(From Money Magazine 11/6/06)
You'd never fall for a sucker pitch because you're too smart, right? Before you answer, maybe you should consider some data (Source: FTC).

Recent Economic News

U.S. Nov. existing-home sales rise 0.6% to 6.28 mln - 12/28/06 MarketWatch
Sales of U.S. existing homes rose 0.6% in November, to a seasonally adjusted annual rate of 6.28 million, the National Association of Realtors said Wednesday. Inventories of unsold homes fell 1%, to 3.82 million, representing a 7.3-month supply. The increase was unexpected. Economists surveyed by MarketWatch were expecting a drop to 6.20 million.

U.S. consumer confidence rises unexpectedly in December - 12/28/06 MarketWatch
U.S. consumer confidence rose in December amid an improved job market and more optimism about the economy, the Conference Board said Thursday. The private research group said its consumer confidence index climbed to 109.0 in December from a revised 105.3 in November. Economists were expecting a decline to about 101.9 from the previously reported 102.9.

Sales of New Homes Pick Up After a Big Drop - 12/27/06 NY Times
Sales of new homes picked up last month after a big drop in October, while the backlog of unsold homes on the market became somewhat smaller. Still, sales are 15 percent lower than they were a year earlier, suggesting that the correction taking place in the housing market has not yet run its course. The Commerce Department reported this morning that sales of new homes rose 3.4 percent in November to an annual rate of 1.05 million. That followed a 3.8 percent decline in October. While the housing market has been in the midst of a sharp slowdown in recent months - some economists are calling it a full-blown housing recession - the damage to the economy has been limited so far. The decline in residential construction during the summer months knocked more than a full percentage point off of the nation's gross domestic product growth, pulling it down to 2 percent in the third quarter.

U.S. weekly initial jobless claims rise to 315,000 - 12/21/06 MarketWatch
The number of Americans filing applications for unemployment benefits climbed back in the latest week, while the number of workers continuing to claim benefits rose to its highest level since the beginning of the year. The Labor Department reported that 315,000 workers filed initial claims for jobless benefits in the week ending Dec. 16, an increase of 9,000 from the previous week. Initial claims fell for the first two weeks of December. Holidays between Thanksgiving and New Year's Day can skew the data, because the normal filing pattern can be disrupted.

Leading indicators rise 0.1% in November - 12/21/06 MarketWatch
Slow economic growth is likely to continue in the near term, the Conference Board said as it reported that the index of leading economic indicators rose 0.1% in November, the third straight increase. The increase was exactly as predicted by economists polled by MarketWatch. The index rose a downwardly revised 0.1% in October and 0.4% in September.

GDP revised down to 2% in third quarter - 12/21/06 MarketWatch
The U.S. economy grew at a 2% real seasonally adjusted annual rate in the third quarter, slightly lower than the 2.2% estimated a month ago, the Commerce Department reported Thursday. It was the slowest growth since the fourth quarter of 2005. The economy grew at a 2.6% pace in the second quarter. The big picture take-away from third and final estimate of gross domestic product was little changed from the report from a month earlier. As before, the collapse of homebuilding was a large drag on growth, offset by healthy consumer spending and robust capital spending by businesses. Disposable personal incomes were revised higher, while profits were slightly lower, although profits have still risen at the fastest pace in 22 years over the past year. Core consumer prices were unrevised in the report, showing a 2.2% annualized gain, still in the Federal Reserve's discomfort zone.

U.S. housing starts rise 6.7% in November - 12/19/06 MarketWatch
Construction on new homes rebounded in November, rising 6.7% after a whopping 14% drop in October, the Commerce Department reported Tuesday. Building permits, meanwhile, fell 3% to a fresh nine-year low, signaling that the housing market remains very weak. Starts rose 6.7% in November to a seasonally adjusted annual rate of 1.588 million. Starts are down 25.5% in the past year. Building permits, considered a leading indicator, fell 3% to a seasonally adjusted annual rate of 1.506 million. Building permits are down 31.3% in the past year. The pace of starts in November was above the expected 1.54 million, while permits fell short of the 1.55 million expected by economists polled by MarketWatch.

Economic Report Provides Reminder on Inflation - 12/19/06 NY Times
Wholesale prices shot upward in November, the Labor Department reported today, offering a stark reminder that inflation remains a threat to the economy. The producer price index, which measures what businesses charge one another for everything from iron ore and diesel fuel to cases of soda pop, was 2 percent higher in November than in October, seasonally adjusted. The index had not risen by that much in a single month in more than 32 years, since the energy and stagflation crises of the mid-1970s. Rising prices for gasoline and light trucks, which had fallen considerably in October, led the surge last month. Even with the volatile prices of food and fuel removed, the "core" index rose by 1.3 percent for the month, the most since 1980.

