Last Week in the News (January 26, 2009)

On Wednesday, January 21, it was announced that the National Association of Home Builders/Wells Fargo housing market index fell one point to eight in January, the lowest level recorded since the index was created in 1985. The index held steady at nine for December and November and was 14 in October. An index reading higher than 50 indicates positive sentiment about the housing market. The index has been below 50 since May 2006, and below 20 since April 2008.

The Labor Department reported Thursday that new applications for jobless benefits increased by 62,000 to a seasonally adjusted 589,000 in the week ended January 17 from a revised 527,000 the prior week. Economists had expected a reading of 543,000. U.S. employers cut 2.6 million jobs last year. The total number of people collecting unemployment benefits increased to 4.607 million.

The Commerce Department reported that housing starts fell 16% in December to a seasonally adjusted annual rate of 550,000 units, the lowest on record. It was a much bigger decline than the 610,000 economists had expected. This follows an upwardly revised rate of 651,000 units in November and 791,000 units in October. Meanwhile, building permits fell 10.7% in December to 549,000 units, also a historic low, from 615,000 units in November.

In other news, the U.S. Treasury is now demanding monthly reports from the banks that received the most capital from the government’s $700 billion Troubled Asset Relief Program. Neel Kashkari, the program administrator, wrote to Citigroup, Bank of America, Wells Fargo and 17 other financial institutions on January 16 seeking figures on business and consumer loans.

Upcoming on the economic calendar are reports on existing home sales on January 26, new home sales on January 29 and gross domestic product on January 30.