Recovery in danger as firms, homebuyers cut back

[The Northerner]

WASHINGTON – The economic recovery appears to be stalling as companies cut back last month on their investments in equipment and machines and Americans bought new homes at the weakest pace in decades.

Overall orders for big-ticket manufactured goods increased 0.3 percent in July, the Commerce Department said on Wednesday. But that was only because of a 76 percent jump in demand for commercial aircraft.

Taking out the volatile transportation category, orders for durable goods fell at the steepest rate since January. And business orders for capital goods took their sharpest drop since January 2009, when the economy was stuck in the deepest recession in decades.

Separately, Commerce said new home sales fell 12.4 percent in July from a month earlier to a seasonally adjusted annual sales pace of 276,600. That was the slowest pace on records dating back to 1963. Collectively, the past three months have been the worst on record for new home sales.

The weak sales mean fewer jobs in the construction industry, which normally powers economic recoveries. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

Read more: http://news.yahoo.com/s/ap/20100825/ap_on_bi_go_ec_fi/us_economy

[bemildred]

1. They really ought to put "recovery" in quotes at this point.

I mean it was always doubtful spin, but now it's transparent bullshit.

[jtuck004]

2. You are right on.

Notice in the article their reliance on housing leading the recovery. The only reason we haven't lost our economy sooner is because it was propped up by artificial housing values, while a large portion of our GDP during those years came from the debt people pulled from their mortgage equity withdrawals. Now that is gone, jobs are decreasing...yet people still want to depend on housing.

Have they completely forgotten what manufacturing did for us? And that the process of manufacturing spawns other ideas when people work with the materials? It will take years before all the housing sitting out there is soaked up again, and the only little bits of building going on is where there are a few jobs and not enough housing.

We really need to figure out what manufacturing and wealth creation needs to look like for the 21st century, and make the gov spend the capital to make it happen.

[ixion]

3. "The only reason we haven't lost our economy sooner is because it was propped up by artificial...

housing values."

This is spot on. The Dot.com bubble burst and BushCo immediately came up with the 'Ownership Society' BS, then with the help of the bankers created a massive speculative market in housing, which was insane, of course.

And now we're paying the price for all those years of bubbles, but especially for the housing speculation bubble. The effects of that are going to last for years.

[Crazy Dave]

4. Canada actually has a higher percentage of home ownership

But they buy homes the way people used to many years ago in the US. To live in for 10 - 20 years, not "flip" them for a profit.