US GDP contraction revised lower in 3rd Qtr, House Prices continue record fall. Dollar declines in Fx Trading for second day. | CountingPips Forex Blog

November 25, 2008 - Forex Economic News

US GDP contraction revised lower in 3rd Qtr, House Prices continue record fall. Dollar declines in Fx Trading for second day.

The U.S. economy contracted by more than previously reported in the 3rd quarter of 2008 according to a release by the U.S. Commerce Department. The preliminary estimate report released today showed that the U.S. Gross Domestic Product contracted at an annual rate of 0.5 percent in the July to September quarter following a real 2.8 percent annual rate of growth in the 2nd quarter. The advance report released on October 30th had shown a decline USD falls in FX Trading of 0.3 percent in 3rd quarter GDP. The 3rd quarter GDP numbers equaled economic forecasts expecting a contraction of 0.5 percent.

Contributing largely to the decreased GDP for the 3rd quarter was a decline in consumer spending which makes up approximately two-thirds of U.S. economic activity. Consumer spending fell by a revised 3.7 percent in the quarter after increasing by 1.2 percent in the 2nd quarter and fell to its lowest reading since the 2nd quarter of 1980. Consumer spending was previously reported to fall by 3.1 percent. Core consumer spending, excluding food and energy, increased by 2.6 percent and revised down from 2.9 percent in last month's advance estimate.

Exports contributed positively to the GDP numbers as exports of goods and services increased by 3.4 percent in the quarter after increasing by 12.3 percent in the 2nd quarter. Imports declined in the 3rd quarter by 3.2 percent following a decline of 7.3 percent in the 2nd quarter. The previous advance report had shown exports increasing by 5.9 percent and imports decreasing by 1.9 percent. The preliminary GDP data is subject to revision as the final version is released at a later date. The final version is scheduled for December 23rd 2008.

S&P Case-Shiller Index House Prices fall in 3rd Quarter.

Home prices in the U.S. continue to decline as the Standard & Poors/Case-Shiller index released today showed that home prices fell new record amounts in the 3rd quarter when compared to a year ago. The S & P’s/Case-Shiller Home Price Index measures sale prices of existing single-family homes nationally and tracks 10-city and 20-city composite home price measurements. The 3rd quarter house prices report showed that the 20-city composite index fell an annual 17.4 percent to mark a new record low while the 10-city composite index also fell a new record low 18.6 percent in the July through September quarter compared to last year.

The areas hardest hit continued to be Las Vegas and Phoenix with annual declines of 31.9 percent and 31.3 percent, respectively. On an annual basis, none of the 20 metropolitan areas measured have shown house price increases with Dallas and Charlotte being the areas with the lowest declines at 2.7 percent and 3.5 percent, respectively.

David M. Blitzer, Chairman of the Index Committee at S & P, commented in the report, "The turmoil in the financial markets is placing further downward pressure on a housing market already weakened by its own fundamentals" and that, "Looking at the returns of the U.S. National Index, prices are back to where they were in early 2004. As of September 2008, the 10-City Composite is down 23.4% from its peak, the 20-City Composite is down 21.8% and the National Composite is down 21.0%."

US Dollar falling in FX Trading.

The U.S. dollar has been falling in fx trading today for a second day in a row. The euro, pound, loonie, aussie, kiwi, yen and the Swiss franc have all gained verses today against the American currency.

The EUR/USD pair has gained from today's opening rate of 1.2851 dollars per euro to trading at 1.3047 in the afternoon trading session at 1:32 pm ET. The GBP/USD has advanced from opening at 1.5128 to trading today at 1.5461. The US dollar is also falling against the yen reversing yesterday's gains as the USD/JPY trades at 95.35 down from 96.28. The dollar is falling against the Canadian loonie as the USD/CAD pair trades at 1.2283 from its opening at approximately 1.2412 while verses the Swiss franc the dollar has declined from 1.2009 to trading at 1.1837. The Australian dollar has advanced to trading at 0.6481 today against the US dollar from 0.6430 while the New Zealand kiwi dollar has reached 0.5463 dollars per kiwi after opening at 0.5424 today.

GBP/USD Chart - The British Pound gaining vs. the US dollar for a second day in a row in forex trading (1 Hour Chart).

Today's Forex Chart

tags: gdp, house prices, economy, fx trading, forex

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