U.S. Economy: Confidence, Home Prices Beat Forecasts

U.S. consumer confidence climbed more than forecast and national home prices increased for the first time in three years, signaling government efforts to right the world’s biggest economy are starting to pay off.

The Conference Board’s confidence index rose to 54.1 in August, the first gain since May, as consumers became less concerned about the outlook for jobs, the New York research group said today. The S&P/Case-Shiller home-price index advanced 2.9 percent in the second quarter from the previous three months, the first increase since 2006 and the biggest in almost four years.

The reports underscore why President Barack Obama gave Ben S. Bernanke a vote of confidence today by nominating the head of the Federal Reserve to a second term as chairman. Indications the housing crisis that triggered the worst recession since the 1930s is dissipating boosted stocks even as the White House downgraded growth and deficit forecasts.

“We’ve moved into the recovery phase,” said Conrad DeQuadros, senior economist at RDQ Economics in New York. “The talk about the recession being over, combined with better economic data, stabilization in housing and strength in equity markets is driving consumer confidence higher.”

The Standard & Poor’s 500 Index rose 0.2 percent to close at 1,028. The rally was restrained by declining shares of energy producers as oil prices tumbled. The drop in oil boosted Treasuries, sending the yield on the benchmark 10-year note down to 3.44 percent at 5:14 p.m. in New York from 3.48 percent late yesterday.

Four More Years

Obama nominated Bernanke, who led the biggest expansion of the central bank’s power in its 95-year history to stem the worst financial crisis since the Great Depression, for a second four-year term starting Jan. 31. The appointment still needs to be approved by the Senate.