July 26, 2002
Wages, Benefits Grow, Mark Signs of Recovery
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The second quarter showed some signs of economic recovery, as workers wages and benefits increased by 1 percent. The increase was the fastest in six months, the Associated Press reports, and was bigger than many analysts expected.
The U.S. Commerce Department reported that orders to factories for high-cost goods dropped by 3.8 percent from May to June, while analysts had been forecasting a 0.5 percent increase. The drop marked the largest since November, according to the AP.
In addition, the National Association of Realtors reported that the sales of existing homes decreased 11.7 percent in June. But the association predicts that sales will reach a record sometime this year. Low mortgage rates have been spurring economic recovery by giving buyers an incentive.
According to the AP, the latest economic reports suggest that the economy is slowly but surely recovering. The Federal Reserve may keep interest rates at current lows throughout the rest of the year, however.
Treasury Secretary Paul O'Neill maintains his confidence in the economy.
"The reality is that our economy remains solid, and our recovery is well under way," O'Neill told the National Association of Manufacturers Thursday. He predicts the economy will rebound to growth of around 3 percent to 3.5 percent by the end of this year, the AP reports..
New claims for unemployment insurance fell for the second week in a row, marking their lowest level in almost a year and a half. But Thomas Stengle, a Labor Department statistician, warned that unemployment claims fluctuate quite a lot this time of year.
The AP reports that benefit costs also increased, exceeding the rate of increase of wage gains. Benefits costs rose 1.3 percent in the second quarter.