The Big Number; Sagging Demand
The Big Number
For weeks, Wall Street has worried about the slowing economy. This week, investors will finally learn how much economic growth has slowed. On Friday, the Bureau of Economic Analysis releases its preliminary estimate of economic growth in the first quarter. In the fourth quarter of 2006, gross domestic product increased 2.5 percent, an uptick from the previous quarter. But many expect more modest gains for the first three months of 2007. Merrill Lynch economist David Rosenberg predicts 1.7 percent GDP growth, citing lackluster business spending and imports. If Rosenberg is right, Wall Street is likely to be disappointed. Rosenberg notes that "some economists were at 4 percent for current-quarter growth just three months ago."
The Commerce Department will release on Wednesday its latest data on new-home sales. Dwindling demand for new homes has led to a surplus of houses on the market. There is now 8.1 months' worth of housing stock for sale, up from just 6.1 months' supply in December. Any further rise in housing inventories is likely to drive home prices down even more.
This story appears in the April 30, 2007 print edition of U.S. News & World Report.