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Message #5262 posted by forged registration (Info) October 17, 2007 15:19:11 ET
U.S. housing slump deepens
Last Updated: Wednesday, October 17, 2007 | 1:27 PM ET
CBC News
The fallout from the U.S. housing slump and related credit crunch deepened on Wednesday with news of thousands of mortgage-related job cuts and the release of the weakest home building figures in 14 years.
GMAC Financial Services said it will chop 3,000 jobs, or about a quarter of the work force at its Residential Capital mortgage division.
It blamed "sharp downturns in the U.S. residential real estate markets and the global dislocation of the mortgage finance and credit markets."
The U.S. Commerce Department reported that the construction of new homes last month fell by a much larger than expected 10.2 per cent to its lowest level since March 1993.
In another negative sign, applications for building permits fell dramatically in September — also hitting a 14-year low.
The reports increased fears that the U.S. consumer will curtail spending and push the economy into recession.
The International Monetary Fund, in its latest global economic forecast, lowered its prediction of U.S. economic growth to an anemic 1.9 per cent this year and next. If that forecast pans out, it would be the weakest annual growth for the world's biggest economy in five years.
On Tuesday, U.S. Treasury Secretary Henry Paulson warned that the housing crisis poses a big danger to the prospects for future U.S. growth. "The housing decline is still unfolding and I view it as the most significant current risk to our economy," he said.
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