By Shobhana Chandra
Jan. 29 (Bloomberg) -- The yearlong recession left no part of the U.S. economy unscathed in December as orders for durable goods probably fell for the fourth time in five months and sales of new houses slumped to a 26-year low, economists said before reports today.
Bookings for goods meant to last several years dropped 2 percent after falling 1.5 percent in November, according to the median estimate in a Bloomberg News survey. Builders probably sold 397,000 homes at an annual pace, the fewest since 1982.
Companies from General Motors Corp. to Caterpillar Inc. are cutting back as a lack of credit and mounting job losses cause consumers to retrench and the worst global downturn in the postwar era stunts demand from overseas. The Federal Reserve yesterday said it was ready to expand efforts to unclog lending, just as the Obama administration works to pass a stimulus plan.
“Companies are responding to the decline in demand by cutting back sharply,” said Kevin Logan, a senior market economist at Dresdner Kleinwort in New York. “There’ll be a pretty severe contraction in the first half” of 2009.
The Commerce Department’s durable-goods report is due at 8:30 a.m. in Washington. Projections in the Bloomberg survey of 75 economists ranged from a decline of 6 percent to a gain of 1.3 percent. Excluding transportation equipment, orders were forecast to fall 2.7 percent after a 0.6 percent increase.
At 10 a.m., Commerce figures may show new-home sales dropped 2.5 percent last month from November’s 407,000 rate, according to the median estimate in the Bloomberg survey.
Also at 8:30 a.m., a Labor Department report may show initial claims for jobless benefits fell last week after matching a 26-year high a week earlier, according to the survey.
Fed Action
The Fed yesterday left the benchmark interest rate as low as zero and said it was prepared to purchase Treasury securities to resuscitate lending should circumstances warrant such action. Policy makers also warned that inflation may recede too quickly and that downside risks to growth “are significant.”
Boeing Co., the world’s second-biggest commercial-airplane maker, yesterday said a drop in travel and tight credit indicates customers may continue to cancel or defer orders in 2009. The Chicago-based company reported a fourth-quarter loss and said it plans to cut 10,000 jobs. It also disclosed that a customer canceled all 15 of its orders for the new 787 Dreamliner plane.
The U.S. economy contracted at a 5.5 percent annual pace last quarter, the worst performance since 1982, after shrinking at a 0.5 percent pace in the previous three months, economists project a Commerce report tomorrow will show. A slump in business investment, together with continued declines in consumer spending and housing, accounted for the deterioration.
GM Cutbacks
GM, which already closed most of its 22 plants in North America this month, said it’ll eliminate shifts in the second quarter at plants in Ohio and Michigan, cut about 2,000 jobs, and reduce output at 13 other U.S. and Canadian factories. Chrysler LLC, Ford Motor Co. and Toyota Motor Corp. are also scaling back North American production.
Exports are declining as the global economy faces the first simultaneous recession in the U.S., Japan and the euro region in the postwar era. The International Monetary Fund yesterday projected financial losses worldwide will swell to $2.2 trillion, double the current count, almost bringing economic growth this year to a halt.
Caterpillar, the world’s largest maker of bulldozers and excavators, said this week it is cutting 20,000 jobs and profit this year may trail analysts’ average forecast. The Peoria, Illinois-based company cited “significant order cancellations” in the fourth quarter.
“We are expecting recessionary conditions to persist in most of the world throughout the year,” Chief Executive Officer Jim Owens said on a conference call with analysts, adding the company is looking at “seismic adjustments” in 2009 sales and revenue.
Bloomberg Survey
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Durables Durables Initial New Home
Orders Ex-Trans Claims Sales
MOM% MOM% ,000’s ,000’s
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Date of Release 01/29 01/29 01/29 01/29
Observation Period Dec. Dec. Jan. 24 Dec.
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Median -2.0% -2.7% 575 397
Average -2.1% -2.6% 581 394
High Forecast 1.3% 0.5% 650 412
Low Forecast -6.0% -4.0% 540 345
Number of Participants 75 43 39 70
Previous -1.5% 0.6% 589 407
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4CAST Ltd. -2.0% -4.0% 545 375
Action Economics -1.5% -2.2% 560 407
AIG Investments -1.0% 0.5% --- 389
Aletti Gestielle SGR 0.5% --- 600 412
Ameriprise Financial Inc -2.2% -2.5% 555 395
Argus Research Corp. -1.3% --- --- 385
Banc of America Securitie -1.5% --- --- 410
Bank of Tokyo- Mitsubishi -0.7% --- 570 392
Bantleon Bank AG -2.1% -3.0% --- 390
Barclays Capital -3.0% --- 540 395
BMO Capital Markets -2.0% -3.0% 600 400
BNP Paribas -2.2% --- 650 400
Briefing.com -2.2% --- 580 400
Calyon -2.3% -2.8% --- 402
Castlestone Management LT --- --- 590 ---
CIBC World Markets -3.0% -3.5% --- 399
Citi -2.0% -1.7% 635 395
ClearView Economics -2.0% --- --- 400
Commerzbank AG -3.0% -4.0% 575 400
Credit Suisse -4.0% -4.0% 600 370
Daiwa Securities America -2.0% --- --- 400
DekaBank -1.5% --- --- 370
Desjardins Group -2.0% --- 572 400
Deutsche Bank Securities -4.0% -3.0% --- 400
Deutsche Postbank AG -2.2% -2.7% --- ---
Dresdner Kleinwort -1.6% -2.6% --- 397
DZ Bank -2.0% -3.5% --- 390
First Trust Advisors -2.5% -3.3% 558 395
Fortis -1.5% --- --- ---
FTN Financial -2.5% -1.5% --- 400
Goldman, Sachs & Co. -2.0% --- --- 397
Helaba -2.0% --- 560 400
Herrmann Forecasting -1.7% --- 558 397
High Frequency Economics -2.5% -3.0% 589 400
Horizon Investments -4.0% -2.5% --- 390
HSBC Markets -1.9% -2.3% 550 400
IDEAglobal -1.7% -2.0% 565 400
IHS Global Insight -6.0% --- --- 345
Informa Global Markets -2.0% -2.5% 575 400
ING Financial Markets -2.0% -2.8% --- 395
Insight Economics -1.5% --- 575 400
Intesa-SanPaulo -2.0% -3.0% --- 400
J.P. Morgan Chase -2.8% -3.0% 585 395
Janney Montgomery Scott L -2.8% -3.5% --- 376
Landesbank Berlin -3.4% -2.7% 550 390
Landesbank BW -2.0% --- --- 390
Maria Fiorini Ramirez Inc --- --- 600 390
Merrill Lynch -2.0% -3.5% 650 400
MFC Global Investment Man -2.5% -3.0% 570 400
Moody’s Economy.com -1.4% -2.6% 590 410
Morgan Keegan & Co. -1.6% -1.1% --- ---
Morgan Stanley & Co. 1.0% --- --- 390
National Bank Financial -2.5% -3.0% --- 400
National City Bank 1.3% --- --- 371
Natixis -2.5% -2.7% --- 403
Newedge -1.0% --- --- ---
Nomura Securities Intl. -1.1% -1.7% --- 400
Nord/LB -0.5% -2.5% 580 ---
PNC Bank -3.5% --- --- 390
Raymond James -2.1% -2.4% 590 390
RBS Greenwich Capital -4.0% --- --- 350
Ried, Thunberg & Co. -1.5% --- --- 390
Schneider Foreign Exchang -0.9% -1.1% 610 389
Scotia Capital -2.2% -2.4% 590 350
Societe Generale -0.8% -0.8% 540 410
Standard Chartered -2.7% --- --- 405
Stone & McCarthy Research -5.3% --- 590 410
TD Securities -2.0% -3.0% 600 390
Thomson Financial/IFR -3.0% -1.0% 560 395
UBS Securities LLC -2.0% -2.5% --- ---
Unicredit MIB -1.0% --- --- 390
University of Maryland -2.0% --- --- 410
Wachovia Corp. -2.2% -2.8% --- 400
Wells Fargo & Co. -1.5% --- 560 407
WestLB AG -2.0% --- --- 405
Westpac Banking Co. -2.0% --- 600 379
Wrightson Associates -1.5% --- 575 390
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To contact the report on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
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