The Declining Market » US Economy

Home Prices Fall in 4Q 08- Worst on Annual Record since 1991

MarketSpecialist — Tue, 24 Feb 2009 22:25:19 +0000

According to the Associated Press, there are some discouraging facts recently posted:

* Home prices tumbled by the worst annual rate on record in the fourth quarter

* Almost 14 million homeowners are already under water, according to Moody’s Economy.com (where they owe more than the home is worth)

* Confidence index sank to new lows in February as widespread layoffs, shrinking retirement accounts and plunging home prices fueled fears as stated by the

* The Standard & Poor’s/Case-Shiller U.S. National Home Price Index plunged more than 18 percent during the quarter from the prior-year period, the largest drop in its 21-year history

Read full story from the Associated Press.

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Over 500,000 Jobs Lost in November 2008 – Highest Unemployment Rate in 15 Years

MarketSpecialist — Tue, 09 Dec 2008 05:07:15 +0000

Jobs are one of the major indicators of declining market. In November 2008, payrolls took a deep dive as 533,000 jobs were cut. Now that our unemployment is at 6.7% we are at all 15 year high. According to Market Watch,

“It was only the fourth time in the past 58 years that payrolls had fallen by more than 500,000 in a month. Since the recession began 11 months ago, a total of 1.9 million jobs have been lost. Job losses in September and October were revised much lower.

In addition to the 533,000 lost jobs, an additional 621,000 workers were pushed into part-time work and 422,000 simply dropped out of the labor force.

“This is almost indescribably terrible,” wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. “The pace of job losses is accelerating alarmingly.”

Over the past three months, 1.26 million jobs have been lost, a pace of job destruction exceeded only once since 1945.

“The threat of a widespread depression is now real and present,” said Peter Morici, a business professor at the University of Maryland.

The recession “is going to be long and drawn out,” wrote Jennifer Lee, an economist for BMO Capital Markets.

The unemployment rate rose from 6.5% in October to 6.7% in November, the highest jobless rate since October 1993.

Job losses were widespread across industries in November. Fewer than a third of industries were hiring in November.

In services-producing industries, 370,000 jobs were lost, a record excluding one month in 1983 when nearly three-quarters of a million workers at AT&T went on strike.

The grim report could set the stage for further responses from Washington to address the recession. The Bush administration promised “aggressive” action, and pressure increased on the incoming Obama administration to craft a sizable fiscal stimulus plan. The large loss of jobs could also boost the chances for the automakers to get a loan from the federal government.

The Federal Reserve is likely to lower its interest rate target at the Dec. 16 meeting, economists said.

The employment report was much worse than expected. Economists expected job losses of around 350,000 in November. They expected the unemployment rate to rise to 6.8%. See Economic Calendar.

“We expect labor market conditions to be dreadful for many months to come and consequently for consumer spending to continue to decline,” wrote Josh Shapiro, chief economist for MFR Inc.

Job losses in September and October were revised sharply lower by a total of 199,000. Over the past three months, payrolls have fallen by an average of 419,000 per month, compared with average monthly losses of 82,000 earlier in the year.

An alternative gauge of unemployment — which includes discouraged workers and those whose hours have been cut back to part-time — rose to 12.5% from 11.8%. The number of workers forced to work part-time rose by 621,000 to 7.3 million.

Total hours worked in the economy fell 0.9% in November and are down 2.8% in the past year. The average workweek fell to a record-low 33.5 hours in November. The decline in working hours is consistent with a 5% annualized drop in gross domestic product, wrote John Silvia, chief economist for Wachovia.

Average hourly earnings rose by 7 cents, or 0.4%, to $18.30. Average hourly wages are up 3.7% in the past year, close to the 3.8% rise in the consumer price index.

In goods-producing industries, 163,000 jobs were lost, according to a survey of work places. Manufacturing lost 85,000 workers, while construction lost 82,000.

In the services, 136,000 jobs were lost in business services, including 101,000 in employment services, such as temporary jobs. Financial services cut 34,000 jobs. Retail shed 91,000 jobs, including 24,000 at auto dealers.

Leisure and hospitality industries cut 76,000 jobs

Health and education services industries added 52,000 jobs. Government added 7,000.

In a separate survey of households, the government found that employment fell by 673,000, the largest lost since August 2001. Unemployment rose by 251,000 to 10.3 million. Unemployment has increased 2.7 million during the recession and 2.7 million more have been forced into part-time work.

In November, the labor force fell by 422,000.

The employment-population ratio fell to 61.4% in November from 61.8%. The labor force participation rate fell to 65.8% from 66.1%.

Rex Nutting is Washington bureau chief of MarketWatch.”

Click here to link to the story.

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I.O.U.S.A – The Movie that Speaks to our Declining Market

MarketSpecialist — Wed, 06 Aug 2008 09:26:37 +0000

There is no denying that our country has always faced financial problems based on our mentatility of borrowing versus saving…of consuming versus producing…of “printing money” when needed! This issue has been compounded with the downturn of our real estate market and depreciating home values. Our homes are the single largest asset (or should I say liability now) of many Americans. With a decrease in this asset, spending is minimized and families cannot rely on their homes as an ATM machine anymore. This issue is hitting home, not only as a country but individually. A movie called I.O.U.S.A is being released this month that outlines not only our current financial conditions but the history that has led to where we are today from a debt perspective. Below is the trailer:

As it can be seen in the trailer, there is no question that we are truly facing a major crisis not only for ourselves but for future generations. We may honestly be at jeopardy of loosing our place as the one of the worlds pillars and super powers.