Consumer prices flat in November - 12/15/06 MarketWatch
U.S. consumer prices were unchanged in November, as lower energy and car prices offset increases in costs for homeownership and medical care, the Labor Department reported Friday. Core prices - which exclude volatile food and energy prices - were also unchanged in November, the lowest core inflation since June 2005. Economists expected 0.2% gains for both headline and core inflation. The CPI is up just 2% in the past year, following 0.5% declines September and October and November's flat reading. The core CPI is up 2.6% in the past year. Core inflation has risen at a 1.6% annual rate in the past three months.

Home builders' confidence falls in December - 12/18/06 MarketWatch
U.S. home builders were a bit more pessimistic about the housing market in December, but were growing more hopeful that home sales could perk up in six months, the National Association of Home Builders reported Monday. The NAHB/Wells Fargo seasonally adjusted housing market index fell to 32 in December from 33 in November. About a third of builders view the market as favorable. Economists expected the index to improve to 34 in December. The index for current sales of single-family homes remained at 33 in December. The index for future sales of single-family homes rose from 45 to 48, the highest since June. The index for buyers' traffic dropped from 26 to 23.

Retail sales show surprising strength with 1% gain - 12/13/06 MarketWatch
The U.S. consumer is far from dead, two reports released Wednesday show. Retail sales soared in November and while home buyers jumped back into the market, lured by lower mortgage rates. Bond prices fell, as the surprising 1% jump in retail sales forced investors to re-evaluate their bet that the Federal Reserve would cut interest rates soon to prop up the economy. Seasonally adjusted U.S. retail sales increased by 1% in November, the first gain since July, the Commerce Department reported.

The Fed Leaves Short-Term Rates Alone - 12/13/06 NY Times
The Federal Reserve left short-term interest rates untouched on Tuesday for the fourth consecutive time, warning that inflation remained a concern in a statement that offered little encouragement to those on Wall Street hoping the Fed will cut rates early next year. With only minor changes, the statement echoed the same message that central bankers have sounded since August, adding a nod to the deeper plunge in the housing market and other scattered signs of weakness in the economy that have emerged since its last meeting, in late October. But the thrust of the statement - that the risk of higher inflation is still the biggest threat to the economy - was unchanged.

U.S. trade gap narrows sharply in Oct. - 12/13/06 govexec.com
"The United States trade deficit shrank by the most in almost five years in October as the price of imported oil fell and faster growth abroad propelled exports to a record," Bloomberg News reports. "The gap narrowed 8.4 percent, to $58.9 billion, according to the report. The narrowing came even as the United States had a record shortfall with China, which is on course to surpass Mexico this year as the country's second-largest trading partner, behind Canada."

Forecast of slow growth, inflation easing - 12/12/06 govexec.com
"U.S. economic growth will slow and inflation will ease in 2007, with energy costs and a falling dollar posing the biggest risks for a pickup in prices, a panel of Wall Street analysts forecast Monday," Reuters reports. "The U.S. economy is likely to grow at a 2.5% annual rate next year, the analysts said. The slowdown in housing markets remains the most significant drag on economic growth, and though residential real estate has yet to recover, the most intense phase of the downturn is past, the analysts said."

Payroll growth rises 132,000 in November - 12/08/06 MarketWatch
Hiring in the U.S. continued at a steady, strong pace in November, easing worries that the economy is weakening precipitously. Nonfarm payrolls increased by 132,000 in November, based on a survey of business establishments, the Labor Department reported Friday. The unemployment rate ticked up to 4.5% from 4.4% in October, which was a five-year low, according to a separate household survey. The gain in payrolls was higher than expected. Economists were forecasting an average gain of 112,000 in November.

Consumer credit falls at fastest rate in 14 years - 12/7/06 MarketWatch
Outstanding consumer credit fell by $1.2 billion or an annual rate of 0.6% in October, the biggest decline in 14 years, the Federal Reserve reported Thursday. Consumer credit in September was revised to show a $4 billion gain, or 2%, revised from the earlier $1.2 billion decline, or 0.6% annual. It's the biggest decline in credit in percentage terms and in absolute terms since 1992.

Net worth rises at 5.8% pace in third quarter - 12/7/06 MarketWatch
The net worth of U.S. households increased at a 5.8% annual rate in the third quarter, led by capital gains in stock market wealth, the Federal Reserve said Thursday in its quarterly flow of funds report. At the same time, borrowing by U.S. households grew at the slowest pace in eight years, including the slowest increase in mortgage debt in eight years. Net worth, calculated by subtracting liabilities from assets, had increased 0.2% in the second quarter after gains of 13% in 2003, 9.7% in 2004 and 8.5% in 2005.

