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| Friday, November 20, 2009 |
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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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November 30, 2007 4:13 PM ET
The drumbeat of economic bad news in real estate continued last month, with construction spending off a sharp 0.8%, including a 4% decline in single-family home building, that sector’s 20th consecutive monthly decline. A pullback in private, non-residential construction was the first in over a year. The stiff drop in home building, reported by the Commerce Department today, “will be a huge drag on GDP [gross domestic product] growth in the fourth quarter of 2007 and the first two quarters of 2008,” said Patrick Newport, U.S. economist for the research firm Global Insight, in an interview. “We expect residential investment to chop GDP growth by 1.6% in the fourth quarter, and 1.5% and 0.9% in the first two quarters of 2008.” Private, non-residential construction, which includes office buildings and shopping malls, also showed significant weakness as it dropped by 0.5% in the quarter, its first decline in 13 months. Mr. Newport called that “an ominous sign [since the sector] had been on a roll, increasing 26 times in 27 months prior to October.” Private, non-residential construction had been a bright spot this year for the industry, making up for some of the decline in residential spending and providing construction jobs, “but I think things have changed since August, as companies have found it hard to get financing for anything,” Mr. Newport added. That sector of building has been hurt by the logjam in commercial mortgage-backed securities (CMBS) market, he said. “[It] has dried up since August, and companies are scrambling to get funding for new construction projects,” he wrote in a research note today. “Making matters worse, the interest rate spreads on the [CMBS] indexes, which measure the risk the market places on CMBS, have widened dramatically in recent weeks—despite that fact that borrowers remain current on their debts.” The only positive note in October, and a small one at that, was that public construction, such as for infrastructure improvements, rose 0.8%, its eighth straight quarterly gain.
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