There is more fresh evidence today that the pain in the housing market has begun to bleed through now into consumer spending, which accounts for 70% of GDP.
Big box retailer and national bellwether, Home Depot Inc. (NYSE:HD) reported this morning that its 3rd quarter net profit fell by nearly 27% due to deteriorating conditions in the housing market.
The Atlanta-based giant’s net earnings came in at $1.09 billion, down from $1.49 billion a year earlier.
More worrisome, however, were the retailer’s same store sales figures-they fell by 6.2%. It was the sixth straight decline for largest home-improvement retailer. That’s key, because those figures track sales at stores open for at least a year and don’t reflect the addition of "new" store revenue.
That suggests, of course, that the consumer may now be beginning to really wobble as the "wealth effect" of the housing bubble continues to wane.
Said new CEO Frank Blake, "We are facing a tough environment as housing indicators continue to deteriorate. Our financial performance in the third quarter reflects these tough conditions."
On top of that, the company also lowered their guidance going forward. In a statement, the company said that it now expects their full-year earnings from continuing operations to a decline by as much as 11 percent. Previously, it had expected a drop of "only" 7 percent to 9 percent.
Since July, shares of company have declined by 29% as of yesterday’s close.
Unfortunately, the bottom in housing is nowhere in sight.