Wednesday, December 24, 2008

Economic news

Consumers gain purchasing power in November Real consumer spending rose 0.6% in November, marking the first gain since May, the Commerce Department reported Wednesday, as lower prices for gas and other goods have added to purchasing power. I just paid $1.84 a gallon of gas. In early July I paid $4.34 a gallon. That drop of $2.50 a gallon is significant: 4 gallons at 4.34 cost me over 17 dollars; five and a half gallons at 1.84 cost me 10.60: a gallon and a half more cost six dollars less; I'm getting more for my money, which is increased purchasing power. That is a very significant factor. Yet the fear of bad economics and more bad news is palpable, and offsets increased purchasing power.

US Durable Goods Orders Fell Less Than Forecast Orders for U.S. durable goods fell less than forecast in November, easing concern that business investment would plummet in coming months in response to the deepening credit freeze and slowing sales. Durable goods are items that last years. Demand for computers, machinery and defense equipment rebounded last month, partly offsetting a slump in aircraft bookings. Even so, companies will likely keep paring spending as consumer bookings slow and international demand weakens in the face of the global credit crisis.

Mortgage applications soar as rates fall Near record low mortgage rates sent mortgage applications shooting higher last week, especially for refinances, according to an industry report. Many of the applications are for refinancing, rather than purchases, yet the activity is substantial. That's good for lenders (more business), borrowers (money saved), and indicates a thawing in the credit markets.

Crude Oil Falls Below $37 on Forecasts of US Supply Increase Crude oil fell below $37 a barrel in New York before a government report that’s forecast to show U.S. inventories rose for the 12th time in 13 weeks. Down from$143, $147, a barrel of crude now sells for 37 bucks. That is a drop of $110 or so. About a 75% drop. Gasoline is only down about 57%, or so; there is room for lower gas prices soon.

All is all, those four news stories are good news. Lower oil prices, lower gas prices, credit market activity, an economic indicator showing some (relative) strength.

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