CaseShiller U.S. House Price Index Collapses Further

The CaseShiller house price index for July showed a worse-than-expected 16.3% year-over-year (consensus 16%). Fourteen of the 20 metropolitan areas showed monthly declines, led by Las Vega (-2.75%) and Phoenix (-2.68%). On a year-over-year basis, prices declined in all 20 areas, as little at 1.77% for Charlotte and as much as 29.9% for Las Vegas.

No relief is in sight for homeowners. The negative wealth impact is being compounded by the hits to consumers' equity portfolios. Combined with continued high energy prices and declining access to credit, the consumer is under siege.

U.S. weekly same-store sales moderate again

The ICSC measure moderated further to 1.1% year-over-year in the week of September 30, the fifth lowest rate since 2003 when the economy was still struggling to emerge from the 2001 recession. The ICSC reported that the Wall Street meltdown appears to be causing consumers to retrench. The Redbook measure showed a similar moderation to 1% year-over-year, a low since April.

The data are providing evidence that economic growth is slowing and that the Wall Street crisis is spreading to the real economy. The Wall Street crisis is likely to continue and the collateral damage to the real economy is likely to rise. These developments suggest significant downside risks for the economy on top of the moderation we had already expected for growth during the second half of 2008.

RBC Financial Group
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The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.