Donald Lambro

-- The big news from a key sector of the economy: The Fed reported that industrial output rose by 0.3 percent last month, following a solid 0.6 percent rise in June. July's increase was fueled by a 0.6 percent rise in manufacturing, the second consecutive increase at this rate.

"Analysts believe U.S. factories, after being hit by a slowdown late last year, are starting to revive the economy in spite of continued troubles in the housing sector," Associated Press economics writer Martin Crutsinger reported last week.

Stronger global growth is a big factor behind the faster pace in factory output. We are selling more abroad and that, the government reported this month, has been driving down the trade deficit.

-- Another sign of the economy's health is last week's report that the budget deficit is falling faster than expected. Tax revenues have been flowing into the Treasury at higher-than-forecast levels as a result of growing employment and rising corporate earnings.

-- There's even a bit of hope that the housing sector's sales decline may be primed for an upturn, according to a report from the National Association of Realtors.

"Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming out in the fourth quarter of 2006," said NAR senior economist Lawrence Yun. "Recent disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets."

Notably, the NAR survey found housing price increases in 97 out of the 149 cities it surveyed, or about two-thirds of the market. In other words, the bottom is not falling out of the housing market.

The underlying reality in the housing market is that most homeowners have experienced "very healthy long-term gains," said NAR president Pat Combs. So, the pessimists on Wall Street notwithstanding, the U.S. economy is sturdy, resilient and growing. Over the long term, I don't think the housing downturn is going to fundamentally affect that trend.

Donald Lambro

Donald Lambro is chief political correspondent for The Washington Times.