Latest US economic data confirms accelerating contraction
By Patrick O’Connor

Figures released yesterday on US unemployment, home sales, and business capital investment all proved significantly worse than economists' prior forecasts. The Commerce Department reported that new single-family home sales for December plunged 14.7 percent from a month earlier, or about 45 percent on an annualized basis. Economists surveyed by Dow Jones Newswires had forecast an average 2.9 percent monthly fall. December's sales decline was the largest recorded since such data was first kept in 1963. In 2008, home sales totaled 482,000, the lowest number since 1982 and sharply below the 776,000 homes sold in 2007.

The Commerce Department also issued data yesterday on December's durable goods investment. Orders for durable goods—such as computers, vehicles, tools, and construction equipment—fell 2.6 percent, or 4.9 percent excluding military purchases. This was the fifth monthly decline in a row. Orders for computers and electronics fell by 7.2 percent, machinery by 5 percent, and primary metals by 6.9 percent. Total orders for durable goods in 2008 fell by a total of 5.7 percent.

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