Housing starts climbed 6.3 percent to a 1.02 million annualized rate from a 957,000 pace in August as multifamily and single-family projects advanced. The University of Michigan preliminary sentiment index for October increased to 86.4, the strongest since July 2007, another report showed. Builders started work on more homes in September and American consumers this month were the most optimistic in seven years, signalling the U.S. economy will ride out a global slowdown. Gains in residential construction will help underpin the economic expansion as the recent drop in mortgage rates lifts home sales and gives builders reason to take on more projects.
The firming in consumer confidence reflected a jump in Americans’ expectations about the economy six months from now as that gauge rose to 78.4 in October, a two-year high, the report from the University of Michigan showed. The index of current conditions, which measures Americans’ views of their personal finances, was unchanged at 98.9.
Job gains are on track for their strongest year since 1999 and cheaper gas prices are keeping households upbeat about the economic expansion amid the weakening in Europe and emerging nations. Faster wage increases and more broad-based improvement in the labour market would help further spur the consumer spending that makes up about 70 percent of the economy.
US Federal Reserve chair Janet Yellen said that she was "greatly concerned" about rising inequality in the US. "I think it is appropriate to ask whether (growing inequality) is compatible with values rooted in our nation's history," she said in a speech in Boston on Friday. Some worried the speech politicised the Fed in favour of Democrats. President Barack Obama has highlighted inequality in recent speeches on the state of the US economy. Ms Yellen has made efforts since taking over as head of the central bank in January to focus more on issues beyond the basic rate-setting role of the Fed.
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