Home Starts, Factory Production May Fall: U.S. Economy Preview

[marmar]

from Bloomberg:



Home Starts, Factory Production May Fall: U.S. Economy Preview


March 16 (Bloomberg) -- Builders in the U.S. broke ground in February on the fewest houses in 17 years and factory production fell, a sign the deepening real-estate slump is dragging the economy into a recession, government reports this week may show.

Residential home starts fell 1.7 percent to an annual rate of 995,000, according to the median forecast of economists surveyed by Bloomberg News ahead of the Commerce Department's March 18 report. Industrial output likely dropped in February for the first time in four months, Federal Reserve figures may show.

Housing, the source of the economic downturn, may weaken further as property values fall and credit shrinks. Economists predict the Fed will lower the benchmark interest rate again at its March 18 meeting after it broadened plans last week to stabilize financial markets and rescued Bear Stearns Cos. with emergency funding.

``There's certainly feed-through into the economy from the downturn in the housing and credit markets,'' said Adam York, economist at Wachovia Corp. in Charlotte, North Carolina. ``Fed policy makers will cut rates, but they're also looking for new ways to provide liquidity and restore confidence.''

The construction report may show permits, an indicator of future building, dropped to a 1.02 million annual pace, also a 17-year low. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a1c7_pLIQtUY&refer=home