According to a report issued earlier this week, the economy shrank at an annual rate of just 1 percent in the second quarter. Despite marking a record fourth-consecutive quarterly decline, the smaller decrease provides further evidence that the recession is slowly coming to an end. In addition, smaller decreases in consumer spending were reported during the April-June period, leading some economists to raise their expectations for the third quarter.

Nigel Gault, chief U.S. economist at IHS Global Insight, stated, “The big surprise in this report was that there was enough spending in the consumer sector and elsewhere to offset all the loss from inventory reductions.”

Gault expects that the economy will gain momentum in the current and fourth quarters as businesses switch from reducing stock to rebuilding inventories, and he expects the GDP to increase more than 3 percent in the third quarter and remain in the 3 percent-range in the fourth

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Inflation-Proof Savings Account Could Pay 100% “Interest” this Year Euro Pacific Capital President Peter G. Schiff has identified a savings account that could yield 100% interest between now and the end of the year. It’s much safer than a regular account, and fully insured by Lloyd’s of London. Since every dollar of your savings is fully backed by gold bullion held in specialized vaults outside of Zurich, you could easily double your money as gold prices rise. And that means it’s a great way to protect your money from inflation, a falling dollar, geopolitical instability and even government stupidity! Go here for Schiff’s complete report.

By Bob Blandeburgo

Associate Editor

Money Morning

Prices for single-family and condominium homes in the second quarter fell by a record 15.6% and 19.8% year-over-year in the United States, mainly due to foreclosures.

While the data taken on a national average may be disheartening, the …

In the currency market, the dollar inched up against the euro. Late Thursday, the euro was trading at $1.4194 vs. $1.4214 on Tuesday. On the economic front, the National Association of Realtors (NAR) reported yesterday that resales of U.S. single-family homes and condos climbed 3.6% in June to a seasonally adjusted annual rate of 4.89 million, the highest level since October.

Meanwhile, the inventory of unsold homes on the market fell 0.7% to 3.82 million in June. This is reportedly a 9.4-month supply at the June sales pace, down from 9.8 months in May.

“The housing market appears to be healing,” said Lawrence Yun, the NAR’s chief economist. Yun said that inventories would have to be at a seven-month supply to get price stabilization. He said prices could stabilize “around the end of the year.”

The NAR report sparked a debate about whether the housing market has really turned a corner.

Some

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Mr. Market has begun to show clear signs of split personality disorder in recent weeks. Now that investors have exhaled in relief that a deflationary apocalypse has been avoided, the new reality of reflation and stagnation is sinking in…

“Mr. Market” is starting to show clear signs of split personality disorder.

On the one hand, certain areas of the market – the ones much favored in the big run-up – have started to wilt and fade as the much-lauded “green shoots” turn brown. On the other hand, other areas of the market – which didn’t participate so much in the rally at first – have started showing signs of life.

Take the grain markets for example. Foodstuffs like corn, wheat, soybeans and sugar have been red-hot in recent days.

We can see this in the Powershares

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In the currency market, the dollar was lower against the euro. Late Friday, the euro was trading at $1.2907 vs. $1.2818 on Thursday.

The Commerce Department reported that the U.S. trade deficit narrowed by 9.7% to $36.0 billion in January, a six-year low, on an across-the-board decline in global trade flows.

“The big story here is not the decline in the deficit but the continuing collapse in trade volumes,” wrote Nigel Gault, chief U.S. economist for IHS Global Insight.

The speed and depth of the decline has stunned analysts.

“The numbers have been wild since the summer of last year, before the bankruptcy of Lehman Brothers, when a combination of falling demand - and we surmise - much tighter trade credit, began to squeeze both exports and imports,” wrote Ian Shepherdson, chief economist at High Frequency Economics.

And the euro continued to benefit from the Swiss central bank’s decision Thursday to intervene in foreign

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The unemployment picture took on an even more ominous tone this week as new layoffs emphatically underscored a worsening global economy.  Now, fear is rising that the losses represent a major restructuring in the business world and that some, if not most, of the jobs are gone forever. Monday began with several European companies, including electronics giant Philips (PHG) and insurance and banking conglomerate ING, announcing job cuts of 6,000 and 7,000 employees respectively. The gloomy start to the workweek quickly turned into a bloodbath as more than 75,000 jobs were lost in a single day, when a who’s who of U.S. household names launched a gauntlet of layoffs: Sign up below… and we’ll send you a new investment report for free:...

President Obama Urges Greener Vehicles

The accompanying table (click to enlarge) includes 38 companies which are equal-weight components in the ETF Innovators Global Personal Transportation Index, which includes companies with market caps of at least $150M. The index declined by over 51% in the past year compared to declines of about 37% for the S&P 500 SPDR (SPY), 36% for the Consumer Discretionary Sector SPDR (XLY), and 35% for the PowerShares Consumer Goods ETF (PRFG).

The companies are listed in descending order by market cap, with Toyota Motor (TM) recently eclipsing Volkswagen (VLKAY) for the largest market cap among the auto makers. Beyond the auto makers, the index also includes recreational vehicle makers such as Polaris (PII) + Winnebago …

Global stocks decline as gloomy economic news flow resumes… Euro zone services activity falls to a fresh record low… Central banks expected to cut rates aggressively… MSCI World stock index down 0.4 percent

A tentative rebound in global stocks spluttered on Wednesday while euro zone government bond yields hit a three-year low as gloomy economic news highlighted the case for more aggressive interest rate cuts in Europe this week.

The euro stayed on the backfoot and oil held near a 3-1/2 year low a day before the European Central Bank, Bank of England and Sweden’s Riksbank are all widely expected to cut borrowing costs.

Supporting those expectations, economic reports on Wednesday showed the euro zone’s services economy fell deeper into recession in November than initially thought and inflationary pressures eased.

“This is a horrible survey across the board, showing that the euro zone service sector is being hit ever harder

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Oil down more than $2 after no cut from OPEC… OPEC to discuss 1 to 1.5 mbpd cut later in December… Saudi Arabia cites $75 a barrel as “fair price”

Oil fell more than $2 to below $53 a barrel on Monday after OPEC decided to wait until mid-December to make another cut in output to try to defend sagging prices.

U.S. light crude for January delivery was down $2.28 at $52.15 a barrel by 1200 GMT.

Oil had settled at $54.43 on Friday after a shortened post-Thanksgiving holiday session. On Nov. 21, it touched a three and half year low of $48.25.

London Brent crude was $2.05 lower at $51.44 a barrel.

“The markets are discounting OPEC’s decision to stand pat by selling off,” said Edward Meir, analyst at broker MF Global.

“When it comes to calibrating supply and demand

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In the currency market, the dollar edged higher against the euro. Late Tuesday, the euro was trading at $1.2618 vs. $1.2643 on Monday.

The day’s big number was the Labor Department report showing that producer prices fell 2.8% in October, the most in at least 50 years.

The headline number was slightly misleading, however, as the plunge was triggered by a 24.9% drop in gasoline prices, a record freefall going back to 1947, when the government first began keeping track. Outside of food and energy, prices were actually up, by 0.4% in October.

But Nigel Gault, economist with IHS Global Insight, downplayed the core figure, saying that, “We saw huge commodity price increases really through the middle part of this year … It took a long time for that to start feeding though into the core inflation. So we’re probably seeing the last gasp of the inflationary implications of the previous

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