Gold, Silver & Platinum with WhichWayGold - House Price Predictions with WhichWayHomes   House Price Predictions & Real Estate News - WhichWayHomes   How to buy Gold, Silver & Platinum - WhichWayGold

Latest Offers & News                                                                     

Sign up to receive our newsletter here l Newsletter archive

Book of the Month                                                             

This month we are recommending "The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream" in which John Wasik exposes the untold truths about home ownership.
Click here to learn more >

Join WhichWayHomes on Facebook Follow WhichWayHomes on Twitter

Category Navigation:

House Price Outlook (5 May – 8 June 2008)

Send to a friend Email to a Friend    Add to Favourites Add to Favourites   Bookmark and Share

This Month's House Price Crash Developments

> Nationwide reported UK house prices down 2.8% in May, down 6.7% from last year's peak.
> Halifax reported UK house prices down 2.4% in May, down 7.8% from last year’s peak.
> Hometrack said that it now takes 9.8 weeks to sell a UK home, up from 5.8 weeks last year.
> Standard & Poor’s revealed a sharp increase in overdue mortgage payments in the UK.
> As a result the number of mortgages has been slashed by over 50% in the last six months.
> UK defaults on commercial property loans have surged 400% in past 12 months.
> S&P/Case Shiller reported US home prices down 2.1% in March and 16.6% from their peak.
> National Association of Realtors reported US house & condo prices down 12% from their peak.
> Also, the inventory of unsold US homes and condos jumped to an 11.2 month supply.
> The number of US homes heading towards foreclosure escalated in the first quarter.
> UK and US property companies saw the value of their property investments plunge.
> The Spanish housing market dipped further as the housing downturn gathers pace.

Buy gold online - quickly, safely and at low prices

Section Index

Which Way Home Focus on: The Big Picture >
News Review >
High debt burdens lead to loan defaults, foreclosures & falling house prices >
Banks curb lending, individuals and corporations suffer as credit evaporates >
Stock markets price in corporate woes and fall >
Central Banks try to help, lowering interest rates and pumping out money >
Their currencies fall in value as a result >
Commodities rise as currencies fall in value >
Disposable incomes fall causing loan defaults, foreclosures & falling house prices >

Which Way Home Focus on: The Big Picture

The most difficult aspect in writing this website is keeping it simple. In order to do so I attempt to take a myriad of interrelating factors impacting the global economy, sift through the detail and identify the key drivers behind market movements. I then put these observations on to paper/screen. The skill lies in identifying the right factors, which separates the winners from the losers.

For example, as house prices rose in the UK, many took the view that this was driven by a lack of housing or that immigrant workers were entering the country and chasing up property prices. These are relevant factors, but if you based your decision to buy on these facts alone, you will now be starting to feel the pain of your decision. In fact, this logic could be quickly dismissed simply by comparing the UK with Japan. Japan is the world’s second largest economy, and is comprised of a small land mass with little land available for development – excellent criteria for continually increasing property prices. Yet during the 90s Japanese property prices fell 90% as its economy suffered. There may not have been much land to build on, and high demand may have existed, but poor economic conditions dominated these factors. When deciding which path to take it is usually best to follow the money trail.

Supporters of this theory failed to realise was that there was a much more important, powerful factor influencing house prices – the rapid expansion of money supply. The ever increasing supply of money allowed for the exponential creation of credit, which in turn allowed home buyers to borrow huge sums of money and to chase up property prices. Perversely, rising house prices then allowed banks to lend further money to buyers since the assets they were lending against were increasing in value.

This feedback loop has gone largely ignored. By lending money, the banks acted to push up house prices, and the rise in house prices allowed banks to lend yet more money, which pushed house prices up further still. House prices became entirely driven by the willingness of banks to continue lending increasing amounts of money to buyers. This phenomenon is hundreds of orders of magnitude more powerful than a lack of housing or an increase in the number of immigrant workers.

Forming a correct view of the big picture is not easy and takes years of work, research, and experience participating in the financial markets. This is what I try to bring to you. I may not go into detail, in fact I deliberately avoid it, but I do give you the key trends and developments which you should consider when making your financial decisions.

Last month I was pleased to see that my views keep me in good company. George Soros, the legendary investor who made billions from well placed positions in the currency markets in the early 90’s, released a book entitled “The New Paradigm For Financial Markets – The Credit Crisis Of 2008 And What It Means”.

His view is that we are in the midst of the worst financial crisis since the 1930’s depression and that this crisis is different from other crises as it marks the end of a super bubble – the end of an era of credit expansion based on the dollar as the international reserve currency.

He states that the outbreak of the current financial crisis can be officially timed at August 2007 when the central banks had to intervene to provide liquidity to the banking system. (Which Way Home was brought off the sidelines and launched in July 2007, in anticipation of these events).

Mr Soros observes that the housing market is in a massive bubble. He notes that a long period of credit expansion has now ended and that the current crisis will have more severe and longer lasting consequences than similar crises in the past. He sees US house prices falling another 20% from their current levels within the next year or so and goes on to state that a decline of such magnitude is bound to effect consumer spending, employment and overall business activity. That we will slip into recession in the course of 2008 is a certainty.

Mr Soros and I hold similar views on the outlook for housing. The key trends which homeowners and prospective buyers need to be aware of are detailed below. Firstly, homeowners have borrowed too much in recent years. 100% mortgages and teaser rate loans have enabled buyers to purchase homes beyond their means. In the US for example, Americans have taken on more household mortgage debt in the last 6 years than in all previous years combined.

Over the next couple of years millions of teaser rate mortgage products will reset at higher interest rates and homeowners will realise that they can no longer afford their mortgage payments. A huge wave of foreclosures will follow, creating downward pressure on house prices. As house prices fall, banks will curb their desire to lend, meaning that there will no longer be enough money to buy houses at the current elevated price levels. This will cause further downward pressure on house prices. As consumers cut back spending, hit by the loss of their paper wealth, business activity will fall and jobs will be cut, leading to yet more foreclosures and still more falls in house prices.

Make no mistake, this is a multi-year downward spiral for which there is no foreseeable cure. If you are waiting to buy, be patient as you will be duly rewarded. If you own a house, sell if you can, or protect some of your wealth, perhaps by buying gold.

Back to Section Index >

News Review

In this next section I relate current news headlines to the trends we see emerging in the housing market and in other key financial markets. Happy reading…

High debt burdens lead to loan defaults, foreclosures & falling house prices…

In the UK…

Price falls were again experienced across the board.

Nationwide reported that UK house prices fell again in April, down 2.8% or £4,972 to £173,583. House prices are now down 6.7% or £12,461 from their peak last October. This represents the largest monthly drop since the index was introduced in 1995.

Halifax reported that UK house prices fell 2.4% or £4,593 to £184,111 in May, down 7.8% or £15,489 from their peak last August. £13k has been wiped off the value of the average home since January. House prices have fallen twice as fast in the past five months as in the same period in 1992, during the most recent property crash, when they fell by only 3.3 per cent. The decline in prices this year is the biggest five-month fall since records began.

Hometrack reported that UK house prices have fallen another 0.5% in the past month. The latest survey of the national housing market suggests that the average property is worth 1.9% less, at £172,200, than it was a year ago. Hometrack blames the erosion of property values on a “buyers’ strike”. Nervousness, fuelled by fears of further price falls to come, is causing aspiring homeowners to delay buying. It now takes an average of 9.8 weeks to sell, up from 5.8 weeks this time last year. The number of viewings required is 14, up from 10.3 a year ago.

Savills reported that sales of multi-million pound London homes have fallen by 40% over the past three months. The volume of business selling flats and houses worth between £1 million and £5 million in prime central London suffered "a sharp fall in transaction volumes" over the first quarter.

The fall in residential prices was mirrored in the commercial sector.

UK property companies saw the value of their property investments plunge. Among the companies reporting McKay Securities reported 20% fall in net asset value (NAV), Quintain Estates reported a 11.5% fall, Land Securities reported a 10% fall and Helical Bar revealed a 6% fall in NAV. Shaftesbury, the West End property specialist, suffered its first pre-tax loss for 16 years as a result of the sharp fall in property values in the UK, experiencing a 6.3% drop in the value of its properties.

High debt burdens and an increasing cost of living continue to have an adverse impact on mortgage repayments.

New data from Standard & Poor’s revealed a sharp increase in overdue mortgage payments in the UK. The data is based on the behaviour of homebuyers whose loans have been packed into mortgage-backed securities – which accounts for 80% of the £43bn subprime mortgage market. More than a fifth of UK homebuyers who have a chequered credit history have fallen behind on their mortgage payments and even those with top-quality ratings have seen a statistically significant rise in delinquencies in the first three months of this year.

