U.S. economy sends conflicting signals

WASHINGTON -- Anyone puzzled by the most recent U.S. economic data has reason: The numbers sketch a sometimes contradictory picture.

We've learned that:

Consumers are more confident, but aren't spending much. Fewer people are losing jobs, but not many are being hired.

Home and stock prices are up, but workers' pay is trailing inflation.

Auto sales have jumped, but manufacturing is faltering.

That's what an economy stuck in a slow-growth rut can look like, and it's a focal point of the presidential campaign. The U.S. economy grew at a scant 1.3 percent annual rate in the April-June quarter, too weak to reduce high unemployment. And most economists foresee little, if any, improvement the rest of the year.

Many Americans are reducing debt loads instead of spending freely. Builders are borrowing less and constructing homes at a modest pace. Businesses are being cautious about hiring and expanding.

In the long run, reduced debts and rising home and stock prices will help rebuild household wealth, boost consumer spending and spur job growth. But it's taking time.

"The U.S. outlook could best be described as one of near-term weakness and long-term strength," says Chris Jones, an economist at TD Bank.

Home prices, after plunging when the housing bubble burst, are finally rising steadily, according to the Standard & Poor's/Case-Shiller index. The index rose in July compared with a year earlier, the second straight year-over-year gain. Still, the annual pace of new-home sales dipped in August from a two-year high in July. At the same time, sales were nearly 28 percent above the level a year earlier.

Americans are feeling better about the economy, despite chronically weak job gains and pay levels that lag inflation. The private Conference Board's index of consumer confidence is at a seven-month peak. A survey of consumer sentiment by the University of Michigan reached its second-highest point in nearly five years.

Businesses appear less confident than consumers. A survey of chief executives of large U.S. companies has found their outlook to be at its most pessimistic level since the fall of 2009, just after the recession officially ended. Orders for long-lasting factory goods plummeted in August.

Americans spent more in August, mainly because they had to pay more for gas and some other items. Adjusted for inflation, consumer spending barely rose in August.