Stocks slipped early as the DOW flirted with 10,000 on mixed economic data. Durable Goods orders gained .3% in July, a volatile series that has drifted more or less sideways for 3-months. That said the business spending proxy Nondefense capital goods ex. Aircraft increased 10.6% a seventh consecutive solid gain, nonetheless the reports shows slowing demand. Mortgage activity increased 4.9% last week as both purchases and refi’s gained ground, the 30-year contract rate was unchanged at 4.6% as per the MBA. Despite historically low interest rates sales remain moribund.
New Home Sales for July came in at 276,000 units annualized, a big miss just like yesterdays existing home sales data, and for similar reasons. This is the first sub 300,000 reading in the Index’s 47-year history. The 12.4% drop in sales pushed the months of inventory to 9.1 as the median price fell by 7.6% to $201,600. This marks the 2nd consecutive monthly decline and makes 4 declines in the last 6-months. The Western region was hit particularly hard as sales plunged 25.4% to just 40,000 units annualized, just over 1/3rd the rate seen in April.
Recent estimates from the CBO peg the economic effects of the various stimulus programs at +1.7 and 4.5% added to GDP. Using the low end of the range, for the Second Quarter the estimate is +1.7% or more than total GDP as currently calculated for the quarter. The 3rd quarter estimate is +1.5% will be added to GDP. Today’s Durable Goods orders report puts 3rd quarter GDP down to about –1%. So again the stimulus is the economy at this point. Definitely better than nothing and this is after all the whole idea behind economic stimulus. The CBO went on to point out that with out stimulus another 1.4 to 3.3 million would have been unemployed. That 2 to 4.8 million full time equivalent jobs were created and that the unemployment rate is .7 to 1.8% lower than it would have been otherwise.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. 
