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But they worry that the lingering effects of the housing bust are slowing the U.S. economy's expansion. The AP economists say growth can't accelerate until national home prices
-- which dropped for a sixth straight month in February -- finally bottom. Falling house prices can slow numerous sectors of the economy. They demoralize consumers by eroding their chief source of wealth. A 30 percent drop in housing prices has vaporized $7 trillion in home equity since 2006. Some of the economists fear that the financial crisis and recession left lasting consequences. Among their concerns: Growth will remain slow as consumers pare debts. The long-term unemployed will struggle to regain jobs. People will no longer see housing as a source of wealth. And many will lose faith in the idea that Americans can achieve rising living standards. One sign of the still-tough job market is long-term unemployment: Forty-three percent of the unemployed
-- 5.3 million Americans -- have been out of work six months or more. Most of the economists blame weak customer demand. Only about a third think the main reason is a mismatch between the skills workers have and the skills employers need. The unemployed might not get much relief from manufacturers, despite a report this week that U.S. factory activity grew last month at the fastest pace in nearly a year. The economists think manufacturers, a key source of hiring during the recovery, will fill jobs more slowly the rest of the year. If so, that could slow overall job growth. Another factor in the economists' cautious view of hiring: political bickering and doubts about government policies in an election year. "There's still a ton of uncertainty about the future of tax and regulatory policy," says Swagel, a Treasury Department official under President George W. Bush. "Business that might be tempted to expand say,
'I don't know what my taxes will be in three years.' "
[Associated
Press;
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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