Productivity revised higher to 0.2% in third quarter - 12/05/06 MarketWatch
Inflationary pressures stemming from higher wages are not building as fast as previously thought, Labor Department data released Tuesday show. Unit-labor costs -- a key measure of inflationary pressures from a tight labor market -- were revised much lower in both the second and third quarters, said the government. Instead of rising at a 5.3% pace in the past year, unit-labor costs in the nonfarm business sector were revised to a much-tamer 2.9% annual pace. The Federal Reserve's chief worry about inflation was largely revised away. The Fed had been expressing concern that wage pressures were building, and that they'd inevitably feed into higher prices. The revised data show no trend toward higher wages in the past two quarters. Slower wage growth also means consumers don't have nearly has much income as had been assumed before.

Layoff plans rise 11%, showing Ford worker buyouts - 12/5/06 MarketWatch
Planned job reductions rose by 11% in November to 76,773 as more than 20,000 jobs were eliminated in the automotive sector, according to a monthly tally released on Tuesday. So far in 2006, planned layoffs total 785,179, outplacement firm Challenger Gray & Christmas said. That's down 19% from the 964,232 announced last year at this time. This year is on pace to be the first since 2000 that Challenger counts fewer than 1 million job reductions. November's job reductions were down 23% from November 2005. It's the eighth month this year with smaller layoffs than the same month last year.

U.S. Nov ISM services index rises to 58.9, highest since May - 12/05/06 MarketWatch
Nonmanufacturing sectors of the U.S. economy expanded at a faster pace during November, the Institute for Supply Management reported Tuesday. The ISM nonmanufacturing index rose to 58.9% from 57.1% in October. This is the highest level since May. The increase surprised forecasts. Economists were looking the index to dip to 55.8%. The headline index is not a weighted average of the survey's other key components. New orders rose to 57.1% from 56.5%. The employment index rose to 51.6% from 51.0%.

U.S. Oct. factory orders fall 4.7% - 12/0506 MarketWatch
Orders for U.S. factory goods fell by 4.7% in October, the latest evidence of contraction in the manufacturing sector, the Commerce Department said Tuesday. Excluding transportation, however, orders for U.S.-made factory goods fell by 0.8%. Taking out orders for defense goods, orders fell by 3.6% in October. It was the biggest overall drop in factory orders since July 2000. Falling orders for transportation equipment and defense and non-defense capital goods dragged down the overall number, the report shows. Orders for defense capital goods fell by 41.5%, while orders for non-defense capital goods dropped by 15.5%. Orders for transportation equipment fell by 21.6%. Wall Street economists surveyed by MarketWatch were expecting factory orders to decline by 4% in October.

Pending home sales fall 1.7% in Oct. - 12/4/06 MarketWatch
A gauge of future home buying declined slightly in October, a sign that the housing market could be stabilizing, the National Association of Realtors said Monday. The pending home sales index fell 1.7% in October to 107.2 after a 1.1% drop in September. Pending home sales are purchase agreements in which the contracts have been signed but the transaction has not closed. The index is down 13.2% in the past year. But the NAR noted that the index has trended up to from 105.6 in July and the year-ago gap is narrowing from 14% in August.

November reading of U.S. manufacturing index is lowest since April 2003 - 12/1/06 MarketWatch
The Institute for Supply Management showed manfuacturing contracted in November, raising hopes that the Federal Reserve will cut interest rates sooner rather than later. The ISM said its manufacturing index fell to 49.5% in November from 51.2% in October. Economists polled by MarketWatch were expecting a rise to 51.8%, but traders were ready for a fall below 50 after weakness in Chicago-area data released Thursday. A reading below 50 indicates contration and the Fed usually cuts rates after ISM falls below that level. Separate data showed construction spending fell 1% in October, beating the 0.3% drop expected by economists.

U.S. Oct. construction spending falls 1.0% - 12/1/06 MarketWatch
Spending on U.S. construction projects dropped by 1.0% in October, as outlays on private residential construction matched a low hit in July 2006, the Commerce Department said Friday. Private residential construction spending fell by 1.9% in October, the latest evidence the U.S. housing market has pulled back sharply. Private construction spending dropped by a sharp 1.5% in October. Spending on private nonresidential construction projects fell by 0.7%. The decline in overall construction spending beat the 0.3% drop expected by economists surveyed by MarketWatch.

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