The Consumer Price index (CPI) has had its biggest drop in October; since the Labor Department began keeping monthly data in 1947. Newly constructed homes saw a new record low as well, underlined how rapidly the economy was weakening.

Breakdown:

·          Labor Department

·          Consumer Price Index Fell 1%

·          Wall Street analysts forecasted 0.8% decline

·          Core prices, excluding food and energy, declined 0.1% - Forecast showed a 0.1 increase.

“Analysts said earlier concern about inflation risks may soon be replaced by worry about deflation, which also has a corrosive effect on the economy’s performance.”

Breakdown: Home Starts

·          New-home starts fell 4.5% in October to 791,000 units

·          Building permits dropped 12% to 708,000

“It appears we are in a period of disinflation right now, where the actual level of inflation is trending lower,” said Michael Sheldon, chief market strategist for RDM Financial, Westport, Connecticut. “The question is will the economy rebound enough with the benefit of a big stimulus plan in 2009 to prevent deflation and get consumers spending again.”

In testimony on Capital Hill on Tuesday, Federal Reserve Chairman Ben Bernanke told Congress that the $700 billion bailout and other treasury facilities have started to ease credit markets, but what is at the core now, are declining home price. This is having a direct affect individual credit and their willingness and ability to spend.

Breakdown: Energy

·          Prices dropped 8.6% in October,

·          3.1% in August

·          1.9% in September

·          October saw biggest drop since recording started in 1957

·          Gasoline prices plunged 14.2 percent in October

·          Expected to drop again in November

·          Retail gasoline at $2.13 a gallon in November,

·          Sharply below the $3.54 a gallon in October.

“On a year-over-year basis, the Consumer Price Index rose 3.7 percent, the smallest increase in a year.”

Read Article: October consumer prices and home starts plummet

CNN has an article, a letter really, The ‘Great Crash’ in the history books.  The author writes to his children (in the future) about what was going through his mind in and around this crash we are experiencing.

It is very well put together, and a recommended read.  Nothing new, just a sobering look at our new status quo.

As energy costs continued to decline, The Labor Department’s Producer Price Index (PPI) decreased 2.8% in October, after a smaller decline in September 0.4%.

Breakdown:

• Producer prices fell 2.8% in October
• Sharpest one-month decline on record
• More than the 1.8% decline that economists expected

Breakdown: Core PPI

• Core PPI number, which excludes food and energy prices, rose 0.4%
• More than the 0.1% increase analysts had forecast

“The 0.4% increase in core PPI was driven by a sharp 2.6% jump in light truck prices, which include sport utility vehicles, and a 4.1% rise in tire prices. Prices for soaps and detergent rose 1.7%.”

“Needless to say this is all about energy prices,” said Ian Shepherdson, chief economist at High Frequency Economics.

Breakdown: Energy & Food

• Energy prices plummeted 12.8% in October
• Falling 2.9% in September
• Largest one-month decline since July 1986 when energy prices fell 14%.
• 24.9% drop in gasoline prices, which fell 0.5% a month earlier.
• Crude oil prices have fallen 60% to roughly $55 a barrel, From all-time high of $147
• Residential natural gas slid 5.9%
• Home heating oil moved down 9.6%
• Food prices declined 0.2% after climbing for the last 5 months

“Despite the rise in core PPI, many economists say inflation is moderating, which could give the Federal Reserve some leeway when it comes to lowering interest rates.”

Read Article: Wholesale prices in record plunge

CNBC has been keeping track of the total dollars spent so far on the Financial Crisis that we are seeing.

That total is, $4.28 trillion.  

The post, Financial Crisis Tab Already In The Trillions, says “… that number is more than what was spent on WW II, if adjusted for inflation, based on computations from a variety of estimates and sources.”

“Not only is it a astronomical amount of money, its’ a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and new releases. Strictly speaking, not every cent is directed a result of what’s called the financial crisis, but it arguably related to it.

Some 68-percent of the sum falls under the Federal Reserve’s umbrella, while another 16 percent is the under the Treasury Asset Relief Program, TARP, as defined under the Emergency Economic Stabilization Act, signed into law in early October.”

Why Banks Fail had analyzed the nubmers back on October 7, 2008, which pegged the total cost of the bailout at $1.5 trillion.  

All of this, and we are STILL only hearing about the $700 billion loan.

