July 2008 - MND NewsWire

The advance U.S. GDP report came in lower than expected for the second quarter of 2008, rising by 1.9% against expectations of 2.3% growth, according to the Bureau of Economic Analysis on Thursday. Revisions showed the U.S. economy shrank 0.2% in the fourth quarter 2007.

The negative figure is the first decline in quarterly growth since Q3 2001.

Freddie Mac today told mortgage servicers it was doubling the amount of money it pays for each workout that keeps a delinquent borrower with a Freddie Mac-owned mortgage out of foreclosure.

Freddie Mac also announced it will start reimbursing servicers for the cost of door-to-door outreach programs, give servicers more time to negotiate workouts in states with fast foreclosure processes, and make administrative changes intended to streamline the workout process.

In an interview on CNBC, Former Federal Chairman Alan Greenspan warned that if the Federal Reserve is given a role to oversee the financial system it could undermine its credibility.

Greenspan said the US is facing a "once in a century crisis." He warned that the U.S. teeters on the brink of recession...

Economists say the reported 1.9% GDP growth for the second quarter of 2008 was boosted by a 1.5% increase in consumption and a 2.4% gain in net exports. The figure was lower than expectations, however, as inventories saw a sharp reduction.

Aside from the headline, the big news came from revisions to the previous two quarters...

Headline inflation in the United States could be headed as high as 6% before the end of the year, CIBC chief economist Jeff Rubin warns in a forecast published Wednesday.

"We haven't seen a 6% CPI inflation rate posted in the U.S. since 1990 and even then only briefly for four months," wrote Rubin. "You've got to go back to 1982, in the midst of the stagflation that followed the second OPEC oil shock, to see ..."

The consensus forecast expects U.S. GDP growth to come in quite a bit better than the two previous quarters, as exports have surged on the weak dollar and the fiscal stimulus package has provided a boost to consumption.

The advance Q2 GDP report is expected to show growth of 2.3% in Thursday's report from the Bureau of Economic Analysis, a significant advance following 1.0% growth in Q1 and a dismal 0.6% rate in the final quarter of 2007. However, forecasts are abnormally wide for the report, ranging from 0.9% to 4.2%.

Whatever else is going on in the housing market, it appears that Americans are no longer using their homes as gigantic credit cards to finance new cars, tuition, and vacations.

Freddie Mac's report on cash-out refinancing for the first half of 2008 showed that the number of homeowners taking that option was the lowest in three years.

Still, a substantial number of those refinancing Freddie Mac-owned loans - approximately 66 percent - did so with new loans that were...

The ADP employment report will be the most closely looked at economic event of the day ahead of Friday's U.S. nonfarm payrolls. In Canada, markets will receive industrial product and raw material prices for June followed by an auction of five-year government bonds. Meanwhile, energy traders will be looking at weekly U.S. crude oil inventory figures for more direction on where oil will go next.