Northern Rock revealed that the number of borrowers behind with repayments had jumped sharply since the UK mortgage lender was nationalised. The number of mortgages where payments were behind by three months or more jumped to 0.95% of its outstanding loan book, almost double the figure of 0.57% at the end of December.

Separately, it was reported that UK defaults on commercial property loans have surged 400% in past 12 months.

As a result, UK mortgage products continue to disappear. This will lead to further falls in house prices in the coming months.

Citigroup announced that it is to stop offering some new UK mortgages and personal loans to customers who have a patchy credit record in a move that could threaten 700 British jobs. The US bank, which has been hit hard by the subprime mortgage crisis, is to close 49 small UK branches that offer loans to so-called “near prime” customers, who would find it tougher to get a loan from a high street bank.

Lenders also reduced their buy-to-let exposure, cutting maximum loan amounts on new-build properties and withdrawing many competitive rates. Bank of Scotland, BM Solutions and The Mortgage Business, all part of the HBOS group, reduced the maximum loan-to-value they will offer on new-build rental flats and apartments, including newly converted properties, from 85 per cent to 75 per cent. They also removed many of their best fixed and tracker mortgage deals.

Data from the Council of Mortgage Lenders showed that the number of loans for house purchase dropped 48% to 46,500 in March this year from 89,000 in March 2007. The number of loans to first-time buyers declined in March to 17,800, down 1% from 17,900 in February and 45% from 32,500 in March last year.

The British Bankers Association showed that UK mortgage approvals for home purchases in April were nearly 40% lower year-on-year. Some 38,704 home loans for house purchase were approved last month, up from 35,546 in March, but this is down on the six-month average of 41,955. Mortgage lenders are still tightening their lending criteria and increasing their rates in the wake of the credit crunch to limit the number of mortgage applications they receive, making it increasingly difficult for borrowers, especially first-time buyers, to obtain a home loan. The March approval number was the lowest since records began in September 1997.

Overall, Mortgage Monitor claims that the number of mortgage deals available has been slashed by more than half in the last six months. It has discovered that the number of mortgages available in the UK has fallen 20,000 (56%), from 36,000 six months ago, to just 16,000 today. This also represents a 76% drop from this time last year, when there were more than 68,000 deals on offer. The most dramatic decline has been seen in the fixed rate mortgage market, where a staggering 38,000 deals have vanished in the past year.

A side effect of the above is that around 40 estate agents are going out of business every week, according to property website Rightmove. The company on Tuesday said the retention rate for estate agents has declined to about 85 per cent, compared with 92 per cent in 2007, as a result of an increase in agents ceasing trading.

In the US…

Home prices in 20 major U.S. metropolitan areas dropped another 2.1% in March and are now down 16.6% from their peak last July. House prices are also down a record 14.4% in the past year, Standard & Poor's reported. This is the 16th consecutive decline in prices. S&P's Case-Shiller index tracks sales of the same homes over time, so it's not influenced by the mix of homes sold in a period. According to the Case Shiller index, just over half of the metro areas are experiencing a double-digit drop in home prices, with home prices down over 20% in six areas. The sharpest decline has been in the formerly bubble areas such as Las Vegas, Miami and Phoenix.

Sales of previously owned U.S. homes slipped last month and the backlog of unsold properties hit a record high, according to data from the National Association of Realtors. They reported that the median sales prices for US houses and condos fell to $202,300, down 8% from a year earlier and the second largest price decline on record. Median prices are now down 12% from their peak.

The NAR reported that resales of U.S. houses and condos dropped 1% to a seasonally adjusted annualized rate of 4.89 million from 4.94 million in March, a fall of 17.5% in the past year and 33% from the peak in 2005. The inventory of unsold homes and condos jumped 10.5% to 4.55 million, representing an 11.2 month supply at the April sales pace, the biggest since the combined single-family/condo records began in 1999. Sales of single-family homes fell 0.5% in April to a 4.34 million annual pace, down 16% in the past year and 32% from the peak. The inventory of unsold single-family homes rose to 10.7 months' supply, the highest since 1985. Condo sales dropped 5.2% in April to a 550,000 annual pace, representing an inventory of 14.2 months - the highest ever.

The Commerce Department reported that the median sales price of a US home was $246,100 in April, down 1.5% compared with April 2007. Sales of new homes rose during April for the first time in six months, increasing 3.3% in April to a seasonally adjusted annual rate of 526,000, marking the first gain since last October. Economists said the sales gain was a rebound from the sharp 11% drop in sales in March to 509,000 units, which was the lowest level in sales since April 1991. In April, the number of unsold new homes on the market slipped 2.4% to 456,000 units, representing a 10.6-month supply at the April sales pace.

