Original source URL:
Investment in home building declined at an 18.7 percent rate
-- even more than previously estimated -- and was the
largest cut in 15 years.
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http://www.truthout.org/docs_2006/122106E.shtml
http://www.startribune.com/535/story/890387.html
Last update: December 21, 2006 8:40 PM
Housing stall remains a drag on the economy
By Jeannine Aversa, Associated Press
WASHINGTON - The economy felt the strain of the housing bust and lost momentum
during late summer, with more sluggish performances expected in the months
ahead.
Growth slowed to a 2 percent pace in the July-through-September quarter, the
Commerce Department said Thursday.
That was slightly worse than the 2.2 percent annual rate the government
estimated a month ago, yet better than the anemic 1.6 percent rate initially
calculated for those months.
Still, the message was clear: The deepening housing slump is crimping growth.
Investment in home building declined at an 18.7 percent rate -- even more than
previously estimated -- and was the largest cut in 15 years. That shaved 1.2
percentage points off third-quarter growth, the most in nearly 25 years.
Stocks fell after the Philadelphia Federal Reserve's December business index,
which gauges regional manufacturing activity, moved into negative territory. The
Dow Jones industrials fell 42.62, to 12,421.25.
Even with expectations that economic activity will continue to be subpar, most
analysts do not expect that the housing market will push the economy into a
recession.
Economists say the gross domestic product in the October-through-December
quarter could come in at a pace of 1.7 to 2.5 percent, or slightly higher;
estimates for the first quarter of 2007 are in the same range.
Gross domestic product measures the value of all goods and services produced in
the United States. It is the best barometer of the country's economic health.
In other economic news, the Conference Board reported that its index of leading
economic indicators advanced 0.1 percent in November, suggesting that the
economy is not in danger of stalling.
The Labor Department said that the number of newly laid-off workers signing up
for unemployment benefits rose last week by 9,000, to 315,000.
An inflation gauge tied to the GDP report showed that core prices -- excluding
food and energy -- rose at a rate of 2.2 percent in the third quarter, down from
a 2.7 percent pace in the second quarter. Energy prices, which had soared in the
summer, have calmed.
©2006 Associated Press. All rights reserved.
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