Had this website been working, I would have been saying a lot about the economic news on Friday. The Commerce Department reported that non-residential construction fell by 0.7 percent in October following a downwardly revised fall of 0.6 percent in September. This should put to an end silly claims that growth in the non-residential sector would offset plumetting residential construction. The residential sector is twice as large as the non-residential sector, which by itself made such an offset unlikely. Furthermore, there was no basis for any sustained boom in the non-residential sector. There is still plenty of vacant office space, retail stores are cutting back, the manufacturing sector is stagnant or declining -- what would support a boom? Friday's data also included a release from the Institute of Supply Management that showed the manufacturing sector declining in November and weaker than expectd car sales. In addition, on Thursday we had a sharp jump in weekly unemployment claims (erratic data, but serious cause for concern). Throw in earlier releases showing declining orders for durables goods in both September and October and the continued decline in house sales and prices and you have what could be the beginning of a recession. Remember, economists and economic reporters are very slow to recognize recessions. For the most part, they did not recognize that we were in the 2001 recession until it was almost over. My guess is that they will not be any quicker this time around. For what it's worth, I put my two cents down on paper last week.
--Dean Baker