The US economy has fallen into recession after a series of financial crises sparked by the subprime mortgage crisis, tight credit conditions and global economic turmoil.

 

However, US stocks on Tuesday rose in midmorning trading despite the poor data, with the Dow Jones Industrial Average up 51.37, or 0.61 per cent, to 8,535.30 points.

 

Home prices fall

 

In other poor economic news, prices of single-family homes in October posted a record fall of 18 per cent from last year, the Standard & Poor's/Case-Shiller Home Price Indices reported.

 

S&P said its index of house prices in 10 major metropolitan areas dropped 2.1 per cent in October from September, another record slump.

 

US sales after the Christmas holidays at major shops have also been poor, with sales falling 1.8 per cent in the week ending December 27 compared with the previous year, when sales fell 1.5 percent, the ICSC-Goldman Sachs Weekly Chain Store Sales index reported.

 

Analysts say the latest poor data reflects a further deterioration of economic conditions in the US and warn that the coming year is not expected to provide any financial relief.

 

"The overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half," Lynn Franco, director of the Conference Board's Consumer Research Centre, said.