THE ECONOMY.(A)

Economic rebound in second half

seen by Kansas City Fed chief

President Thomas Hoenig says there are still risks, such as higher energy costs and shaky consumer and business confidence. But he sees the economy growing 2% to 3% this year. The Fed's policy-makers meet on May 15. Federal funds futures have priced in a 25 basis-point cut by May's end and are pricing in a 48% chance of a 50 basis-point cut. Hoenig is a voting member of the policy-making Federal Open Market Committee.

Gasoline stockpiles rose 3.042 million barrels in the week ended Friday. Crude oil stockpiles rose 8.28 million barrels. The gains countered views that supplies would drop, and bring stockpiles above year-ago levels.

Prospects for the economy seem better, said John Auten, a senior Treasury Department economist. He said firms that sell goods to consumers are doing a better job of working off excess inventories than are firms selling to other businesses.

Home affordability at 2 1/2-yr high

The housing affordability index rose to 142.9 in the first quarter from 133.4 in the fourth, the National Association of Realtors says. A year ago, theindex was 130.8. A reading of 100 means a family earning the median income hasexactly the money needed to buy a single-family home at the median price, using conventional financing and a 20% down payment. In the first quarter, the median price of a single-family home was $139,700 and mortgage interest rates averaged 7.21%.