Energy Finance

Housing starts fell 4.5% to a 791,000 pace in October, with starts at the lowest pace since just after WWII, say Standard & Poor’s analysts David Wyss and Beth Ann Bovino.

Manufacturing indicators were equally bleak. Industrial production rebounded 1.3% in October, after plunging a revised 3.7% in September (previously negative 2.8%), the worst monthly decline since 1946.

Economic releases this week include:
• The stock market also reached new lows, with the S&P falling to 752 on Friday (midday), down 51.9% since Oct. 9, 2007, and the largest bear market since the ’30s.
• The Empire State index fell to a new record low of -25.43 in November, while the Philly Fed index edged down to -39.3 in November, its lowest since Oct. 1990.
• Consumer prices dropped 1% in October, the largest one-month drop in the history of the series (1947). Core consumer prices were down 0.1%, compared with the 0.2% gain expected, giving the Federal Reserve some room to lower interest rates.
• The producer price index (PPI) plunged a record 2.8% in October, more than the 1.7% drop expected. Declines in both indices were concentrated in energy prices. The core PPI, excluding food and fuel, was up a firm 0.4%, stronger than the 0.1% expected.
• Federal Open Market Committee’s October 28-29 minutes reported that the Fed cut its GDP growth forecast for 2009 to between -0.2% to 1.1% (previously 2.0% to 2.8%). FOMC extended its December policy meeting to two days, Dec. 15 through Dec. 16, to allow for additional time for discussion.
• The Conference Board’s U.S. leading indicators dropped 0.8% in October, from a revised 0.1% gain in September (0.3% before). Six of the ten components were negative.
• While Fannie Mae and Freddie Mac reported Thursday that they will temporarily suspend foreclosures on occupied homes, house Democrats insisted on a plan from the auto sector.
• The Treasury Department reported a record $237.2 billion deficit for October, up from $56.8 billion a year earlier, as outlays surged because of the various rescue measures.
• Initial claims for unemployment insurance benefits rose by 27,000 to 542,000 in the week ending Nov. 15, the highest since July 1992. The number of people receiving benefits surged 109,000 to 4.012 million in the week ending Nov. 8,, the highest since December 1982, pushing the insured unemployment rate up 0.1% to 2.9%. The four-week average of initial claims climbed to 506,500, the highest since January 1983.
• Oil prices fell below $50 per barrel on Friday from $58 per barrel a week ago, down 66% from $148 per barrel in early July on gloomy demand outlook.

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