Ixnay On The Oombay

Bush boom busted. McClatchy (08.10.06):

"From bustling Wall Street to the quiet corridors of the Federal Reserve, there's widespread agreement that the once-sizzling U.S. economy is slowing. The question now is what's next: a return to stable, modest growth or a skid into recession. The answer will play out in the months ahead. It depends on whether soaring energy prices ease, inflation threats diminish and the slumping housing sector stabilizes or sinks." All signs point to an economic slowdown, and recession dangers are growing

"The Mortgage Bankers Association said this month that loan applications to purchase homes in July were down 20 percent from the same month a year earlier. The National Association of Home Builders said this month that its housing-market index dipped in June to its lowest level since 1991. And the National Association of Realtors said Wednesday that existing-home sales would fall 6.5 percent this year. "With home-price increases slowing, an important engine of U.S. consumption is sputtering. The housing boom helped drive economic growth through a combination of rapidly rising home values and historically low lending rates on refinancing and home-equity loans. These led many Americans to use their homes as a sort of ATM, borrowing against their rising value to fund vacations, new cars or college tuitions. Now that may be ending." With home equity becoming increasingly unavailable, folks are turning to credit cards as a source of funds. Considering that consumer spending "accounts for two-thirds of the total economy", once the plastic is maxed, the ride will get bumpy indeed. But our buddy, Commerce Secretary Carlos Gutierrez, isn't concerned: "'President Bush's economic policies have steered America on a path of even greater prosperity and opportunity.'" So on one hand, we have Carlos. On the other there are those pesky facts. "Recent data point decisively to an already slowing economy. Second-quarter growth slipped to a 2.5 percent annual rate after a red-hot 5.6 percent from January through March. Unemployment rose in July to 4.8 percent from 4.6 percent, and the 113,000 nonfarm jobs added in July were below expectations." "Meanwhile, oil and gasoline prices keep climbing."