Spending Growth to Stall, Home Sales Down: U.S. Economy Preview

from Bloomberg:



Spending Growth to Stall, Home Sales Down: U.S. Economy Preview

By Shobhana Chandra

Feb. 24 (Bloomberg) -- Consumer spending in the U.S. probably stayed at the weakest pace in six months in January as income growth slowed and Americans struggled with a deepening housing slump, economists said before reports this week.

Spending was up 0.2 percent, matching a gain in December that was the smallest since June, according to the median estimate of economists surveyed by Bloomberg News before the Commerce Department's Feb. 29 report. Separate figures may show sales of new and previously owned homes fell last month.

Sluggish wage growth threatens to dent consumer spending, the main driver of the economy, and raise expectations for more Federal Reserve interest-rate cuts to prevent a recession. Manufacturing is slowing, house values are falling and consumer confidence is waning, other figures may show this week.

``People will be monitoring these reports for a recession scenario versus a slowdown scenario,'' said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. ``We're skeptical of the story that consumers will pull back en masse. Everyone's pretty much braced for poor numbers in housing.''

Incomes rose 0.2 percent in January, the smallest gain in three months, according to the median estimate in the Bloomberg survey.

The income report may also show a price gauge tied to spending patterns and excluding food and energy costs, the Fed's preferred measure, rose 0.2 percent for a fourth month, economists in the survey projected. The index probably gained 2.2 percent from January 2007. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=arXDfrjHtyNg&refer=home

Hey walking suits of money, I can't buy groceries anymore. Time to get focused.

The income report may also show a price gauge tied to spending patterns and excluding food and energy costs, the Fed's preferred measure...

Yes, nobody really needs food or energy. They're optional!

They exclude any component that might cause negative political consequences. It's the same thing they do with unemployment, global warming, even the 9/11 report.

Gasoline here went up over fifty cents a gallon so far this year.

"In a confidential proposal to the government Bank of America warned that nearly $800 billion in mortgages (of all types, not just subprime) are at “moderate to high risk” of defaulting due to detoriating housing conditions over the next 5 years. The Bank of America proposal calls for the creation of the Federal Homeowner Preservation Corporation to lead homeowners and banks out of the housing bust."

"To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates."

See the full horror here...

http://www.blownmortgage.com/

:grr: