Americans’ home debt greater than equity for first time since 1945; home prices plunging 8.9% in the final quarter of 2007 compared with a year ago, steepest decline in the 20-year history of the Case-Shiller index.

Excerpt of article published at Tampa Bay’s 10 dot com (click to read whole article): WASHINGTON (AP) — “In a troubling report, the Federal Reserve said Americans’ equity in their homes has fallen below 50% for the first time since 1945.

Home equity is the percentage of a home’s market value minus mortgage-related debt.

The Fed’s flow of funds report shows home equity slipped to a revised 49.6% in the second quarter 2007 and fell further, to 47.9%, in the fourth quarter. It marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.

The total value of equity also fell for a third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.

Home equity has steadily declined even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans, lines of credit and an increase in 100% or more home financing.

Economists expect equity to drop even further as declining home prices eat into the value of most Americans’ largest asset.

Moody’s estimates that 8.8 million homeowners, or about 10.3% of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9%, will be “upside down” if prices fall 20% from their peak. That is, they will owe more than the home’s current market value.

The latest Standard & Poor’s/Case-Shiller index showed U.S. home prices plunging 8.9% in the final quarter of 2007 compared with a year ago, steepest decline in the 20-year history of the index.”

US reports Largest total monthly job loss in 5 years.

the great depressionExcerpt from original article by Chris Isidore:

NEW YORK ( — “Employers made their deepest cut in staffing in almost five years in February, according to a closely watched government report that showed the labor market to be far weaker than expected.

The weak report fueled already mounting recession fears and is likely to influence the Federal Reserve’s decision on interest rates later this month.

There was a net loss of 63,000 jobs, according to the Labor Department, which is the biggest decline since March 2003 and weaker than the revised 22,000 jobs lost in January. Economists surveyed by had forecast a gain of 25,000 jobs in the most recent reading.

“These poor jobs data are the strongest evidence yet that the economy has slipped into a recession of uncertain depth and duration,” University of Maryland Professor Peter Morici said.

Job losses were widespread, reaching beyond the battered construction sector, which lost 39,000 and manufacturing, where job losses hit 52,000. Retailers cut 34,000 jobs, while business and professional services cut 20,000 jobs.

Temporary staffing firms cut nearly 28,000 from their payrolls, another warning sign of employers pulling back, and hotels cut about 4,000 jobs, a sign that discretionary consumer spending could be on the wane.

Overall the private sector cut 101,000 jobs, with only a gain in government employment limiting losses.”

GM offers buyouts to entire unionized workforce after $722 million loss in forth quarter; record $38.7 billion loss for the year in 2007

Published: February 13, 2008 in the New York Times: (see entire article here.)

“DETROIT — A surprisingly tough fourth quarter and a gloomy outlook for the United States market prompted General Motors to offer buyouts Tuesday to its entire unionized work force.

CNBC: Rick Wagoner, G.M. Chief, on Earnings

G.M.’s latest “special attrition program” covers all its 74,000 hourly employees and underscores the challenges it faces in its turnaround effort.

G.M. said Tuesday that it lost $722 million in the fourth quarter and a record $38.7 billion in 2007, although the annual loss was inflated by a one-time charge of $38.3 billion to write down deferred tax assets.

Still, few involved with the industry had predicted that G.M. would begin another companywide program to shrink its payrolls.

“A buyout that broadly based is a surprise and a very bold statement about the condition of the American auto industry,” said Harley Shaiken, a labor professor at the University of California, Berkeley.

G.M.’s buyout package follows a similar one made by Ford Motor, which last month extended offers to its 54,000 workers represented by the United Automobile Workers. Chrysler has offered buyouts to workers at certain plants.

G.M.’s chief financial officer, Frederick A. Henderson, called the buyouts “an important step” in the reorganization of the troubled domestic auto industry.

The company has already cut nearly 40,000 United States jobs in the last two years through buyouts and early retirements and has closed a number of plants to bring production in line with weaker demand for its vehicles.”