by Calculated Risk on 8/24/2010 08:53:00 PM

Just a reminder ... in addition to the existing home sales report this morning, there is more negative news coming.

First, as I noted in the existing home inventory post, the months-of-supply will probably stay in double digits for some time and anything over 7 or 8 months of supply will put downward pressure on house prices. However it will take some time for reported house prices to start declining. The Case-Shiller house price index for June will be reported next week (really a 3 month average of April, May and June). And prices probably didn't start falling until July. The July numbers will not be reported until the end of September, and that will be a 3 month average of May, June and July. So it might take until the end of October to see the price declines in the Case-Shiller indexes.

On Friday, the second estimate of Q2 GDP will be released. In the advance release, the BEA reported real GDP increased at a 2.4% annualized rate in Q2. However subsequent economic releases for construction spending, inventory and trade all suggest downward revisions in the second release. The consensus is for a downward revision to 1.3% real annualized growth.

And next week, the ISM manufacturing index will be released - and this will probably continue to decline based on the regional manufacturing reports (I'm tracking all the regional reports right now because I expect a slowdown in manufacturing).

And next Friday, the August employment report will be released. I expect another weak report - and I expect the unemployment rate to start ticking up.

Also I think the European situation is starting to heat up again with bond spreads widening to the May crisis levels for both Greece and Ireland.

Of course the next couple of days will be busy too (New home sales on Wednesday, the MBA Q2 National Delinquency Survey on Thursday, the FDIC Q2 quarterly banking profile). We've definitely entered a period of downbeat economic news.

Note: I still think the economy will avoid a technical double-dip recession, but the odds are uncomfortably high - and it will probably feel like a recession to millions of Americans. It will be especially discouraging - if I'm correct - when the unemployment rate starts increasing again, and when reported house prices start falling again.