Economic Opinion

Consumer prices rose by 0.3% in December, a pullback from the 0.8% increase in November, the Labor Department reported January 16. For all of 2007, however, consumer prices rose by 4.1%, the largest amount in 17 years. Core consumer inflation, which strips out food and energy prices, rose a more moderate 0.2% in December and 2.4% for all of 2007. Workers’ wages couldn’t keep up with rising prices, as average weekly earnings, after adjusting for inflation, fell by 0.9% in 2007, the largest decline since a 1.5% fall in 2005.
Producer prices, which measure cost pressures before they reach consumers, fell by 0.1%, a marked improvement from November’s 3.2% increase, the Labor Department said January 15. For the year, wholesale inflation rose 6.3%, the largest increase in 26 years. Core wholesale inflation, which excludes energy and food costs, rose by 0.2% in December and 2% for the year.
Construction of new homes fell 24.8% in 2007, the largest amount in 27 years, exceeded only by a 26% drop in 1980, the Commerce Department reported January 17. For December, new-home construction sank by a larger-than-expected 14.2%. Meanwhile, monthly applications for building permits fell 8.1%.
The Conference Board’s closely watched index of leading indicators fell to 136.5 in December from 136.8 in November. The 0.2% drop was slightly more than the 0.1% analysts had predicted. Falling building permits and reduced manufacturing activity had the most negative impact on the index.
Amid growing concerns over a slowing economy, rates on 30-year mortgages fell for a third straight week to the lowest level since the summer of 2005, Freddie Mac reported January 27.
This week look for an update on existing home sales on January 24.
Economic data compiled from government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar.