the visible hand

it is the theory which decides what can be observed – einstein

housing products and lumber shipments down

Posted by ecoshift on July 31, 2007

Bloomberg.com: Worldwide
Subprime Defaults Blamed for Corporate America Earning Setbacks
By Daniel Taub and Nick Baker

Aug. 1 (Bloomberg) — Railroads, chemical producers and insurance companies are blaming the worst U.S. housing slump in 16 years for their earnings woes.

Burlington Northern Santa Fe Corp., the second-biggest U.S. railroad, said lower shipments of housing products and lumber reduced second-quarter earnings. DuPont Co., the third-largest chemical maker, said slumping demand for kitchen and bathroom countertops was partly responsible for its profit drop. Genworth Financial Inc., the former insurance unit of General Electric Co., said earnings will be at the “lower end” of its forecast this year as mortgage-insurance claims increase.

“The subprime slime is oozing,” said Gary Shilling, president of A. Gary Shilling & Co. in Springfield, New Jersey, who correctly predicted the recession in 2001. “As home equity evaporates, that takes out the foundation of strong consumer spending growth, which has been the mainstay of the economy.”

U.S. profit growth has been cut by more than two-thirds because of the housing slowdown, according to David Rosenberg, chief North America economist at Merrill Lynch & Co. Earnings growth is running at 6 percent and would be 19 percent, he said. Business is suffering as home sales plunge more than economists estimate and foreclosure filings in the U.S. jumped 58 percent to 573,397 in the first half, according to RealtyTrac Inc.

“Companies that make anything that goes into a home, all the wiring, plumbing, anything related to coatings and fixtures, will certainly be suffering,” said Gene Pisasale, who helps manage $25 billion, including DuPont shares, at PNC Wealth Management in Baltimore.

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One Response to “housing products and lumber shipments down”

  1. […] Bloomberg.com: Worldwide Subprime Defaults Blamed for Corporate America Earning Setbacks By Daniel Taub and Nick Baker Aug. 1 (Bloomberg) — Railroads, chemical producers and insurance companies are blaming the worst U.S. housing slump in 16 years… …more […]

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