The U.S. economy is faltering after a third-quarter expansion as new-home prices dropped the most since 1970 and jobless claims rose to a nine-month high...
The median price of a new house dropped 13 percent to $217,800 in October from a year earlier, the Commerce Department said today in Washington. Homes sold at an annual rate of 728,000 in October, less than the median forecast of 750,000 among economists surveyed by Bloomberg News.
The number of Americans filing first-time claims for unemployment benefits rose to 352,000, the Labor Department reported.
The figures overshadowed the revision in third-quarter economic growth by the Commerce Department. The new rate is a percentage point higher than the 3.9 percent initially reported. The expansion may slow to about 1 percent this quarter, some economists predict.
President George W. Bush's economic advisers today reduced their outlook for economic growth in 2008 to 2.7 percent from a 3.1 percent rate projected in June. The unemployment rate will rise to 4.9 percent, compared with 4.7 percent previously estimated, according to the Council of Economic Advisers' semi- annual forecast.
New home sales increased 1.7 percent from the previous month because September's purchases were revised lower. In a another report, the Office of Federal Housing Enterprise Oversight said today in Washington that prices for previously owned single- family houses fell 0.4 percent last quarter, the first decline since 1994.
No need for investors to worry though. The Fed will come to the rescue again with rate cuts, as MarketWatch reports.
U.S. stocks rose for a third day on Thursday, ending mildly higher after the stock market's biggest two-day jump up in five years, as mostly bearish economic news competed with thoughts of another interest-rate cut ahead.
"Bad news is good news as it pertains to the Fed, so there is some solace to be gained," said Art Hogan, chief market strategist at Jefferies & Co.
Up and down throughout the day, the Dow Jones Industrial Average rose 22.3 points, or nearly 0.2%, to close at 13,311.7, with 17 of its blue-chip components finishing higher...
Treasury prices rallied, with the benchmark 10-year note up 26/32 to 102 17/32, its yield falling to 3.939%.
Certainly, the latest speech by Chairman Ben Bernanke suggests that he is mindful of the impact of the financial turbulence. From Bloomberg:
"The outlook has also been importantly affected over the past month by renewed turbulence in financial markets," Bernanke said in a speech in Charlotte, North Carolina. "The committee will have to judge whether the outlook for the economy or the balance of risks has shifted materially."
Having said that, Nouriel Roubini isn't convinced that the stock market will be able to shrug off the hard landing in the economy that he predicts. The "Bernanke Put" notwithstanding, he says that if the economy falls into a recession, the stock market is likely to "fall sharply by about 28% from peak to the trough" before it starts to recover in the late stages of the recession.