US recovery slows, fueling stagnation fears

A home is for sale in Glendale, California, in May
© AFP/File Robyn Beck

AFP

WASHINGTON (AFP) - Revelations that key sectors of the US economy were pummeled last month have rekindled fears that the world's largest economy faces protracted high unemployment and lackluster growth.

Exactly two years after the recession officially ended, weakness in the jobs, housing and manufacturing sectors left economists scrambling to downgrade their growth predictions on Wednesday.

"This week is the most important week for assessing the strength of the May economy, and growth is looking much softer than we were forecasting," said John Ryding and Conrad DeQuadros of RDQ Economics.

Dreaded Double-Dip Is Here

Dees Illustration

Greg Hunter
USA Watchdog

I have been telling you the economy is not in any kind of real recovery for more than a year.  Sources I have been quoting have been proven right, and all the economic cheerleaders dead wrong.  Reuters reported yesterday, “Data showing a double-dip in home prices, pessimistic consumers and a slowdown in regional manufacturing raised concerns on Tuesday that the economy’s soft patch could become protracted.” (Click here to read the complete Reuters report.) “Could become protracted?” It is protracted, and now the data is suggesting the economy is getting ready for another cliff dive.

Let’s concentrate on what has been a huge driver of the economy—housing.  A double-dip in housing could start a daisy chain of very bad news for the big banks exposed to derivatives and residential real estate.  According to the latest S&P/Case-Shiller home price report released yesterday, prices hit a new low in the first quarter–plunging 4.2% in just three months!  If you look back six months, prices are off nearly 8% according to Case/Shiller.  If you look on the chart on the first page of the Case/Shiller press release (click here), it clearly shows a double dip in housing.  That is exactly what was predicted nearly a year ago on this site.  One of the many people I quoted was renowned banking analyst Meredith Whitney who said last June, “Unequivocally, I see a double-dip in housing.  There’s no doubt about it . . . prices are going down again.” (Click here to read my original post from a year ago.) At the time, many people thought Ms. Whitney was being overly pessimistic.  In fact, her dire prediction has come true.  This is despite the more than $2 trillion spent in QE1 and QE2 (printing money out of thin air to buy government and private debt) by the Federal Reserve.  QE1 &QE2 helped fuel the stock market and artificially held mortgage interest rates at absurdly low levels and, yet, housing continues to crash.  Good call Ms. Whitney!

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US housing construction plunges

New home constructionsplunged in February
© AFP/Getty Images/File Justin Sullivan

AFP

WASHINGTON (AFP) - Construction of new homes in the United States plunged in February to near record lows and building permits hit bottom, official data showed Wednesday in a dismal report on the ailing housing market.

Housing starts fell to an annual rate of 479,000, down 22.5 percent from January, the Commerce Department said.

That number was the lowest since April 2009, when the economy was still mired in the worst recession since the 1930s Great Depression.

In April 2009, housing starts were a rate of 477,000, the weakest pace since tracking of the data began in 1959. Economists at the time had estimated that it was the slowest pace in new housing construction since the 1940s.

Housing activity was not expected to pick up any time soon, according to the new data.

Building permits sank to a record annual rate of 517,000 in February, a decline of 8.2 percent from the January level, the department said.

That was the smallest number of permits in records dating back to 1960.

© AFP -- Published at Activist Post with license

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