Reports Paint Grim U.S. Economic Picture

Consumer Prices, New Home Construction Sink As Recession Grips Nation

(CBS/ AP)  U.S. consumer prices in November plunged by the largest amount on records going back 61 years as energy costs posted nearly double the decline of the previous month.

The Labor Department reported Tuesday that consumer prices fell 1.7 percent in November, surpassing the previous record decline of 1 percent set in October. The drop was the largest one-month decline dating to February 1947.

The huge decreases reflect the severe recession gripping the country and raise the pressure for the Federal Reserve to act decisively to guard against a debilitating bout of deflation.

In other economic news, the Commerce Department reported that construction of new homes fell in November by 18.9 percent, the biggest drop in a quarter-century. The steep decline pushed construction down to a seasonally adjusted annual rate of 625,000 homes, the slowest pace on records that go back to 1959.

On Wall Street, Goldman Sachs Group Inc. on Tuesday reported its first quarterly loss since it went public in 1999, losing $2.29 billion during its fiscal fourth quarter.

The loss proves the turmoil in the financial markets has tripped up even the best-run financial institutions. The New York-based bank has long been considered the premier investment bank on Wall Street, and in recent quarters, the sturdiest bank amid the market turmoil.

The Fed wraps up a two-day meeting Tuesday. Economists expect the central bank to cut the federal funds rate, already at a low of 1 percent, by another half-point in an effort to keep the recession from worsening.

Experts agree another interest rate cut will do little to get banks lending and consumers borrowing again, reports CBS News' Alexis Christoforous.

The benefit of a Fed rate reduction may be mostly psychological, rather than economic.

"It's a feel-good thing," said economist Ken Mayland, president of ClearView Economics. "Hopefully this a bridge to better confidence."

Only a few months ago, some anticipated that the Fed would start raising interest rates to battle a prolonged surge in energy costs. But since September, the Fed's focus has switched to trying to prevent the worst financial crisis since the Great Depression of the 1930s from pushing the country into a deeper recession.

The turnaround in inflation reflects a huge drop in energy costs. Energy prices fell by a record 17 percent in November, nearly double the 8.6 percent decline in October. Both declines represented record drops.

Food costs posted a modest 0.2 percent rise in November, the smallest increase in eight months.

Core inflation, excluding food and energy, showed no increase at all in November following a 0.1 percent drop in October.

[grandesign]

And that is exactly what politicians in Federal government want. People are distracted from the ineffectiveness and downright corruption.
Posted by saraplumber at 04:05 PM : Dec 16, 2008

Wow, sounds like a strategy worth a pay raise. Give them all salary increases with an extra portion of benefits.

[pepperwood2]

You know Uncle Ted, I''ve been talking to Hillary, and I decided that what I want for Christmas, this year, is to be Senator of NY.

Nobody is suppose to know, but Hillary thinks we can pull this off as she has a lot of friends in low places.

It''s what I''ve always wanted Uncle Ted come on now. I can do it. CACKLE CACKLE CACKLE .... My laugh is starting too sound just like her. How''s that for starters.

I''m the Change the people of New York & this Country needs to straighten out all these problems that Bush created. Wow this is fun and I''m just warming up.

[lucasnico]

Just wait until Jan 20th then we can start heing how well the economy is recovering and how great things are going.

Posted by Mccain08nc

Heing??

[cheetah-man7]

I amazed that the rightwing loonies are still here. Of course they are being paid. Realizing how marginalized they are now these sites are the only place they have. Most American''''s have left them by the road side.


Posted by trillion1

Actually, I do not leave them along the roadside. I simply gun my Toyota Prius and knock them down while saving gasoline at the same time. My aim is getting better and better.....

[slinginrich]

I can''t believe poor Pappy lost the election after saying, "We''ve made great progress economically, in the Bush years", and, "The Economy is Fundamentally Sound"......15 minutes before declaring we were all going to die...........(of course, he also said we should stay in Iraq for a hundred years, but that''s an entirely different senile moment)....

