The Commerce Department left its November assessment of 3rd quarter gross domestic product unchanged at negative 0.5 percent. But some economists believe the economy could contract at an annual rate of as much as 6 percent in the current 4th quarter. If realized, that would be the worst quarterly decline in 26 years.
Meanwhile, existing home sales fell to an annual rate of 4.5 million last month, down 8.6% from October. The median sales price plummeted 13% to just over $181,000 in the largest monthly decline since record-keeping began 40 years ago.
Orders to U.S. factories for big-ticket manufactured goods fell 1 percent last month, reflecting a 38 percent reduction in demand for commercial aircraft and a decline in orders for new vehicles and auto parts.
Sales of U.S. automobiles plunged 37 percent in November to their lowest level in more than 26 years.
This week, Toyota announced it too is struggling, and will report an operating loss for the first time since the Japanese automaker began reporting results in 1941.
With all the negative economic news these days it seems almost unbelievable that a mere six months ago, the Dow was over 12,000, most Americans associated the term "bailout" with incarceration, and virtually all major commodity prices were at record highs.
But a glimmer of hope could be seen in rural America this week, where a key barometer of economic health showed signs of improvement.
The Rural Mainstreet Index, or RMI, ranges between a low of 0 and a high of 100 with a score of 50 representing neutral growth. The monthly survey reached 25 in December, up from a record low 22.1 in November. The RMI is a survey of rural bank CEOs from 11 states including Iowa, Illinois, the Dakotas, Kansas, Minnesota, Montana, Missouri, Nebraska, and Wyoming.
Ernie Goss, Creighton University Economist: "What we have now is just fear. And the fear is gripping the banks in many cases, not in this part of the country, but in other parts of the nation, gripping the banks and they don't wish to lend or at least not to lend to those that don't have star ratings, star credit ratings. So, that is freezing things up right there. And you've got among consumers, consumers are pulling back their buying, businesses are pulling back their buying."
Conducted by economists at Omaha's Creighton University, the RMI pegged the greater national economic picture, export declines, and a weakening farm sector for the near-record low index. The RMI peaked in January 2008 at an all-time high of 81 which was largely attributed to strong commodity prices and record farmland values. That number has tumbled in less than one year to this month's RMI of 25.
Ernie Goss, Creighton University Economist: "…farm income is holding up pretty well and the companies that have close ties to agriculture are doing well. Now, again, with commodity prices coming down and input prices holding up too strong there are some real head winds there but that's an area that's doing real well. So, if you look at the economy here, while it may feel really tough, there's a lot tougher places in this part of the country right now."
The RMI survey also asked a pair of questions in addition to normal economic data. When rural bank CEOs were questioned whether 2009 projected fertilizer prices have declined in their areas, 57.8 percent responded NO as opposed to only 20.3 percent answering YES to fertilizer price declines.
In a poll of rural banks outside of America's Rust Belt, more than 47 percent agree with a government authorized bailout to auto producers. That's higher than the 36.5 percent whom disagree with government loans.
Ernie Goss, Creighton University Economist: "I just think we're stimulating the economy, we're not thinking about what's going to happen in 2010 or 2011 in terms of inflation. We've got President-elect Obama talking about an $850 billion to $1 trillion stimulus package and that's a two year package. This recession, in my judgment, is going to be over at the end of 2009."