G.O.O.D

Spending on durable goods like new cars and home appliances requires, for most sheeple, a little something called credit!

Source:  Yahoo! Finance

Commerce Secretary Carlos Gutierrez told Bloomberg TV that the economy was going through a tough time, adding that “We are going to have a couple of difficult quarters.”

The White House blamed the poor third quarter numbers on the credit crisis.

“There’s no question the financial crisis was a major shock to the economy, and that’s being reflected in the economic data. We believe a big reason for this was the freezing in credit markets this Fall,” said White House spokesman Tony Fratto.

“That’s why we’ve been so focused on unfreezing our credit markets and stabilizing our financial system.”

Continuing job losses, a severe credit crunch, falling home prices and a wobbling stock market have put consumers under severe stress. Analysts reckon the Fed could trim the fed funds target rate by another 50 basis points to 0.50 percent next month.

Consumer spending that fuels two-thirds of U.S. economic activity fell at a 3.7 percent rate in the third quarter rather than 3.1 percent as previously estimated, the sharpest rate of decline since the second quarter of 1980.

Spending on durable goods like new cars and home appliances that are intended to last three years or more plummeted at a 15.2 percent rate instead of 14.1 percent as previously estimated, the steepest fall since the start of 1987.

The revised GDP report offered a first look at corporate profits during the third quarter. They dropped at a 0.4 percent rate after falling 5.4 percent in the second quarter, the department said.

Business investment fell at a revised 1.5 percent rate in the third quarter rather than 1 percent as previously estimated. It was the first reduction in business investment since the end of 2006 and signals that companies are wary about prospects for future sales.

Pointing to the deteriorating economic climate, prices of U.S. single-family homes in September plunged a record 17.4 percent from a year earlier, the Standard & Poor’s/Case-Shiller Home Price Indices showed.

In yet another sign of the times, the largest U.S. homebuilder D.R. Horton posted a fourth-quarter loss of $799.9 million, or $2.53 per share, compared with a loss of $50.1 million, or 16 cents per share, a year ago.

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Technorati Tags: Consumer spending

Full Story at Reuters

The earnings outlooks for the four largest U.S. banks have been slashed by Oppenheimer & Co analyst Meredith Whitney, who said there is “no clear end in sight” to downward pressure on the sector’s profits.

In a report late Tuesday, Whitney said Citigroup Inc (C.N: Quote, Profile, Research), the largest U.S. bank by assets, might lose $1.15 per share in the first quarter, four times her prior forecast for a 28 cents per share loss. She expects the bank to lose 15 cents per share in 2008, after earlier seeing profit of 75 cents per share.

Whitney in October correctly predicted that Citigroup would cut its dividend and raise $30 billion of capital.

Technorati Tags: durable goods, economics, recession, depression

Read the Full Article at Bloomberg.com

Orders for U.S. durable goods unexpectedly fell in February, led by the biggest slump ever in demand for machinery that indicates companies are becoming more reluctant to invest as the economy heads into a recession.

The 1.7 percent drop followed a 4.7 percent decrease in the prior month, the Commerce Department said today in Washington. Excluding orders for transportation equipment, which tend to be volatile, bookings fell 2.6 percent, the most since January 2007.

Businesses are cutting back on equipment purchases as the biggest housing downturn in a quarter century hurts sales, and rising fuel costs erode profit. Improving demand from overseas is the only thing preventing manufacturing from declining even more.

Technorati Tags: durable goods, economics, recession, depression