My faves for the day (11-19-08)

And the bad news keeps on coming:

Housing Starts at Record Low

“Notice that single-family completions are significantly higher than single-family starts. This is important because residential construction employment tends to follow completions, and completions will decline sharply soon.”

The great myth of Main Street

RW: Go Bing!

Economists React: CPI Reflects ‘Crunch’ in Consumer Spending

"The headline [CPI number] was pulled down by a 14.2% drop in gasoline prices - less than we expected, so there’ll be an even bigger drop in November - and an 8.8% drop in fuel oil. Again, much more to co- me there. The core was pushed down by a 2.4% plunge in used auto prices, a 0.5% dip in in new auto prices, a 1.0% drop in apparel and a 1.6% fall in lodging costs. The public transportation com- ponent, which includes airline fares, fell 3.3% too. In short, this report clearly reflects the crunch in discretionary consumers’ spending, which is likely to persist for the foreseeable future. – Ian Shepherdson, High Frequency Economics"

RW: Yup, and that’s called a recession! I love how they attach the adjective “crunch” to just about everything these days.

Fed sees economy shrinking through mid-2009 -- at least

“The Fed also nodded to its fears about a potential broad-based deflation of prices: "Some saw a risk that over time inflation could fall below low levels consistent with the Federal Reserve's dual mandate of price stability and maximum employment," according to the minutes.”

RW: Again, that’s called a recession, slack, unemployment. I don’t think that deflation of prices makes sense when you are talking about inflation falling below levels consistent with maximum employment – that is disinflation.

Corporate cost of borrowing

"The surge in real borrowing costs reflects the combination of rising risk spreads — even for AAA borrowers — and falling expectations of inflation. This is why deflation is a problem.

And the high cost of capital is going to be one more reason for enormous downward pressure on the economy."

RW: He’s much more eloquent than I, but still..same point.

RW: And a rather dreary forecast with an actual model to back it up (hat tip Mark Thoma):

2009 will be the nightmare on Main Street

"Hence, I predict growth in 2009 will contract rapidly, falling by an annualised rate of up to 3%. But uncertainty should fall by mid-2009, releasing a backlog of investment and employment that should propel a rapid recovery in 2010, with growth returning to 1% or 2%.”

RW: And why, exactly, is this news???? eHarmony to Provide Gay Dating Service After Lawsuit

A pic for the day via Kerry Hawkins Photography: