More Bad Numbers for Economy
- Dec 03, 2008
The Institute for Supply Management, which released its manufacturing index for November recently (those numbers were bad), has more bad news for the nation today: U.S. service industries, which constitute about nine-tenths of all domestic economic activity, contracted in November. The index of non-manufacturing businesses, according to the ISM, fell to 37.3, down from 44.4 in October. Anything less than 50 indicates contraction, and the November figure is the lowest ever recorded, though the index has only been around since 1997. Another set of numbers released today offers no comfort either. The ADP National Employment Index, published by payroll processor Automatic Data Processing, says that the U.S. economy lost a quarter million jobs in November: 118,000 in manufacturing; 44,000 in construction; and 92,000 service jobs. The U.S. Department of Labor will report its employment numbers for November later this week, and no one is expecting any good news from that direction. Mortgage rates are down, and despite everything else, people seem eager to take advantage of it, mostly for refinancing purposes. According to the Mortgage Bankers Association, mortgage applications filed last week rose 112.1 percent compared with the week before–more than doubling, in other words. The MBA, which tracks average mortgage rates, said that 30-year fixed-rate mortgages averaged 5.47 percent last week, compared with 5.99 percent the week before. The drop stems from the decision by the government to buy mortgage-backed securities and Fannie Mae and Freddie Mac debt, and if rates stay down, at least some homeowners will be able to get out from under their oppressive ARMs. Somewhere, someone is writing a script for AIG: The Never-Ending Bailout, the story of a beleaguered giant that journeys again and again to the fabled land called Washington to seek ever-bigger pots of gold. The material would write itself: according to the Wall Street Journal, AIG CEO Edward Liddy said that he plans to renegotiate the bailout once more, to get better terms. “As soon as we make good progress on selling assets and paying down that debt, we intend to go down to Washington, D.C., and negotiate with the new Treasury secretary,” Liddy told the paper yesterday. “Bankruptcy is not an option,” is the mantra of the Big Three these days. The argument being that consumers won’t buy cars from a bankrupt automaker. But then again, they’re already not buying cars from the not-yet-bankrupt automakers for reasons that are probably more fundamental than an abstraction like bankruptcy. In any case, the Big Three are now asking for more than the $25 billion figure that’s been floating around recently–$34 billion all together.