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US economy showing strength as spending cuts loom

Wednesday - 2/27/2013, 6:14am  ET

FILE - In this Friday, Jan. 11, 2013 photo, a construction worker works at a new home under construction in Chicago. U.S. new-home sales jumped in January from the previous month to the highest level since July 2008, a sign that the housing recovery is accelerating. (AP Photo/Nam Y. Huh, File)

CHRISTOPHER S. RUGABER
AP Economics Writer

WASHINGTON (AP) -- Even with automatic spending cuts looming, the outlook for the U.S. economy brightened a bit Tuesday after reports showed that Americans are more confident and are buying more new homes.

Home prices are also rising steadily, and banks are lending more. Such improvements suggest that the economy is resilient enough to withstand the deep government cuts that will kick in Friday.

That's especially encouraging because uncertainty over the federal budget could persist for months.

"The stars are lining up for stronger private sector growth this year," said Craig Alexander, chief economist at TD Bank.

Sales of new homes jumped nearly 16 percent in January to their highest level in 4
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