As in the UK, commercial property prices in the US in February saw their sharpest decline since records began nearly 15 years ago as sources of finance for deals has dried up, according to data from Standard & Poor’s. The value of commercial buildings fell 1.03% between January and February, the largest monthly decline since at least 1993, when the industry was just emerging from a deep slump.

The number of US homeowners heading towards foreclosure escalated in the first quarter. Both the percentage of loans somewhere in the foreclosure process as well as the rate of foreclosure starts reached levels not seen since 1979. The data from the Mortgage Bankers Association showed that the percentage of loans within the foreclosure process at the end of the first quarter was 2.47%, compared to 1.28% in the first quarter of 2007. Loans entering the foreclosure process rose to 0.99%, up from 0.58% in the first quarter of 2007. The delinquency rate, reflecting mortgage loans at least one payment past due, was 6.35% of all loans during the first quarter, up from 4.84% in the first quarter of 2007. The delinquency rate doesn't include mortgages in foreclosure.


The Spanish housing market dipped further in March as the downturn in Spain’s residential housing market gathers pace. Tightening credit conditions exacerbated already weakening demand among first-time buyers and holiday home investors. Figures released on Wednesday by the National Statistic Institute show that the number of house sales completed in March dropped more than 38% year-on-year, to 46,100 units. This compares with an annual decrease of 27% in January and 24.5% in February.

Back to Section Index >

Banks curb lending, individuals and corporations suffer as credit evaporates…

Banks globally have written off more than $330 billion in losses since last summer and regulators have strongly encouraged them to shore up their capital. The month of May saw further write-downs and plans to raise funds from beleaguered investors. Ongoing pressure will be applied as house prices continue to fall and borrowers default on their debts.

Morgan Stanley, Merrill Lynch & Co. and Lehman Brothers Holdings Inc. all suffered after Standard & Poor's lowered credit ratings for the investment banks, saying they may have to book more write-downs on devalued assets.

Swiss banking giant UBS said that it would raise more than $15 billion by issuing sharply discounted shares as it tried to restore capital depleted by losses on mortgage securities. The capital increase marks the second time that UBS has had to raise funds since the credit markets tightened last year with the collapse of the American subprime housing market. In February, the bank raised 13 billion Swiss francs, or $12.6 billion, in capital from the Government of Singapore Investment Corporation and an unidentified Middle Eastern investor.

American International Group increased the amount of funds it is seeking to raise, which will total around $20 billion when all offerings are complete. It has already raised about $13.5 billion so far this month after reporting a quarterly net loss of almost $8 billion and unveiled plans to raise money by selling new shares, equity-linked securities and fixed-income securities with a large equity component included.

Fannie Mae, the largest provider of U.S. home financing, reported its third straight quarterly loss due to the ongoing US housing crisis. It posted a net loss of $2.51 billion for the first quarter which comes on the heels of a record $3.6 billion loss in the fourth quarter of 2007. It will seek to raise $6 billion in new capital through public securities offerings. Both Fannie Mae and Freddie Mac, another government-backed mortgage company, came under fire as it was suggested that they may not have enough capital to withstand the plunge in house prices. Richard Shelby, the senior Republican on the Senate banking committee, said Fannie Mae and Freddie Mac were “thinly capitalised, highly leveraged and pose a systemic risk to taxpayers”.

HSBC revealed bad debt charges of $3.2 billion and investment bank write-downs of $2.6 billion (including $500 million on subprime assets, $1.1 billion of non-subprime credit trading assets and $700 million on its exposure to bond insurers).

Barclays revealed a further £1.7 billion in write-downs on its credit investments and admitted that its capital cushion had fallen even further below target. It may have to follow RBS, HBOS and Bradford & Bingley by raising extra capital.

Credit Agricole said that it expects to raise around 5.9 billion euros ($9.2 billion) to strengthen its balance sheet after further subprime losses, as rival Societe Generale revealed a 23% drop in profit due to the credit crunch.

MBIA, the world's largest bond insurer, posted a quarterly loss of $2.4 billion as it took charges on billions of dollars of exposure to bonds linked to subprime mortgages. MBIA is suffering as the U.S. housing market deteriorates, lifting expected payouts on repackaged subprime mortgage bonds that the company insures.

