Consumer expectations edge up in August:
The Conference Board's Confidence Indices rose again in August as lower gas prices help sentiment rebound from historic lows in June. Severe concerns remain over declining jobs, incomes and business conditions.

Leading indicators down hard in July:
The Conference Board's Index of Leading Economic Indicators fell another -0.7% in June; it has risen slightly only twice over the past year. This privatized index is no longer the useful forecasting tool it once was but it clearly reflects today's worsening recession conditions.

Single-family permits lowest since 1982:
New housing permits and starts fell sharply in July with single-family new permits down -41.4% yr/yr, the lowest since 1982. Effects of the debt industry's scams/crises appear to be worsening and spreading throughout the US economy and through the G-7 countries.

July producer prices up 9.8% yr/yr:
Wholesale prices soared another 1.2% in July and yr/yr rise is most since 1981. Gap between total and "core" price rise is largest since 1974 as most producers lack pricing power to pass on higher energy costs, squeezing profits, wages and investments in the difficult months ahead.

Industy output up in July, down yr/yr:
Industrial output regained 0.2% in July but is down -0.1% yr/yr despite strong growth in mining and utilities. Manufacturing output gained 0.4% in July but remains down -1.1% yr/yr. Capacity use is just 77.7% for Manufacturing. Since the last recession ended 80 months ago, and with the current recession just starting, this is already the weakest business cycle since 1927-'34.

Weekly wages plunged again in July:
Average weekly wages bought -0.8% less in July, -3.3% less than in Aug '07, and back -0.8% less than in Jan '01. With no current savings, record high debt and debt-service, falling home and vehicle values, a job market in decline and new borrowing more difficult, household spending will remain very sluggish throughout 2008 in what is likely to be a long, severe downturn.

Consumer prices soar 0.8% in July:
With gas prices still soaring in July, all energy costs rose 4.0%, transportation cost rose 1.7%, and housing and food costs continue to rise. Financially stresses households face continued sharp increases in the price of essentials while most other businesses, with little pricing power, cut profits, wages & jobs.

What rebate? Retail sales fell again in July:
Total retail sales fell -0.1% in July even before adjusting for rising prices. Auto sales are the lowest since Sept. '01 but gas and grocery sales continue to soar on rising prices. Adjusted for prices, retail sales have plunged -3% since November despite the recent debt-financed federal rebate. Almost all spending increases are for basics of gas, groceries & health care as household finances continue to worsen despite lack of savings and falling wages and networth.

Even now, trade losses remain severe:
Despite the debt crisis and near economic stagnation, the trade deficit remained -$56.8 billion in June, easing only slightly from May and yr/yr forcing the US to continue to borrow near $2 billion per day from abroad. The goods deficit is worse yr/yr but the services sector, aided by the weak dollar and foreign tourists has improved sharply. Despite plunging demand, the auto deficit is worsening yr/yr beyond -$10 billion per month and losses in advanced tech trade are also worsening to new record levels.

New home sales down, inventories soar:
New single-family home sales fell -2.5% in May to levels now down -40.3% yr/yr. Prices continued to fall while unsold inventores rose to 10.9 months with the median time to sell a house -- even after discounts -- now 8.5 months. There is still no end in sight to debt and income troubles.

Salaries down, output & productivity weak:
Total real compensation and hours worked fell sharply in Q2 but this allows 1.7% annualized output growth to translate into 2.2% growth for productivity. Yr/yr hours worked are down -1.0% driving down total real compensation even as output rose 1.8% meaning that productivity - output per hour -- rose 2.8%. Productivity can be a key to wealth-creation or, as now, it can indicate worsening financial stress for households.

Rebate effects wane, income/spending fall:
The Federal debt-financed rebate in May and June slashed taxes and sent Govt checks but real disposable incomes fell -2.6% in June after soaring by 5.2% in May. Real spending fell -0.2% in June after rising 0.3% in May. Saving 2.5% of disposable income in June, financially-pressed households welcome this one-shot rebate but there is no sign of alterning the worsening downward cycle.

