Also out this morning is a report that shows new home construction activity declined by 14 percent in December to the lowest level in 16 years. And, building permit applications — a sign of future construction activity — declined by 12 percent. You do have to wonder what is going to happen when the housing market turns around — and it will — and inventories are consumed and there is nothing in the pipeline. Gary Zimmerman, chief economist for the Federal Reserve Bank of San Francisco , pretty much blamed the housing market for all of the nation’s economic woes in his speech yesterday at the Escondido Chamber of Commerce’s Economic Forecast luncheon. When I asked him what if energy prices fall and inflation becomes less of a concern, the economic stimulus package works, interest rates continue to decline, new job creation rebounds and consumers stay active, he had little to say other than he bases his forecasts on standard techniques. read more