Legg Mason reported its first loss in at least 25 years and become the first big fund management group to raise public capital to shore up losses arising from the credit crisis. It said that it had lost $255m during the fourth quarter after taking a $291m charge against losses in its money market funds.

Bradford and Bingley became the latest British bank to bolster its balance sheet as it launched a £300m rights issue. The mortgage lender, which has been hit by the turmoil in the capital markets and concerns about declining UK house prices, is proposing to offer shareholders 16 new shares for every 25 shares they own, at a price of 82p a share.

Away from the financials, casino operator Tropicana Entertainment LLC sought Chapter 11 protection in the largest corporate filing of the year, after it missed an interest payment on a $1.32 billion loan with lender Credit Suisse Group.

During the month, Standard & Poor’s reported that the number of companies defaulting on their junk-rated debt and filing for bankruptcy in the US is running at its fastest pace in five years amid the slowing economy and contraction in credit markets. So far this year, 28 “entities” have defaulted. The defaulted debt of the one Canadian and 27 US companies totals $18.4bn and exceeds the 17 defaults in the US for all of last year.

Buy gold online - quickly, safely and at low prices

Back to Section Index >

Stock markets price in corporate woes and fall…

The S&P500 went sideways for most of the month until the last few trading days of the period when it experienced selling on increasingly heavy volume. The Nasdaq followed a similar pattern. The biggest falls came on Friday 6th, which saw the Dow Jones Industrial Average chalking up its 8th-largest point drop in the index's history. The S&P500 is now down 13% from its peak and the Nasdaq is 14% below its peak.

In the UK the FTSE Allshare fell almost 5% for the period and currently stands 14% off its June 2007 peak. I continue to hold a negative outlook for the US and UK stock markets.

Back to Section Index >

Central Banks try to help, lowering interest rates and pumping out money…


The Bank of England's Monetary Policy Committee held base rate at 5% during the period. The move is in line with expectations with only 5 out of 65 city analysts anticipating a cut in a recent poll. The Bank of England told Britons not to expect another cut in UK interest rates for at least two years, as it warned that inflation would rise far above its previous forecasts and persist at levels well above the government’s target until early 2010. Mervyn King, the Bank governor, said the consequence of price increases would be “a squeeze on real take-home pay, which will slow consumer spending and output growth, perhaps sharply”.

I believe this to be the correct course of action at present, to protect sterling from further falls versus real assets like oil, gold and food. However, as the UK housing market capitulates the Bank will come under tremendous pressure to cut rates in an attempt to help borrowers and stimulate the economy. I have not therefore changed my current view of base rates in the 1-2% range in the years immediately ahead.


The Fed left rates unchanged during the period. There was some talk of rates rising in the future, but as is the case for the UK, the downward pressure exerted by a crumbling housing market will not allow for this manoeuver. I still expect US interest rates to hit near 0% levels over the next couple of years.


Eurozone interest rates were kept firmly on hold at 4% after the European Central Bank made clear its inflation fears remained undiminished. The governor of the European Central, Jean-Claude Trichet, said it might raise interest rates next month in order to mitigate inflationary risks.

The ECB also voiced its “high concern” at growing evidence that banks are exploiting its efforts to unblock the frozen funding markets by using its liquidity scheme to offload more risky assets than it envisaged.


The Bank of Japan held interest rates unchanged at 0.5% as expected.

Back to Section Index >

Their currencies fall in value as a result…

The dollar rose slightly for the month. The US Dollar Index, which compares the dollar's rate of exchange against other major currencies rose 0.4%. The dollar is, however, stuck in a multi-year downtrend making one new low after another, interrupted only by the occasional rally. The dollar may have taken a breather at the current level but nothing has changed to alter its downward path. Rising commodity prices continue to be one of the strongest indications of a flight out of the dollar and into tangible assets. Expect the value of the dollar to continue to erode.

Back to Section Index >

Commodities rise as currencies fall in value…

Oil had an exciting month, rising 22% to close at record levels following a series of volatile trading sessions. Oil hit $135 a barrel on May 22nd, before relinquishing its gains and falling 10% over the next 9 trading sessions. Then, over the final 2 trading sessions of the period it leapt 12% to close the at almost $137 a barrel. Friday’s $11 gain was the biggest one-day in dollar terms on record.

At a high level, the ongoing increase in the price of oil is driven by a shortage of supply. The world is currently consuming around 88 million barrels of oil per day, while the supply of oil has remained steady at around 85 million barrels per day for a couple of years now. Due to depleting reserves and the escalating costs involved with oil production, there is a fear that supply will not be able to keep up with demand, leading to higher prices.

