Declining House sales in US ....

Yet another Fed Rate cut is expected as US consumer Index has fallen and there is a decrement in the present data of housing sales .

It was big surprise in store for analysts as US markets closed at a flat as a consequence of a bout of negative data. As markets already started with Consumer Index of 99.8 against an estimated value of 104.3, nothing more would have been expected , finally it hit the lowest in the last couple of years.

This fall in Index can be factorized in the following three ways :-

· With declining housing prices it is getting realized that the consequent net-worth is also on a decrease.

· The labor market is sensed to be on a deterioration

· There is a credit crunch in the market and availing credit is getting immensely tough.

As Consumer Index sums up almost to two thirds of GDP , hence it is expected that the lowering Consumer Index shall bring down the GDP as well.

However another data that was evaluated was the fact that US Existing Home Sales data showed figures beyond the expected ones.

The declination at 4.3% in August ,’08 was lower than the expected 4.6%.

Certain companies even showed negative results. Such an example being Lennar Corporation, a leading credit company , showed the worst results in the 53 years of its history with a net loss of USD 514 billion ,which was written off at USD 848 billion.

Thus the whole market depicted a negativity.