. 

"Bank lending is growing and will help finance the economic expansion," said Stuart Hoffman, committee chairman and chief economist of PNC Financial Services Group, in prepared remarks. 

The prediction on credit comes after the House passed legislation providing incentives for banks to loan to small businesses. The Senate is expected to take up the bill after it completes work on the so-called tax extender bill. 

Unemployment rates dropped in 37 states in May but improvements still aren't considered a signal that job creation is rooting nationwide. 

Six states saw an increase in the jobless rate and seven saw no change, according to a report from the Labor Department on Friday. 

Nonfarm payrolls rose in 41 states and in Washington, D.C., while only five states showed drops. The nation's most populated states — California, Texas and New York — added the largest number of jobs, but Delaware, Maine and Rhode Island added the most jobs in percentage terms.

President Barack Obama said "more needs to be done" to bring jobs and economic growth to those fams and communities not yet seeing it, during a speech Friday in Columbus, Ohio.

The White House on Friday released a letter from President Barack Obama to G-20 leaders that urges them to continue efforts to shore up the global economy as they head to the summit in Toronto.

"Our highest priority in Toronto must be to safeguard and strengthen the recovery," the June 16 letter states. "We worked exceptionally hard to restore growth; we cannot let it falter or lose strength now."

New jobless claims rose unexpectedly by 12,000 last week, reflecting continued weakness in the job market. 

Claims increased to a seasonally adjusted 472,000 for the week ending June 12, the highest level in a month, according to Labor Department figures released Thursday. 

The four-week moving average, which smooths out the volatility of the weekly number, dropped 500 from the previous week's revised average of 464,000. 

The number of people receiving unemployment insurance fell 255,000 to 4.46 million, the lowest level since December 2008. 

Economists argue that jobless claims need to drop into the low 400,000s or high 300,000s to reflect stronger job growth in the private sector. 

The unemployment rate dropped to 9.7 percent in May on the creation of more than 400,000 jobs. But most of those jobs were temporary government jobs for the federal Census, not from the private sector. 

Spirit Airlines and the union representing striking pilots reached a tentative agreement Wednesday.

The Florida-based airline said on its website it will start flying again Friday, nearly a week after pilots walked out over a salary dispute.  

The Air Line Pilots Association announced the deal Wednesday afternoon and said details were still being worked out on an agreement, but final negotiations were expected to move along smoothly. Details of the accord weren't available. 

The strike began last Saturday and negotiations re-started Tuesday. 

Spirit and its pilots have spent nearly three years trying to work out a deal on raises. Although the airline had offered more money, the pilots argued that pay was lower than their discount-airline counterparts such as AirTran and JetBlue Airways. They complained that they would have to fly more to get extra money and the increases were spread out beyond the proposed five-year contract. 

The strike unexpectedly grounded Spirit, leaving stranded the approximately 16,000 people they fly daily.