Yesterday and today, the housing industry and analysts who follow what’s happening in the economy received a batch of bad news. Existing home sales fell to the lowest level in 15 years and the pace of new home sales set a new low.
In the meantime, orders for new durable goods managed to eke out a 0.3% rise in July; however, the gain was far shy of forecasts, and the increase occurred due to a huge rise in orders for aircraft. Pull out transportation, and durable goods orders fell 3.8%. More worrisome, orders for capital goods fell 8.0%.
Yes, durables are volatile on a month to month basis, and the weakness in the economy we are seeing may abate when summer ends. But the gloomy data surely has officials must have Fed officials worried that the economy could be slipping into a new recession.
New measures
The Fed is out of bullets when it comes to lowering interest rates. Still, expect tougher talk in the statement that emerges at the conclusion of the September 21 meeting. And the possibility is growing that monetary officials could begin more aggressive measures to stoke demand.
It seems unlikely, because traders and analysts might fret that the Fed is in panic mode, but the possibility, though remote, is growing that policymakers could put new steps in place prior to the next meeting.
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