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Home Builder WCI Communities Files for Chapter 11

MarketSpecialist — Tue, 05 Aug 2008 06:01:39 +0000

WCI Home Builders could not obtain the necessary funding to maitain a healthy cash flow. With $2.18 billion in assets and $1.92 billion in debts WCI had to file for Chapter 11. WCI Home builders focus on the luxary real estate market where most of its business is centered out of Florida (one the top states for declining real estate prices). A week ago its stock went from 99c to 2c. This is a far cry from the ~$20 it was trading for about a year ago. This is yet another plea for help in our declining real estate market.

Read the full story from NY Times.

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Government Support for Homes Pending Foreclosure

MarketSpecialist — Mon, 04 Aug 2008 06:45:18 +0000

Bush recently passed a housing law to try and “help” homes that are pending foreclosure. $300 billion is being given to the FHA to help refinance homes at a more affordable rate. This is expected to be dispersed to over 400,000 households. There are many other perks to this housing bill such as grants to fix up foreclosed homes and tax credits for first time home buyers. Read the full article from the News & Observer.

One point that the article does not mention is the fact that the banks still have to WANT to refinance the loan with a FHA loan. According to lenders, the new loan amount would be 90% of the new appraised value and the difference from the previous balance on the home would be a write off. For instance, if the home was worth 500,000 in 2005 and is currently appraised for 350,000 today, the new loan would be $315,000 and the bank would write off $185,000.

My question is, why would a bank want to do that when they can put the home into foreclosure and get 100% of the current value in a shorter amount of time? The new interest rate is not going to be the 3 or 4% that many home owners had in 2002 and 2003 (not to mention those homes that had negative amortization loans). My suspicion is that this might buy time for homeowners but several of them will end up defaulting again. However, this housing bill does do a good job of giving the perception that the government is “there to help”!

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Could 500 Billion turn into a Trillion Dollars in Write Downs?

MarketSpecialist — Mon, 28 Jul 2008 17:04:27 +0000

With all the financial turmoil our economy is facing right now it is no surprise that there has already been 500 billion dollars in losses and asset write downs by our financial institutions. According to Money Morning, this is forecasted to continue with an expected total of 1 TRILLION dollars in write downs! With so many people waiting on the sidelines to buy, it is not a far stretched theory. Some feel that there is hope with the new bill that the US House of Representatives just passed:

Allowing the government to insure up to $300 billion in refinanced mortgages.

Establishing a tax break of as much as $7,500 for first-time homebuyers

And creating a new regulator to oversee government-sponsored enterprises Fannie and Freddie.

Though this may help, with 25 million homes in risk of entering into negative equity, there is no denying that there will be more write downs and losses to come resulting in tighter lending and downward pressure on market conditions.

Read the full article on Morning Money.

TheDecliningMarket.com / support@thedecliningmarket.com / 1-800-881-1479

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More Signs of Recession – Stagflation

admin — Sat, 16 Feb 2008 08:50:39 +0000

As of today, February 16, more are more signs are leading towards a further declining market:

U.S import prices went up by 1.7% which was driven by increased prices for oil
Export prices increased 1.2% which was the largest jump since 1989.
The Reuters/University of Michigan index of consumer sentiment dropped to 69.6 which was the lowest it has been since 1992. These numbers are representative of the recessions in the mid 70’s, 80’s, and early 90’s.
Stock prices fell due to concerns that there was a slowing in consumer spending. Dow Jones was down 28 points to 12,348.
Dollar once again slide against other foreign currencies

This all leads to a term called stagflation. Which is not a good scenario for our economy: slowed economic growth and increased inflation.

Click here for the full story from MSN Money… ____________________________________________

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January Job Losses are the Highest in 4 years

admin — Wed, 06 Feb 2008 03:21:02 +0000

It was reported that over 17,000 jobs were lost last month. Most of the jobs were lost in construction, the mortgage industry and in real estate (no surprise there!). This doesn’t even include all of the real estate agents who are still technically employed with a broker but are not seeing any income due to the drastic drop in sales.

Bush couldn’t have said it any better in this article, “There’s serious signs that … the economy is weakening”.

Click here for the full story from Yahoo! Finance…

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Emergency Meeting Called by the Fed: Interest Rate Cut

admin — Thu, 24 Jan 2008 00:46:22 +0000

On January 22, the Fed cut the benchmark interest rate by 3/4 of a point (now at 3.5%). This meeting came a week or so early from the next board meeting on January 29th. This was partially due to the panic that swept the globe on Monday when all foreign stock markets took a plunge.

What is most concerning is that this is the largest cut ever. Typically we have not seen cuts more than .5% (especially in a spontaneous meeting like this one). I guess desparate times calls for desparate measures.

Click here for the full story from Economist.com

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Worldwide Stock Markets Plunge due to Bush’s “Stimulus Plan”

admin — Tue, 22 Jan 2008 00:39:47 +0000

Not only are we skeptical of the government’s ability to stop our country from moving into a recession, but so is the rest of the world. Foriegn market stock indecies fell sharply today as a result of skeptism from foreign markets that President Bush’s stimulus is too little too late! This plan calls for a tax cut of approximately $145 billion dollars with the thought that this would promote spending and keep the economy going strong.

Click here for the full story from Yahoo! Finance…

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The Declining Market » US Economy

Home Prices Fall in 4Q 08- Worst on Annual Record since 1991

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Over 500,000 Jobs Lost in November 2008 – Highest Unemployment Rate in 15 Years

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I.O.U.S.A – The Movie that Speaks to our Declining Market

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Home Builder WCI Communities Files for Chapter 11

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Government Support for Homes Pending Foreclosure

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Could 500 Billion turn into a Trillion Dollars in Write Downs?

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More Signs of Recession – Stagflation

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January Job Losses are the Highest in 4 years

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Emergency Meeting Called by the Fed: Interest Rate Cut

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Worldwide Stock Markets Plunge due to Bush’s “Stimulus Plan”

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