The U.S. housing market continued its tepid trek toward recovery as housing starts in May exceeded expectations, the U.S. Commerce Department said yesterday (Tuesday).

Housing starts soared 17.2% from April to May, nearly double the 7% increase economists were projecting, Actual housing starts reached a seasonally adjusted annual rate of 532,000, also well ahead of the 490,000 economists surveyed by the Dow Jones Newswires had projected, The Wall Street Journal reported.

Despite the unexpected month-to-month uptick, U.S. housing starts are still more than 45% below the pace of a year ago when the housing-start rate was 971,000.

And just because there’s been an increase in home construction doesn’t mean there’s been an accompanying increase in housing demand, Andrew Waite, a former institutional investor who is now the publisher ofPersonal Real Estate Investor magazine, told Money Morning in a telephone interview.

In fact, says Steve Hagenbuckle, managing principal of real estate private

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By William Patalon III
Executive Editor
Money Morning/Money Map Report

[Editor's Note: When it comes to banking or global economics, there's literally no one better than Money Morning Contributing Editor Martin Hutchinson - a former investment banker with more than a 25 years experience. Hutchinson has proven himself to be a market maven and he is currently offering investors an opportunity to make $4.201 in cash in just 12 days. You can also subscribe to Martin's new investment service, The Permanent Wealth Investor, by clicking here .]

Just days after Chrysler LLC said it would be cutting one quarter of its auto dealerships, 1,100 General Motors Corp. (NYSE: GM) dealerships have reportedly been told not to expect a relationship with the embattled U.S. carmaker after October 2010.

GM dealers targeted for separation were informed by

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Home Depot Inc.'s (HD) first-quarter adjusted earnings came ahead of Wall Street expectations despite lackluster sales.

The home-improvement retailer reported adjusted EPS of 35 cents, which topped the consensus estimate by 6 cents. The company posted adjusted earnings of 41 cents per share in the same period of fiscal 2008.

Home Depot's revenue fell 9.7% to $16.2 billion. Same-store sales were down 10.2%, while US-based same-store sales declined 8.6%.

"Our markets, and the consumer in general, remain under pressure," said CEO Frank Blake.

The Atlanta-based chain also stated that it continues to expect full-year sales to fall 9% and comparable store sales to decline in the high single digit area.

The consensus estimate on Home Depot's full-year earnings has increased by 3 cents over the past 30 days to $1.33 per share.

Yesterday, rival Lowe's Companies Inc. (LOW) also reported better-than-expected

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Just days after Chrysler LLC said it would be cutting one quarter of its auto dealerships, 1,100 General Motors Corp. (NYSE: GM) dealerships have reportedly been told not to expect a relationship with the embattled U.S. carmaker after October 2010.

GM dealers targeted for separation were informed by letter over the weekend, Reuters reported.

The eradication of hundreds of hundreds of American auto dealerships is merely the latest development in the ongoing dismantling of the so-called U.S. “Big Three’’ – a  process that seems likely to leave Ford Motor Co. (NYSE: F) as the last American automaker standing.

“These companies are making up for now for what they have avoided doing for years, if not decades,” industry analyst John A. Casesa, managing partner of consultantcy Casesa Shapiro Group LLC, told The New York Times. “And if the

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How did it get here, and where is it going? What a difference a year makes. While March lions and April showers were at work in 2008, so were these factors in the U.S. and global economies:

The Dow Jones Industrial Average remained steady above 12,000. The leading indicator of existing home sales was down over 21% from the previous year, and the official unemployment rate was just beginning its upward creep by crossing the 5% mark. The first official admissions of the “R” word. In early April 2008, the International Monetary Fund (IMF) declared a 25% chance of a global recession, and Federal Reserve Chairman Ben Bernanke told Congress that gross domestic product “could even contract slightly.” The novelty of bailouts began. Bernanke also assured Congress that the Fed’s emergency authorization of a loan against $29 billion of Bear Stearns assets wasn’t putting taxpayer money at risk: “I feel reasonably confident that ...

Wall Street created the U.S. housing bubble and now it’s missing the real estate rebound.  And Andrew Waite understands why.

Waite is the publisher of the Personal Real Estate Investor, a glossy magazine that focuses on investors who buy houses or condos to manage for income or to fix up and sell for a profit. But he’s not some industry cheerleader whose statements are nothing but spin.

He’s a true expert on the U.S. housing sector who goes out of his way to “educate” journalists about the true state of the American housing market, and who criticizes most of the “indicators” in use as useless and irrelevant. Plus, as a onetime Wall Street venture-capitalist who subsequently joined Silicon Valley’s Sand Hill Road private equity crowd, Waite really understands how the Wall Street investment game is played - and, in the case of the

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Back in December, with the U.S. recession in its 12th month – and showing no signs of abating – Money Morning Contributing Editor Martin Hutchinson warned that an “L”-shaped recession was very possible.

The U.S. recession is now in its 15th month, and many economists now expect the downturn to last until 2010 – if not longer. In fact, some economists now say the U.S. malaise could easily evolve into the virulent “L-shaped” downturn that Hutchinson predicted – a development that would guarantee both the maximum pain and the slowest recovery, experts say.

“I said in December that the recession could be ‘bloody-L shaped.’ With the huge deficits, that now looks the most likely outcome – and believe me when I say that it will be very bloody,” Hutchinson said this week. “The economy will bottom quite soon, but every time it tries to

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Oil fell $2 a barrel to below $36 on Wednesday after a U.S. government report showed larger-than-expected rises in inventories of gasoline and distillates.

Stocks of distillates grew by 6.4 million barrels last week amid weak demand, while crude and gasoline inventories also rose, the Energy Information Administration said.

“Inventories continue to build. This morning we had negative sales numbers. This is more economic weakness affecting demand,” said Tom Bentz of BNP Paribas Commodity Futures in New York.

U.S. crude was down $2.08 at $35.70 a barrel by 1618 GMT after earlier hitting a high of $39.45. London Brent crude fell 88 cents to $43.95 a barrel.

The inventory report added further pressure to prices after weak U.S. retail sales data sparked selling earlier in the session.

The U.S. Commerce Department said total retail sales fell 2.7 percent to a seasonally

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The U.S. economy shed 693,000 jobs in December, a showing that was far worse than economists had expected and that may even have been the biggest monthly loss of jobs in more than 30 years, analysts said of a closely watched survey of business employment released yesterday (Tuesday).

The monthly ADP Employer Services (ADP) survey - which tracks private non-farm payroll employment - stunned economists, showing a surprising increase from the 476,000 jobs lost in November.

The decline was the worst in the history of the survey, which began reporting in 2001. And if the findings are matched by the official government jobs report, due out Friday, it would be the biggest employment drop since the U.S. recession of 1975.

“This is an eye-poppingly bad number,” Art Hogan, the New York-based chief market analyst at Jefferies & Co. (JEF), told Bloomberg News. “The economy is in

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If there’s a proverb that captures the outlook for the U.S. economy in the New Year, it’s the one that says: “It’s always darkest before the dawn.”

Regardless of any formal announcement of whether or not the United States drops into an actual recession, the ongoing credit crisis guarantees a contraction of the American economy by virtually every measure we know. That period of darkness will be marked by a dramatic slowdown in economic activity, as well as by rising unemployment, additional declines in U.S. stock prices, and constant volatility. It could last as long as 12-18 months.

But when the dawn does come, it will be one to remember. If U.S. President-elect Barack Obama gets it right - and I have every reason to believe that he will - then investors will be presented with the greatest investment opportunity of our generation. At that point, shares of American companies will be

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