The economic recovery showed signs that it had staying power as the new year began, with home sales surging as 2010 ended and weekly jobless claims posting the biggest decline in almost a year.
Sales of previously owned homes jumped to the fastest pace in seven months in December, even though fewer people bought existing homes last year than in any year since 1997.
Existing home sales soared 12.3 percent to an annual rate of 5.28 million units, the National Association of Realtors said on Thursday, far surpassing forecasts for a rise to 4.85 million. But sales fell 4.8 percent to 4.91 million units in 2010, the weakest performance in 13 years, showing just how far the housing market needs to go before returning to health.
The number of Americans filing for first-time unemployment benefits dropped sharply to 404,000 from a downwardly revised reading of 441,000 in the prior week, the Labor Department said on Thursday.
The 37,000 drop in claims was the biggest since the week that ended February 6, when claims fell by 51,000. Analysts had expected weekly jobless claims to fall to 420,000.
"The trend of the last three months is clearly downward. The pace of layoffs is clearly lower," said Christopher Low, chief economist at FTN Financial in New York. But he added: "Hirings are still frustratingly slow."
Despite that, evidence has been mounting that the economy is picking up a bit of momentum after one of its longest stretches of stagnation since the Great Depression.
A private research group said its gauge of future economic activity rose in December, suggesting the U.S. economy will strengthen over the next few months.
The Conference Board said its index of leading economic indicators rose 1 percent last month after a 1.1 percent increase in November. Those are the biggest increases since March, when the index jumped 1.4 percent.
And a Reuters poll of about 80 economists, released Wednesday, suggested U.S. gross domestic product will rise by 3.0 percent on an annualized basis in 2011, up from 2.7 percent in a similar poll in December and 2.3 percent in a November poll. The median of forecasts for 2010 GDP rose to growth of 2.9 percent from 2.8 percent in the December poll.
"Most of the reports today were fairly good. For anyone skeptical about the U.S. recovery, these should ease concern," said Kathy Lien, director of research at GTF Forex in New York.
A Labor Department official said the larger-than-expected decline in jobless claims was partly explained by claims returning to trend after the big rise the earlier week.
The big spike in the week ended January 8 may have reflected a backlog of claims built up over the holiday season.
The Labor Department data correspond to the survey week for the government's closely watched report on employment, which will be released on Feb 4. The jobless rate has remained stubbornly high, and was reported at 9.4 percent in December.
The four-week moving average of new claims, which strips out short-term volatility, dropped by 4,000 to 411,750. Economists say getting the four-week average for new jobless claims below 400,000 would be an important signal the lofty unemployment rate was set to come down.
Continuing claims fell to 3.86 million in the week ended January 8, the lowest level in over two years.
However, the total number of Americans on benefit rolls, including extended benefits under emergency government programs, jumped to 9.6 million in the week ended January 1 from 9.2 million the prior week.
And the housing market remains under heavy pressure, despite the higher sales at the end of 2010. Home prices have been depressed by a record number of foreclosures and high unemployment. Many potential buyers held off on purchases last year, fearful that prices hadn't bottomed out yet.
Some economists expect home prices in 2011 will be even weaker, with more foreclosures expected.
