Durable-goods orders unexpectedly fall

Orders for big-ticket manufactured goods unexpectedly fell again in September, raising new worries about how much harm a severe housing slump and credit crunch are causing to the overall economy.

The Commerce Department reported Thursday that orders for durable goods dropped 1.7 percent last month following an even bigger 5.3 percent plunge in August. It marked the first back-to-back declines in more than a year and took economists by surprise. They had forecast new orders would rebound by 1.5 percent in September.

The September drop reflected weakness in such areas as autos, fabricated metals, computers and electronics products, and electrical appliances.

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The decline in manufacturing orders followed several other reports showing economic weakness, including continued steep slides in sales of existing homes and reports from banks and investment houses that they were having to take big write-offs due to losses in such areas as mortgage-backed securities.

Reports about those losses in August had caused the worst credit crunch in nearly a decade as the market for many kinds of investments nearly dried up as bond holders became worried about the safety of their investments.

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The concern is that if the economic disruptions become serious enough, they could drag down overall economic growth, which has already slowed under the impact of the steep downturn in housing.

Many economists, however, believe that the economy will still be able to avoid an outright recession because the Federal Reserve, which cut a key interest rate for the first time in four years, will keep cutting rates to stimulate economic growth. The Fed meets again next week.