1. Housing sector’s ‘perfect storm’
While the rest of the economy remains relatively robust, the housing industry is in a severe slowdown. Construction is off by nearly half from levels of two years ago, and homes available for sale are up to an eight-month supply or more. Two industry reports roll out Wednesday and Thursday, with last month’s existing-home sales and new-home sales. After last week’s staggeringly disappointing figures for starts on new construction, economist Brian Bethune of Global Insight noted that “the housing market now is navigating through ‘perfect storm’ conditions.” He cited, among other factors, slashing of output, downward pressure on prices and rising foreclosures. Not much cause for instant cheer on a Monday morning.
2. To cut or not to cut
With only eight days remaining before members of the Federal Reserve gather to discuss monetary policy, some are calling it a tossup whether they will lower short-term interest rates from a level of 4.75 percent. Chicago economist Robert Dederick of RGD Economics says: “For now, they are more worried about the economy. Most of the risks are to the downside, and they don’t want to take chances on a recession.” His bottom line: a further rate cut.
3. Durable goods gain
The manufacturing sector has cooled, as evidenced by a 4.9 percent drop in orders for durable goods in August. Analysts believe Thursday’s report for September will show a gain of about 1.4 percent, helped by continuing expansion of exports.
4. Drop at pump can’t last
Even though oil has topped $90 a barrel, the price of a gallon of gasoline has dropped by about 45 cents since the week before Memorial Day. Wall Street analysts say that can’t last. Gasoline in recent days is up by 5 cents at many pumps.
5. Countrywide concern
The beat goes on for corporate earnings. This week’s shocker could come from Countrywide Financial Corp., which reports Friday. The nation’s biggest home lender is expected to report a loss of more than $1 a share.
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wsluis@tribune.com
