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May 19th, 2009
11:38 AM ET

Financial Dispatch: Home construction at record low

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Gene Bloch
Managing Editor
CNN New York

A stark sign this morning that the housing market is not yet out of the woods. The Commerce Department reporting new home construction plunged 12.8% in April to a record low, as rising unemployment and mounting foreclosures slammed new projects. A plunge in new apartment projects led the decline. Applications for new permits fell as well, indicating the rough patch for housing is likely to continue. The news underscores the recession is still taking its toll.

The upside of the housing decline is, of course, lower prices for homebuyers. Homes are, in fact, at their most affordable in two decades.

A big announcement today on one of the most important energy and environmental issues, fuel economy standards. The Obama administration today is setting new CAFE (Corporate Average Fuel Economy) standards in an effort to reduce fuel emissions. The plan will require cars and light trucks to get an overall average of 35.5 miles per gallon by 2016, according to a senior administration official with knowledge of the plan. Cars will be required to average 39 mpg, and for light trucks the number will be 30 mpg. There is a 1215p announcement from President Obama, who will be joined by Calif. Gov. Arnold Schwarzenegger and Michigan Gov. Jennifer Granholm, who have played major roles in the policy (think environment and industry).

The announcement comes as we’ve seen gas prices rising for 3-weeks straight. AAA reported a 3-tenths of one cent increase in regular unleaded, which brings the price to $2.314 a gallon.

And more auto news – Daimler AG and Tesla Motors are pairing up to build electric cars. As part of the agreement, German automaker Daimler said it had acquired an equity stake of nearly 10% in San Carlos, Calif.-based Tesla Motors. Tesla designs and manufactures electric vehicles. Its battery-powered Roadster is the only highway-capable production electric vehicle for sale in North America and Europe.

As Washington moves to clamp down on the credit card industry – the industry may be ending the free ride for its best customers. According to the New York Times, card companies are considering a number of steps to keep its revenues up, including reviving annual fees, cutting back on cash-back and other rewards programs, and slapping interest rate charges on accounts immediately instead of allowing a grace period. For years, people who have paid on time have gotten a good deal. Is that soon ending?

On CNNMoney:

YOUR MONEY

A report card for your 401(k) plan. Want to know how your company's retirement plan compares with others? It's not easy to find out. But here are a few things you can try.

* How to solve the financial crisis. Cornell economist Robert H. Frank explains why a culture of excessive risk taking flourished – and what might push everyone from money managers to homebuyers to act more prudently.

* Investor Daily: Value investing in health care stocks

JOBS

* Ask Annie: Don't let ID thieves hijack your job hunt. Scammers increasingly are targeting job seekers; here are 6 ways to protect yourself.

COMPANIES: Features

* Hitting the wall. Companies of every stripe are filing for bankruptcy or getting perilously close – and they're not just in Detroit or on Wall Street. Take a look at an array of companies that are fighting to live another day or have gone belly-up in recent months.

TECHNOLOGY

* Who will get caught in antitrust net?

SMALL BUSINESS

* Emergency small business loans coming in June. To kick off National Small Business Week, the government announced its timetable for a hotly awaited assistance program.

* How 5 small businesses are faring? Before the holidays, six business owners shared their stories about surviving the economy. They each had hopeful expectations for the winter and the spring. Go to CNNMoney.com to see how they fared.

soundoff (2 Responses)
  1. James in Nebraska

    Why build new ones, when there are plenty of used to purchase at a low cost.

    May 19, 2009 at 3:13 pm |
  2. Sandra

    Common sense would tell you with all the empty foreclosures, we don't need empty new ones too.

    May 19, 2009 at 12:42 pm |