In an effort to control more of China Construction Bank, Bank of America(NYSE: BAC 15.33 11/17/08) has decided to exercise option this month to purchase additional shares of the Bank. This purchase will bring the stake in China Construction to 19.1%.

China Construction bank is one of Chinese largest financial institutions, and will allow  BofA to be a “long-term and significant strategic investor” in the company.

Bank of America together with China Construction will contuine to work under the strategic assistance agreement formed in 2005 when BofA first purchased a stake in China Construction.

“The companies have launched more than 20 projects, including a leasing business in Beijing and no-fee cash withdrawals from BofA’s ATMs in China.”

Breakdown: Deal

• Initially Purchase of 9% 2005 for $3 billion
• Currently owns 10.75%
• Shares it is acquiring cannot be sold until Aug. 29, 2011, without China Construction’s consent
• Upon completion BofA will hold 44.7 billion “H-shares” of China Construction 

“Some analysts have speculated that BofA might liquidate part of its China Construction investment to free up capital. While not ruling anything out, BofA CEO Kenneth Lewis has repeatedly said the company plans to maintain a significant stake in the bank.”

Read Article: BofA increases China stake

“Japan, the world’s second-largest economy, has officially slipped into recession, hurt by weak export growth and steep cuts in corporate spending amid the worsening global slowdown.”

Breakdown:  

• GDP (Gross domestic product) shrank at an annual rate of 0.4% from July to September
• Declining was 3.7 percent in the previous quarter
• First time since 2001 that Japan’s economy contracted for two consecutive quarters,
• Hong Kong and the European Union released data on Friday that showed they were in recession
• Europe’s largest economy, Germany, also announced last week that it was in recession

“The figure was worse than expected by economists, who had predicted Japan’s $5 trillion economy would narrowly avert a recession by posting slight growth.”

Breakdown: Risk to American Markets  

• Banks relatively unscathed by the American financial crisis
• However, export hurt buy Americans spend less on Japanese cars, televisions and machine tools.  
• Domestic consumption has remained weak in this rapidly aging society,
• Growth in Japan from 0.4% in the previous quarter to 0.2%in the July-September quarter
• Spending by Japanese companies fell by 1.7% from the previous quarter, its third straight decline
• Household consumption rose 0.3% from the previous quarter

“Economists said the decline would probably increase calls for Tokyo to take more steps to stimulate growth, beyond the $70 billion in stimulus already pledged.”

Read Article: Japan’s Economy, World’s Second Largest, Is in Recession

Bloomberg.com reports Citigroup’s Pandit to Reduce Headcount by 50,000, Cut Expenses.

After many other job cut announcements, Fidelity cuts 1300 jobs (and many more job cuts), here comes a big one.  Citigroup announces that it will reduce expenses by 20 percent, and cut 14% of its workforce.  

Citigroup (NYSE:C 9.52 on 11/17/2008) is helping the rest of the financial world eliminate jobs, contributing to almost 160,000 jobs lost since the subprime mortgage market collapsed last year.  

Still not the biggest of them all (GM), but a big deal pushing us further (not closer) into recession.

As the United State is heading into recession sales data shows a decline of 2.8% in October from September with a 4.1% decline form October 2007. Consumers are faced with plunging stocks, rising unemployment and general concern about the state of the economy.

The decline in October is the fourth consecutive monthly drop this year and is worst then most analysts on Wall Street expected. “The October decline topped the 2.65 percent drop in November 2001, which came after the terrorist attacks.”

“Unemployment reached 6.5 percent last month and many economists think that it could hit 8 percent by the middle of next year.”

Breakdown: Cars and Auto parts

• Sales down 23.4% from last year,
• Industry sales in the United States have fallen 14.6% this year,
• Industry sales down 31.9% in October,
• October was the lowest recorded in 25 years
• Market to remain weak into 2009.

 “Shares in American automakers Ford Motor Company (NYSE: F 1.85 11/13/08 11:34am ET) and General Motors(NYSE: GM 3.02 11/13/08 11:34am ET) have fallen to multi-decade lows as the companies reported billions in losses. Some lawmakers have called for a bailout of the auto industry, but Democratic leaders said Thursday that the odds of a rescue package looked dim.”

Breakdown: furniture and home-furnishings

• Sales fell by 13.5 percent compared with 2007,