US Durable Goods Demand Falls

The level of demand for durable goods from the US has seen its most significant decline for over seven months, according to official figures released today, reflecting ongoing problems with the US economy.

In figures released by the US Commerce Department, the level of orders for durable goods, which are generally high-ticket manufactured goods like household appliances and aircraft, had fallen by almost 5% - a more significant drop than most analysts had forecast.

Today’s figures have been taken as further indication that the troubles arising from the US housing market have now spread to the wider US economy, which could suggest a wider downturn is on the horizon, with the potential to impact upon consumer spending and employment figures later down the line.

The news comes just days after Alan Greespan, former Chairman of the Federal Reserve, predicted with a 50% chance that the US economy would plunge into recession over the course of 2008 as a direct result of problems with the housing market and the sub-prime lending sector.

Whilst many analysts have come short of predicting a full-blown recession, few have disputed that the US economy could be in for a rocky year in 2008 as it deals with the fallout of the sub-prime lending crisis and a business-adverse credit crunch.

The news prompted positive trading on the Dow Jones through the early morning, as a likely indicator that the Federal Reserve could be poised to cut interest rates further when it meets next month.

The Federal Reserve this month slashed interest rates by half a percentage point from 5.25% to 4.75% in an attempt to fuel growth and ease strained lending markets.

With today’s figures, many analysts and investors are now anticipating that even more interest rate cuts could be on the way as an emergency measure to try and halt the onset of a deeper recession in the US economy.

Story link: US Durable Goods Demand Falls