[neonink]

Things still cost too much.

I think the gas costs were a little late being rolled up into our goods.

I''m still in sticker shock over some items in the grocery and pharmacy.

[trillion1]

I amazed that the rightwing loonies are still here. Of course they are being paid. Realizing how marginalized they are now these sites are the only place they have. Most American''s have left them by the road side.

[johnpatrick9]

We must continue to NOT TAX THE RICH and to LOWER THE WAGES OF THE WORKING CLASSES...and of course BREAK THE UNIONS....so that American can eventually be broken up into Feifdoms for the RICH TO RULE OVER...enough of this "OF BY AND FOR THE PEOPLE ***."

[debinok1]

Agreed. Plus the fact that these days homes are built with pressboard, OSB & plywood! JUNK! And they price them like they do! (And people buy them!). Not to mention there is no land...you can spit out the window & hit your neighbors house! Sad.

Posted by GeneRey
*************
I was lucky enough to dodge the housing and credit bubbles. I bought a small acre just recently after prices fell back into the "normal" range. I will be able to have a garden(cut food costs), and a cob house has a better insulating value than wood. a small wood stove means no NG or propane, and electricity will be at a minimum. So just maybe I will have a house that will outlast me and be able to pass over to my kids.

[jowand]

All this economic meltdown from two things.
High energy, oil, prices and from deadbeats getting mortgages they couldn''t make payments on.
Companies are still advertizing no credit check-no income check mortgages, and Congress is still holding up domestic oil production.

But good news on the domestic oil front, a 200 billion barrel oil field in N Dakota. The Bakken oil field is on land not controlled by the looney left enviro'' nut jobs.

[incog-nito]

Here''s a better link to the Buchanan article:

http://www.creators.com/opinion/pat-buchanan.html

[incog-nito]

Real this article by Pat Buchanan on how the Republicans are destroying the U.S. manufacturing sector:

http://news.yahoo.com/s/uc/20081216/cm_uc_crpbux/op_338388;_ylt=AtqUIMtPFJXSkGryVCsquYT9wxIF

[babooph]

We must end all taxes on the rich forever & start 2 more losing wars-this comes from God directly & cannot be wrong.

[kuei12]

"Dow shot up 360 points today on Fed rate cut and asset purchase plans"

Tomorrow it will fall again. Nothing serious is going to happen until bush is out of office. A real man would have stepped aside in light of such enormous failures.

[noloyalisti]

The government is printing money like it''s going out of style. Next stop hyperinflation. There is not more cuts available to the interest rates. We need to impeach the corporations. Time for GENERAL STRIKES yet?

[closethippy1]

Who would have ever thought? It turns out all of Wall Street is nothing but one huge Ponzi scheme!

[generey]

Maybe this is finally the end of the overpriced oversized McMansions, maybe when building does start again it will be regular affordable homes.


--------------------------------------------------------------------------------

Posted by DebinOK1 at 04:54 PM : Dec 16, 2008

Agreed. Plus the fact that these days homes are built with pressboard, OSB & plywood! JUNK! And they price them like they do! (And people buy them!). Not to mention there is no land...you can spit out the window & hit your neighbors house! Sad.

[debinok1]

Starting probably spring/summer 2010 I am building a small(800 sq ft) cob house, nice thick walls, small wood stove, and as little electric as possible. Simple living has won out for me. I have no desire to live the big life, simple comforts are usually more stable.

[vanfer-2009]

Start buying stocks in American companies. This is the CHEAPEST it''s going to get! America is not going to collapse and you''ll be way ahead of the game. Same goes for housing. It''s all DEALS!

[mcv57]

Ok Benny Boy, you bought some time with cheap money, but all you are going to get is REFINANCE up the kazoo. My own mother is passing her credit card debt from one 0% interest debt to another. I don''t think its going get the general public to buy a house or/and a car without a JOB! Minimum wage will not fake-it with the banks neither!