by Calculated Risk on 8/22/2006 12:28:00 AM

The most immediate impacts from the housing slowdown, on the general economy, will be the loss of housing related jobs, and the slowing of personal consumption expenditures due to less equity extraction.

As of July, residential construction employment was only off about 1% from the most recent peak. And mortgage equity extraction (MEW) was apparently still strong in Q2.

But recently there have been signs of a retail slowdown. First with casual dining (a discretionary expense) and now with the major retailers:

From the WSJ: Lowe's Net Rises, but Outlook Is Cut, Dim View for Year Suggests Wider Toll of Energy Costs And Home-Price Slowdown

Lowe's Cos. cut its outlook for the year ... underscoring that the economic malaise created by high energy prices and flattening home prices is spreading to more retailers.

The nation's second-largest home-improvement retailer, after Home Depot Inc... said that sales at stores open at least a year -- a key retailing measure often called "same-store sales" -- rose just 3.3%, near the bottom of Lowe's 3% to 5% forecast. The 3.3% quarterly gain was the smallest since 2003. And Lowe's said the weakness could last through the first quarter of next year.

The weaker same-store sales trend "is primarily the macroeconomic" environment coupled with shifts in its quarterly calendar, which includes one less week among other changes, said Robert Niblock, Lowe's chairman and chief executive. "Consumers are taking a bit of a breather," he said.

Long a retailing standout, the warning by Lowe's of weaker-than-expected gains for the rest of the year comes as higher gasoline, electricity and consumer-borrowing costs continue to pinch spending. Last week, Wal-Mart Stores Inc. and Home Depot offered mixed outlooks as U.S. consumers held tighter to their pocketbooks.

Even retailers appealing to more-affluent customers are now reporting a damping effect on sales of everything from lattes to home décor.