Bad Time for Bad News

If you have been following the financial news lately you have likely noticed an uptick of dismal reports. Just this week we have seen stories on the Fed’s debate on how to simulate a sluggish economy, a slowdown in capital spending and the lowest level of existing homes sales in 15 years. The market has definitely noticed with the S&P 500 falling four out of the last five days and losing 3.5% over the period.

Today’s data are definitely no exception. First, new orders for durable goods were up .3% over the prior month. The consensus estimate was for a 2.5% rise. Also, as can be seen in the chart below the yearly trend is rolling over from its rebound in 2009.

Also released today, were data on new home sales. The headline number came in at 276,000 units versus a consensus of 340,000. Data for sales by region can be seen below.

Likely more important going forward is the data released on the current supply or inventory. At the current sales rate July’s supply is 9.1 months, a 13% increase over the prior month. As can be seen in the chart below the 9.1 months of supply is nearly two standard deviation above the historical average.

Recent data seem to point toward a slowing economy that is struggling to deal with deflationary forces and a housing sector that is far from in a recovery.

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