Economics Update

Weekly initial unemployment claims were less than expected, though the 4 week moving average of people receiving unemployment benefits was up.

If there is a "wealth effect", then this might be the side effect of the not wealth effect, as household net worth dropped by $1.7 trillion in 2Q of 2008.

A lot of this drop is due to the real estate market, where there were over a million homes in foreclosure in Q1 of 2008, 2.5% (one in 40 for the mathematically challenged) of all loans being serviced by the Mortgage Bankers Association, which explains why Federal Reserve Vice Chairman Donald Kohn expects to see more write-downs and losses for banks.

Another day, another record for retail gasoline, $3.989/gal, and oil rose to $125.05/bbl, largely on the European Central Bank holding its interest rate at 4%, and it's president publicly worrying about inflation, which implies rate hikes and a weaker dollar, which tends to push oil prices up.

Finally, monoline insurers MBIA and Ambac are delaying attempts to try and raise capital because of the prospect of a rate cut by Moody's.