US on verge of yet another recession?

Source: Press TV
http://www.presstv.ir/detail/140132.html


The US economy may be on the verge of yet another recession as the government Wednesday announced a decline in manufacturing activity and the weakest rate of new home purchases in almost 50 years.


Earlier this week, it was announced that sales of previously occupied homes fell last month to the lowest level in 15 years.

Meanwhile, unemployment remains near double digits because job growth in the private sector has slowed, AP reported.

Economists are predicting the government will announce Friday that the economy grew from April to June even more slowly than previously thought, at an annual rate below 2 percent - weak for normal times and especially anemic right after a recession.

"The odds of a double-dip are rising and uncomfortably high," said Mark Zandi, chief economist at Moody's Analytics, referring to the possibility that the nation will tip back into recession. "Nothing else can go wrong. There is no cushion left."

Housing has never fully recovered from the recession. Builders have been forced to compete with foreclosed properties offered at sharply lower prices.

According to government figures, in July the sales of new homes fell 12.4 percent in compared to a month earlier to a seasonally adjusted annual sales pace of 276,000, marking a drastic decline from the annual sale of nearly 600,000 new homes from 1983 through 2007.

The July pace was the slowest in at least 47 years. The past three months have been the worst on record.

Weak housing sales spell fewer jobs in the construction industry, which normally powers economic recoveries. On average, each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

The industry received some help in the spring when the government offered tax credits to homebuyers. However, since the tax incentives expired in April, the number of people looking to buy homes has dropped, even with bargain prices and the lowest mortgage rates in decades.

For the average US household the rate of economic growth may not matter much. The two indicators that do matter are the unemployment rate, stuck at 9.5 percent, and home values, which have sunk about 30 percent from their 2006 peak.