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My personal musings about anything that gets on my radar screen--heavily dominated by politics.

2007-11-30

Economic Musings Receive Independent Confirmation 

This is disturbing.

A couple nights ago I wrote about my growing concern that the difficulties in the housing sector have the potential to trickle over into the broader economy and slow down the economy.

Then today comes word that other economists are starting to feel the same way.

Hit by a severe credit crunch, existing home sales fell for the eighth straight month with median home prices dropping by a record amount.

The National Association of Realtors reported Wednesday that sales of existing homes dropped by 1.2 percent last month to a seasonally adjusted annual rate of 4.97 million units. That represented the slowest sales pace on record going back to 1999 and was 20.7 percent below activity a year ago.

The median price of a home sold last month, the point where half the homes sold for more and half for less, declined to $207,800, a drop of 5.1 percent from a year ago, the biggest year-over-year price decline on record. . . .

The worry is that the credit crisis and a deepening housing slump could be enough to push the country into a recession. In its latest outlook at business conditions around the country, the Fed said Wednesday that while the economy continued to grow in the October to mid-November period it did so at a "reduced pace."

In another sign of spreading economic weakness, the Commerce Department reported that orders to factories for big-ticket manufactured goods declined by 0.4 percent in October. It was the third straight drop, representing the longest stretch of weakness in nearly four years.

Especially troubling was the fact that the category which represents business investment plans dropped by 2.3 percent, the biggest setback since last February.

I'm not sure what's more disturbing--the actual news of the troubles in the economy, or that I might actually be learning a little bit about economics.
Posted by: Michael / 11/30/2007 01:14:00 AM

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