US Economy: Goldilocks has left the building
Housing Market: From Calculated Risk The Census Bureau reports Building permits down 2.8% from December and down 28.6% from January 2006. Private housing starts down 14.3% from December 2006 and down 37.8% from January 2006. Historical correlations suggest that 400-600k jobs could be lost by this summer.
from CNNMoney reports a record decline in housing prices.
The slump in home prices was both deeper and more widespread than ever in the fourth quarter, according to a trade group report Thursday.
Prices slumped 2.7 percent in the fourth quarter compared to the fourth quarter a year earlier, according to the report from the National Association of Realtors (NAR). That's the biggest year-over-year drop on record and follows a 1.0 percent year-over-year decline in the third quarter.
International Capital FlowsFrom Brad Setzer The Treasury’s International Capital report came out and Thursday and net flow was negative meaning US private investors bought more foreign securities than foreigners bought American securities.
To finance a roughly $850-900b current account deficit, you need need over $70b of net inflows a month. Not zero. And certainly not a net outflow of $11b.
From Market Watch
U.S. industrial production fell in January by the largest amount since Hurricane Katrina devastated the Gulf Coast in September 2005, the Federal Reserve reported Thursday. Industrial output of the nation's factories, mines and utilities fell 0.5% in January, the fourth decline in the past five months. Automakers and other producers are slashing production to bring down their inventories of unsold goods. The decline in factory output was even steeper, with production down 0.7%. Production of motor vehicles and parts fell 6%. Vehicle assemblies fell to their lowest level in nearly a decade. The decline in factory output was broad based. Factory output excluding vehicles fell 0.4%.
The Q4 GDP was estimated at 3.5%. However, with the new inventory data in, its been revised down to 2%. Look at the second graph here. It shows that GDP has been decreasing since early 2004.
If the economic deceleration continues on (as I suspect it will), there is a very real possibility we will see GDP slip to 1-2% by mid 2007.
Goldilocks has left the building . . .