In light of these factors investment bank Goldman Sachs predicted that crude oil prices could surge to $200 a barrel within the next two years. As I said last month, that seems perfectly logical and realistic to me.

Gold continued its sideways consolidation, finding support at its 200 day moving average. It continues to digest its near 50% gain between September last year and March when it exceeded the $1000oz mark. It ended the period at $901oz. I continue to accumulate gold at these price levels in anticipation of future price increases which will be driven by economic weakness and increasingly inflationary risks.

Back to Section Index >

Disposable incomes fall causing loan defaults, foreclosures & falling house prices...

The situation will be further exacerbated by announcements of further job losses still to come.

Ford Motor Co said it plans to cut its U.S. salaried work force by up to 12 percent after its turnaround plan stalled because of the downturn in the U.S. economy. The automaker also told employees in a memo last week that it expected to make cuts in hourly and salaried employees by August 1 and would detail those steps in July.

Lehman Brothers said is cutting roughly 1,300 positions globally, or nearly 5 percent of its work force, amid difficult market conditions. The latest cuts are in addition to Lehman's layoffs of more than 5,000 people since mid-2007.

UBS plans to cut 5,500 jobs by the middle of next year, an effort aimed at restructuring its troubled investment bank.

The Centre for Economics and Business Research says 15,000 UK estate agents are likely to lose their jobs as a result of the housing downturn. This mirrors the views of property website Rightmove, who said that around 40 estate agents are going out of business every week.

Adding to workers woes, several reports came through during the month of rising inflation, which will continue to reduce disposable incomes.

In the US, core PPI surprised analysts with a 0.4% gain in April. Core prices are now up 3% in the past year, the biggest year-over-year rise in 17 years. The core PPI excludes food and energy prices which are also rising dramatically.

Separately the US Labor Department said that the consumer price index increased 0.2% in April after a 0.3% gain in the previous month. Food prices rose 0.9%, the largest gain since 1990. The core CPI, which excludes food and energy costs, was up 0.1% in April after rising 0.2% in March.

In the UK, food prices rose almost 5 per cent in April driven by wheat and milk, according to latest figures from the British Retail Consortium and pollsters Nielsen. The annual rise is the sharpest spike since the two began collating the index in November 2006. Households' costs for gas, electricity and water have jumped by 5.4% since April last year, and yesterday there were warnings from Centrica, the parent company of British Gas, of more pain to come. Food bills are up 7.2% in the past year, breaking records for the CPI, which began in 1997.

Reflecting the worsening inflationary outlook, the IMF warned about the risk of global inflation, stating that it had re-emerged as a major threat to the world economy. John Lipsky, IMF deputy managing director, said “inflation concerns have resurfaced after years of quiescence” due to soaring energy and food prices. Mr Lipsky said global growth was slowing but headline inflation was “accelerating”.

At the same time we received reports that Vietnam’s inflation rate had surged above 25% in May. The surge in prices, up from 21% in April, was driven by a 67.8% year-on-year increase in the price of grain – the staple food, which accounts for 42.8% of the basket of goods and services Hanoi uses to calculate its inflation rates.

The loss of jobs combined with the reduction of disposable incomes hit US consumer sentiment, the engine of the global economy. The Conference Board reported that U.S. consumer confidence extended its tumble in May to reach a 16-year-low. The May consumer confidence index fell to 57.2 from a reading for April that was revised up to 62.8 from a prior estimate of 62.3. The percentage of consumers saying jobs are "hard to get" rose to 28.0% from 27.9% in April, while those claiming jobs are "plentiful" fell to 16.3% from 17.1%.

Yet the impact of the credit crisis is yet to hit consumers. John Thain, chief executive of Merrill Lynch, said that the pain from the subprime crisis has largely worked its way through the investment banking world but might only be just beginning for retail lenders. He said the credit crunch had taken its toll on consumers and, coupled with rising energy prices and unemployment, was expected to result in higher defaults on retail loans, contributing to weakness in the US economy for at least six to 12 months.

Back to Section Index >

Keep reading and keep updated.

Which Way Home

Buy gold online - quickly, safely and at low prices

Read the Which Way Home Disclaimer Policy here.
Buy gold online - quickly, safely and at low prices

Product Tags

Add Your Tags:
Use spaces to separate tags. Use single quotes (') for phrases.