New Home Construction Slows

October 17, 2008 12:00:00 AM PDT
New home construction drops to its slowest rate in 17 years as investors on Wall Street continue to worry about the president's $700-billion dollar rescue plan.President Bush offered more reassuring words on the economy on Friday, while acknowledging it will take time for credit markets to respond to the massive federal stimulus program. He spoke as new figures pointed to more economic trouble.

One thing the stock market didn't need was more bad news but shortly before trading began, the commerce department released a report showing that construction of new homes dropped to its slowest rate since the recession year of 1991 and the building industry predicted that the number of new homes and apartments constructed will be the fewest since World War II.

As a result stocks opened sharply lower before recovering in early trading.

Speaking to the U.S. Chamber Of Commerce, President Bush offered reassurances that once the $700 billion rescue plan is up and running, the current crisis will begin to reverse.

Bush said, "These are decisive measures aimed at the heart of our financial challenges, and they're big enough and bold enough to work. And the American people can be confident they will."

But Americans are hardly confident and their lack of confidence is showing in their spending habits.

July thru September was the first time in 16 years that retail sales declined for 3 consecutive months.

The areas hardest hit? Furniture sales are at the lowest since 2003. Clothing outlets rang up their worst month this year, and restaurants and bars reported their biggest sales decline in over a year.

So most expect another continued wild ride on Wall Street and overseas financial markets as good news like the dramatic drop in oil prices is blunted by more bad economic news.

"We are in a situation where, I like to call it the panic phase. The panic phase is always classified by exceptionally wild mood swings, exceptionally wild news stories that drives the market up and down in extreme ranges, that's exactly what we're in. So today is a positive range but by the end of the day it could be a negative range," said Market Analyst Tom Hougaard.



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