U.S. Home Construction Falls to Lowest Level in 17 Years
Perhaps. But we already knew the housing market was in terrible trouble and that economic activity was stalling. The Fed already lowered the FedFunds from 5.25% to 2%. Maybe that wasn't enough ... time will tell. But higher mortgage rates (see previous post) wouldn't help the mortgage market.
As of last quarter (and things haven't changed that much since June, if your memory serves you), consumers didn't feel like buying durables, and businesses didn't feel like building houses or accumulating inventory or equipment (see here). Wow, that's surprising, given the payroll numbers, etc.
But this also meant fewer imports (which keep falling, except oil, but that's due to the elevated oil prices -- expect the value of imports to drop in the next BEA report). The rest of the world, particularly emerging markets, seem blissfully unaware of any trouble, and they keep gobbling up American goods:
The deficit on goods increased to $216.3 billion in the second quarter from $211.0 billion in the first. Goods exports increased to $337.3 billion from $317.8 billion. More than half of the increase resulted from an increase in industrial supplies and materials, including energy products. The next largest increases were in capital goods, in agricultural products, and in consumer goods. Goods imports increased to $553.6 billion from $528.8 billion. Nearly half of the increase resulted from an increase in petroleum and products. The next largest increases were in nonpetroleum industrial supplies and materials, in capital goods, and in consumer goods.
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