Losses of jobs and wages continued in July:
The US lost another -76k private sector jobs in July, the 8th straight month of decline. Total paid hours also fell by -0.4%. The private sector has now lost -418k jobs yr/yr so even with 351k new government jobs, the total job count is down -67 yr/yr. Excluding private health and education bureaucracies, bars/restaurants, the private sector has lost -1.15 million jobs yr/yr. Weekly wages were unchanged in July so purchasing power fell by the full amount of price increases. The economy is sinking from unsustainable debt with no new engine or policy strategy in sight.

Rebate drives Q2 GDP to just a 1.9% rate:
BEA estimates real GDP rose at a 1.9% annual rate in Q2 despite the rebate stimulus. Consumer spending on non-durables and services and a sharp decline in the trade deficit were the engines of growth while investment continued to fall sharply. Most of the improvement in the trade deficit was due to a cut in imports, not increased exports. Excluding the rebates, incomes fell further behind prices and spending. But because of the stimulus, the savings rate jumped to 2.6% of disposable income; a welcome if ephemeral boost.

June Durable orders rise on price spike:
The nominal value of orders for durable manufactured goods rebounded in June, rising 0.8% back near March levels but still down -1.1% yr/yr. Nominal values of orders for autos and parts are back to levels of 1998 even as producer costs rise sharply.

Normal weekly salary down year to '08-Q2:
The BLS reports median normal real weekly salaries fell slightly yr/yr to '08-Q2 due to continued shift from higher to lower-paying occupations and industries and to lower-paid women. The number of men working full time DECLINED yr/yr as all the meager job gains were for women.

2008-q1 Trade deficit and borrowing worsen:
US net payments on all global Current Accounts reached -$176.4 billion in Q1, -5% of GDP, forcing the US to borrow or sell assets to foreign interests worth -$2 billion per day. Since 2001 the US Current Account deficit is now -$4.4 Trillion and seems likely to reach -$5 Trillion by the end of 2008. Manufacturing deficits and debt service obligations with China are soaring, complicating efforts both to finance and to reduce production shortfall.

Selling-off strategic US assets worldwide:
The Commerce Dept. reports annual foreign direct investment (FDI) to form new business in the US fell to just 7.9% of the total while FDI to acquire the worldwide assets of existing US firms rose to 92.1%. Since 1992, 90% of $2 Trillion in FDI has gone to acquire existing US assets worldwide. This represents the recycling of a portion of the US' current account deficit payments.

Household debt record, home equity sinks:
Household debt soared to a new record 139% of after-tax income in '07Q4 and homeowner equity plunged to record low 47.9% of falling home values. Seven years ago debt was 101.2% of disposable incomes and homeowners held 57.6% of the rising value of their homes. Debt is rising faster than net worth so the debt-to-net worth ratio also reached a new record 24.9% in Q4. These unprecedented debt levels pose unique risks.

Sales of existing homes are still plunging;
Existing home sales fell another -0.4% in Jan, down -23.4% yr/yr to the lowest levels in 10 years. Median and Mean home prices also continued to fall, down -4.6% and -3.7% yr/yr, respectively even ignoring large incentives now needed to close a sale. For the first time in the Assoc's records, Median and Mean prices fell for the full year 2007 and are now below price levels in 2005. A recession likely already has started and odds are 60/40 that it will be long and deep.

Construction decline widened in December:
Census reports the nominal value of all construction spending fell -1.1% in Dec, the third consecutive monthly decline. The decline in residential construction is accelerating and public construction also fell in Dec. offsetting the slowing growth of private nonresidential. With state and local governments now facing budget shortfalls, the public works boom that has offset the housing decline appears to have ended.

Debt-service pmts. stay near record:
Even with their large fees, the largely unregulated financial "innovation" of subprime and payday lenders have not set introductory rates low enough to reduce debt service far below record levels of Q2 disposable incomes. With record debt levels rising and recent exotic "adjustable" rates beginning to convert, this burden will worsen quickly, further slowing other spending.

The 2001 Recession
The recession that started in March, 2001 following 10 years of only average economic growth, officially ended in November, 2001. By most measures of output, investment and job creation, the current cyclical "recovery" is the weakest on record.