Home Buying, Business Spending Fall in Feb.
U.S. business spending fell and home buying slowed sharply in February, the government said Wednesday, and the number of Americans unable to make credit card payments at the end of last year climbed.
Durable-goods orders sank 1.2% in February, the largest fall since November, while sales of new homes fell to their lowest level in more than two years. Credit card delinquencies in the final quarter of last year rose to their highest level since record-keeping began in 1990.
“The economy is basically stalled, treading water at the moment. The combination of geopolitical uncertainties, the inclement weather, the lousy stock market and lack of confidence are all combined to depress economic activities for the moment,” said Sung Won Sohn, chief economist at Wells Fargo.
Although jitters about the war with Iraq and bad weather in the Northeast largely were to blame for the poor housing and manufacturing numbers, some economists said the data showed that the economy still was troubled by underlying weaknesses.
“Consumer debt is too high. There is still a lot of excess capacity. Our current account deficits are too high. These are unrelated to the war situation,” Sohn said.
The Commerce Department said orders of durable goods from manufacturers met Wall Street expectations with a drop of 1.2%, after a rise in January of 1.9%.
Excluding demand for defense goods, which rose sharply as the nation geared up for war, the number was even worse, with orders tumbling 2.7%, the biggest drop since September. Non-defense capital goods, excluding aircraft, seen as a proxy for business spending, fell 2.8%.
In a separate report, the Commerce Department said sales of new homes fell 8.1% to a seasonally adjusted 854,000-unit annual rate, far lower than the rate expected by analysts.
There also are signs that consumers, faced with mounting job losses, are struggling to keep up with debt payments.
The American Bankers Assn. said credit card delinquencies climbed to 4.07% of all accounts in the fourth quarter, up from 4% in the previous three months.
