%1

New home construction fell 7 percent in July as builders tackled massive backlogs over newer contracts, according to data released yesterday by the Commerce Department, The Hill reported. Housing starts for privately owned homes hit a seasonally adjusted annualized rate of 1.53 million in July, falling below the revised June rate of 1.65 million while remaining 2.5 percent above the same month last year. Single-family housing starts were down 4.5 percent, and starts on homes with five or more units plunged 13.6 percent. Home sales and construction have fallen steadily throughout the summer after surging lumber prices earlier in the year drastically increased the cost of building homes. While lumber prices have fallen closer to historic levels, home prices have continued to break record highs as builders fight through other supply issues and backlogs.

When the Paycheck Protection Program began last year to help small businesses that were struggling during the pandemic, the federal government was determined to get the relief money out fast — so it waived much of the vetting lenders traditionally do on business loans. The absence of those safeguards meant that fraud was highly likely. But just how much of the program’s $800 billion was taken illicitly? A new academic working paper released yesterday contains an estimate: Around 1.8 million of the program’s 11.8 million loans — more than 15 percent — totaling $76 billion had at least one indication of potential fraud, the researchers concluded, the New York Times reported. The study pins blame for many of the questionable loans on one particular group of lenders: financial technology firms, known as “fintechs,” which focus on digital lending. Nine of the 10 lenders with the highest rate of suspicious loans fell into that group. “Certain fintech lenders seem to specialize in dubious loans,” the authors wrote. Collectively, fintechs made around 29 percent of the program’s loans but accounted for more than half of its suspicious loans, the study concluded.

U.S. retail sales fell more than expected in July as shortages weighed on purchases of motor vehicles, suggesting a moderation in economic growth early in the third quarter, Reuters reported. The weak sales reported by the Commerce Department on Tuesday also reflected a plunge in online purchases, payback after Amazon pulled forward its Prime Day to June from July. With the school year getting into full swing later in August and most education districts reverting to in-person learning, a rebound is likely, though rising COVID-19 cases are a wild card. Retail sales dropped 1.1% last month. Data for June was revised up to show retail sales increasing 0.7% instead of rising 0.6% as previously reported. Receipts at auto dealerships fell 3.9% after declining 2.2% in June. Motor vehicle production has been hampered by a global shortage of semiconductors. The scarcity of chips has also impacted the availability of some household appliances like microwaves and fridges.

More than 7 million Americans are set to lose their unemployment aid immediately after Labor Day, even as the delta variant poses new challenges to the economic recovery, The Hill reported. Gig workers and other unemployed Americans receiving aid through programs created for the pandemic will see those checks end on Sept. 7, along with the $300 weekly federal supplement to traditional jobless benefits. President Biden had all but formally ruled out an extension before the delta variant caused COVID-19 cases to surge, saying in July it would “make sense” for those programs to lapse in September. But as cases climbed, White House press secretary Jen Psaki left the door to an extension open, telling reporters on Aug. 6: “At this point, they're expiring at the beginning of September. Nothing has changed on that front, but a final decision has not been made.” Even if Biden decides he wants to change course, Congress would need to pass legislation. And a bill to extend unemployment benefits would almost certainly face universal GOP opposition. Sen. Joe Manchin (D-W.Va.) has also spoken out against extending pandemic jobless aid programs, dashing the chance of an extension through the pending reconciliation spending bill that would require only a simple majority for passage in the 50-50 Senate.

Companies are sitting on a record amount of cash amid lingering uncertainty about disruptions from COVID-19, defying expectations earlier this year that a waning pandemic would unleash a spending spree, the Wall Street Journal reported. Cash and short-term investments on corporate balance sheets globally are at an all-time high of $6.84 trillion, according to data from S&P Global, extrapolated from second-quarter earnings reports. That is 45% higher than the average in the five years preceding the pandemic and a 2.6% increase from the previous quarter. In April, analysts at Goldman Sachs had lifted their 2021 forecast for spending growth by S&P 500 companies to 19% from 10%, “as uncertainty continues to fall and global economies continue to reopen.” But global capital expenditures are expected to slow in the third quarter after a strong start to the year, according to an Aug. 6 report by JPMorgan Chase & Co. Corporate spending growth is forecast to decline to 5.8% this quarter at a seasonally adjusted annual rate, down from 12.9% in the previous one.