Smallest number of housing starts in nearly two years: Builders broke ground last month on the fewest homes in nearly two years, a reflection of declines in home prices and diminished demand that has made it difficult for them to compete. The Commerce Department says home construction plunged to a seasonally adjusted 479,000 homes last month, down 22.5% from the previous month. It was the lowest level since April 2009 and the second-lowest on records dating back more than a half-century. The building pace is far below the 1.2 million units a year that economists consider healthy. Millions of foreclosures have forced home prices down, and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.
Business sales boost activity: U.S. businesses sold more industrial supplies, chemicals and farm products in the final three months of last year, pushing the deficit in the broadest measure of foreign trade to the lowest level in a year. The current account trade deficit fell 9.7% to $113.3 billion in the October-December period, the Commerce Department says. That was the smallest quarterly imbalance since the end of 2009. While the fourth quarter trade deficit shrank, economists expect that the first quarter deficit will widen significantly, reflecting surging oil prices. The devastating earthquake in Japan is expected to have only a modest impact on the trade deficit this year. It will likely lower imports from Japan at least temporarily while boosting U.S. exports of goods needed in the rebuilding effort.
