Bill Losey’s Weekly Economic Update for Aug. 1, 2011

A HINT OF COMPROMISE, A SIGN OF WEAKNESS
The weekend arrived with the House narrowly passing a Republican debt-reduction bill – the “two-step” bill linked to a balanced budget amendment, proposing a $917 billion cut in federal spending. Though doomed in the Senate, the vote on the bill opened a door to negotiation that may lead to passage of a compromise measure by the August 2 deadline. (At a Friday press briefing, Democratic officials said that Congress could possibly approve a 2-day extension of the cutoff date.) Meanwhile, the Commerce Department announced that the economy grew just 1.3% in the second quarter; economists polled by Reuters had forecast GDP of +1.8%.

MIXED CONSUMER CONFIDENCE READINGS
The final July Reuters/University of Michigan consumer sentiment survey came in at 63.7, the lowest reading since March 2009. However, the Conference Board’s July survey came in 1.9 points higher than June at 59.5.

GOLD & OIL GO IN DIFFERENT DIRECTIONS
The price of gold went up $126.00 in July. Futures ended the month at $1,628.30 on the COMEX. Oil prices slipped 4.18% last week, settling at $95.70 a barrel.

REAL ESTATE INDICATORS LOOK MIXED
The May S&P/Case-Shiller Home Price Index showed a 1.0% gain in prices across 20 metro markets; the spring homebuying bump may have contributed to its second straight monthly advance. Year-over-year, prices were down 4.5%. The National Association of Realtors said pending home sales rose 2.4% in June; the Census Bureau said new home sales decreased 1.0% in that month.

DEBT IMPASSE TAKES TOLL ON STOCKS
July 25-29 was a trying market week. The numbers: S&P 500, -3.92% to 1,292.28; DJIA, -4.24% to 12,143.24; NASDAQ, -3.58% to 2,756.38.