We had further confirmation yesterday that US housing isn't turning around yet. From Bloomberg:
Housing starts fell 11 percent in July to an annual rate of 965,000, the Commerce Department said today in Washington. The Labor Department reported the producer price index jumped 9.8 percent from a year before...
Compared with July 2007, work began on 30 percent fewer homes. Building permits, a sign of future construction, also fell in July, the Commerce Department reported. They were down 18 percent to a 937,000 annual pace...
Construction of single-family homes fell 2.9 percent to a 641,000 rate, the fewest since January 1991, today's report showed. Work on multifamily homes, such as townhouses and apartment buildings, dropped 24 percent from the prior month to an annual rate of 324,000.
Meanwhile, Japan isn't looking too hot either. From AFP/CNA:
Japan's central bank downgraded its assessment of Asia's largest economy Tuesday, warning growth will remain "sluggish" as it left its super-low interest rates unchanged amid growing fears of a recession.
However, Germany provided some hopeful news yesterday. From Bloomberg:
German investor confidence increased more in August than economists forecast after the euro declined and oil prices retreated from a record.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations rose to minus 55.5 from minus 63.9 in July, the lowest since the survey began in 1991. Economists expected a gain to minus 62, the median of 43 forecasts in a Bloomberg News survey shows.
Nevertheless, it is too soon to turn optimistic. In fact, despite the jump in producer prices in the US and elsewhere, deflationary forces are building.
The Telegraph reports that US money supply may already be shrinking rapidly.
The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months.
Data compiled by Lombard Street Research shows that the M3 ''broad money" aggregates fell by almost $50bn (£26.8bn) in July, the biggest one-month fall since modern records began in 1959.
And things could get worse. From Reuters.
The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world's biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.
"The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say 'the worst is to come'," he told a financial conference.