Improved retail sales gave investors a boost early this week, but subsequent data revealed the housing sector continues to weigh heavily on the economy.
According to the Commerce Department, retail sales rose 1.4 percent in October. The gain was paced by a 7.4 percent increase in auto sales which recovered more than half of September's decline. Excluding autos, retail sales rose just 0.2 percent last month in their weakest showing since July.
The sales figures were welcomed on Wall Street where the major stock indices rose to 13-month highs on the news.
But the rally fizzled Wednesday when the Commerce Department reported new housing starts fell more than 10 percent in October to their lowest level in six months.
And, the Mortgage Bankers Association reported this week that a record 14 percent of homeowners with a mortgage --some 4 million loans -- were either behind on payments or in foreclosure at the end of September.
Aside from mortgages, consumer credit has fallen for a record eight consecutive months as households cope with the worst recession since the 1930s.
But consumers aren't the only ones cutting expenses. This week, a top producer of renewable energy announced it has cut production costs on the next generation of ethanol by more than 40 percent.
POET, the world's top ethanol producer, this week announced it has reduced its cellulosic ethanol production cost at its Scotland, South Dakota pilot plant from $4.13 per gallon to $2.35 per gallon over the past year. Officials say the cost reductions will allow cellulosic ethanol to compete with gasoline within two years.
Reductions in energy usage, enzyme costs, raw material requirements and capital expenses have helped lower POET's per gallon cost. The company's goal is to be below $2 by commercial plant start-up.
POET's first commercial-scale cellulosic refinery will be built in Emmetsburg, Iowa, at a cost of $250 million. Ground breaking is expected in 2010 with the first product available in 2011. POET plans to produce 25 million gallons of ethanol each year from plant waste typically left behind in farmers' fields after harvest.
Jeff Broin, POET: "We literally could produce 50 billion gallons of grain based ethanol 20 years from today and if you look at a billion tons of cellulose in this country which will also grow as we produce more crops there will be more and more cellulose we can produce 80 to 100 billion gallons of cellulosic ethanol 20 years from today. Those two combined could replace gasoline while still increasing our food supply by over 40%. So, there's tremendous potential in this nation to provide our own energy from the Midwest and from our own land from celluloses located all over this country rather than get it from the Middle East and I think there -- those out there trying to fix status quo that don't want Americans to know that, but that's a fact and we have the data to back that up."
The 20-year-old company produces more than 1.54 billion gallons of the homegrown fuel annually from 26 production facilities nationwide.