Friday's Construction Spending and Manufacturing reports provided still further evidence of a sinking economy. The 2 graphs below from Briefing.com (http://www.briefing.com/Investor/Public/MarketAnalysis/Calendars/EconomicReleases/const.htm) show the overall trend.

http://i27.photobucket.com/albums/c190/unlawflcombatnt/12-1-06grphConstrcBar.gif

http://i27.photobucket.com/albums/c190/unlawflcombatnt/12-1-06grphCnstrSpndLn.gif

Construction Spending declined 1%, leaving an annualized, seasonally-adjusted rate of $1.16 trillion. This was the largest decline since the recession in 2001. Residential Construction fell 1.9% in the last month. Residential Construction spending has also fallen for 7 consecutive months.

Since March, 100,000 housing-related jobs have been lost. Economist Zoltan Pozsar from Moody's Economy.com, (in today's Yahoo News (http://news.yahoo.com/s/ap/20061201/ap_on_bi_ge/economy)) estimates that 300,000 more housing-related jobs will be lost in the next year.

Manufacturing also declined in today's report. This is the first contraction in the Manufacturing sector in almost 4 years. Manufacturing employment also declined in November, with the ISM Manufacturing employment index declining to 49.2 in November from 50.8 in October. (Readings under 50 indicate a contraction.)

The dollar has dropped 3% in relation to the Euro in the last week, and 1.4% since Thursday morning (11/30/06).

The stock market has declined for the 2nd straight week.

All of this follows November 28th's Durable Goods Orders decline, which was much larger than predicted. The original Durable Goods orders prediction was for a decline of only 6.0%. The actual change was a -8.3%. Though much of this was simply an offset from last months increase "alleged" 8.7% increase, October's total is still 0.3% less than August's, and 0.38% less than July's.
The August through October numbers can be seen on the chart below from the U.S. Census Bureau. The Durable Orders totals are underlined in red, as are the "Excluding Transportation" totals.

http://i27.photobucket.com/albums/c190/unlawflcombatnt/11-28-06grphDurOrdrCens-X.gif

More importantly, Durable Goods orders have declined compared to October 2005, for a same-month change of -1.8%. This can be seen from the composite chart below, made from the superimposition of monthly Durable Orders reports from the previous months, with information on the furthest month back coming from the January 2006 report by the Census Bureau.
(October 2005's total was not available, so it was extrapolated from the percentage increase given between October - November 2005 change, shown in the far right column.) Once again, the Total and Ex-Transportation numbers are underlined in red.
http://i27.photobucket.com/albums/c190/unlawflcombatnt/11-28-06grphDurOrdrCens12-13XX.gif

From the above chart it appears Durable Orders peaked In December 2005, and have been generally declining since that time. Compared to December 2005's peak of $230.754 billion, October of 2006 is down 9% to $209.974 billion.

Meanwhile, the Corporatists and the NeoCon-Artists continue to claim the economy is "the strongest ever" and claim the statistics support them. Of course, they never give those "supporting" statistics. There's a reason for that. There aren't any. The economy is sinking and a recession is very likely within the next year. All the Right-Wing propaganda in the world isn't going to change this.

unlawflcombatnt

Economic Populist Forum (http://www.unlawflcombatnt.proboards84.com/)

EconomicPopulistCommentary (http://www.unlawflcombatnt.blogspot.com/)

_________________
The economy needs balance between the "means of production" & "means of consumption."

And yet, 3000 condos are being built in Emeryville (a city of 7000) - new construction is going up all over Oakland, as well as in Richmond, and the new Rincon Hill Tower in SF is already 80 percent sold out when it won't even be completed for another 2 years.

To top it off, I have talked with the three major developers in the bay area who have all given me the exact same prediction - we will be seeing a rise in the housing market by next christmas.

The Dollar in Freefall

December 1, 2006

Falling share prices in New York last night suggested Wall Street has woken up to the risk of a hard landing. The dollar's weakness is no flash in the pan It is the start of something big

All year the dollar has been an accident waiting to happen. Now it has. The selling seen at the end of last week could be blamed, if only just, on thin trading at Thanksgiving.

Yesterday's renewed pressure on the US currency is harder to explain away, and with sterling close to $1.95 yesterday the two-dollar pound is a real possibility.

The ingredients have been there for months. Firstly, the US is running a colossal current account deficit, which it funds by borrowing money from the rest of the world. Secondly, the economy is clearly slowing following the steady increase in interest rates from 1% to 5.25% since 2004.

The boom in the housing market that artificially inflated growth a year ago has turned, predictably to bust.

Thirdly, the differential between US interest rates and those in the rest of the world is narrowing. Despite all its tough anti-inflationary rhetoric, the Federal Reserve will not raise rates again.

The same could not be said of the European Central Bank, the Bank of England or the Bank of Japan; indeed, for the first time since the euro was launched in 1999 the foreign exchange markets are faced with a situation where the two big European banks are tightening but the next move in US rates will be downwards.

These, then, are the fundamentals explaining dollar weakness. There are, however, two other contingent factors that have prompted the recent selling pressure.

One is the thumping taken by the Republicans in the mid-term elections, which has left the US with a divided government and the lamest of lame duck presidents.

The other is that commodity trading advisers, the people who manage currencies in the financial markets, have until now had a pretty rotten year.

The lack of any sustained moves in currencies over the first 10 months of the year means their average returns are negative by around 5%. To turn things round CTAs need a strong trend to latch on to, and they suspect they have it in a falling dollar.

What does all this mean? Well, in the short term the dollar is still a blatant sell. All eyes today will be on the figures for existing US home sales, which could be a lot worse than the tiny fall expected by Wall Street.

Looking further ahead the outcome depends on whether lower long-term rates give overseas investors confidence to keep supporting the dollar by buying US assets.

One study in the US has shown that foreign capital flows have helped keep long-term interest rates in America a percentage point lower than they would otherwise have been. Knocking away that prop would have serious consequences.

Falling share prices in New York last night suggested Wall Street has woken up to the risk of a hard landing. Not before time. The dollar's weakness is no flash in the pan; it is the start of something big.

http://business.guardian.co.uk/print/0,,329645923-108725,00.html