Financial turmoil intensifies; broader solutions are sought

US Weekly, Sep 22, 2008

Current account deficit widens to $183.1bn

The current account deficit widened in Q2 to $183.1bn from $175.6bn in Q1. The deficit on goods and services increased from $177.1bn to $180.6bn. The surplus on income decreased sharply from $33.2bn in Q1 to $27.3bn in Q2. Interestingly, the capital account showed a huge increase in repatriation of assets. US-owned assets held abroad decreased $110.4bn in Q2, after an increase of $260.6bn in Q1, a likely response to flight for quality.

Housing activity continues to contract in August

Both housing starts and permits fell sharply in August, and coupled with recent financial markets jitters, they are likely far from having reached a bottom. Starts fell 6.2% to an annualized rate 895,000, down from 954,000 in July and 33.1% lower than a year ago. Starts of single-family home sales declined by a smaller 1.9% to 630,000. On a similar note, permits fell 8.9% to a rate of 854,000 and are now 36.4% lower than a year earlier.

Initial claims rise further in week ending September 6

The unemployment claim count suffered another bad reading, as initial claims rose 10,000 to 455,000 in the week ending September 13th. The 4-week moving average rose to 455,000. Continuing claims fell 55,000 to 3,478,000, which nevertheless represents an increase of 924,000 from a year earlier.