Tuesday, 21 October 2008

The Crumbling U.S. Economy, Worse is Yet to Come

I wish I didn't have to sound so bearish. No one wants to see workers thrown out on the street, millions of Americans suffer through deep recession, or stocks fall out of bed. But the fundamentals at the heart of this crisis are not improving. To the contrary; they're signaling one of the worst Octobers on record.

Just take a look at last week's pile-up of dismal news announcements (along with my view on each) …

First , the National Association of Home Builders announced that October has been the cruelest month ever for the housing industry. The group's index, which measures home sales and buyer traffic, has just fallen to the worst levels in its 23-year history.

My view: A lasting recovery in construction activity, sales, and home prices remains many, many months away.

Second, the U.S. Department of Labor reported that 3.7 million Americans are now receiving unemployment benefits — the most in more than five years.

My view: The broad economy is behaving like the Titanic, and these job losses could be just the tip of the iceberg.

Third, U.S. industrial production cratered 2.8% in September — more than three times the decline that was expected and the single-worst reading in any month going back to 1974.

My view: This is the first hard data confirming what we've suspected all along — that this recession could be at least as bad as the 1974-75 recession, which was the deepest since the Great Depression.
http://www.marketoracle.co.uk/Article6871.html

[Posted at the SpookyWeather blog, October 21th, 2008.]

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