Are we having fun yet? This week was chock full of hair-raising economic news. Stocks continued to crumble, oil kept rising, and the real estate market seemed nowhere near bottoming out. Here's the latest from the economic front.

I.O.U. one, mortgage market
Here's an unsettling thought to ponder as mortgage giants Freddie Mac (NYSE:FRE) and Fannie Mae (NYSE:FNM) teeter on the brink of collapse: The companies own or guarantee some $5.2 trillion worth of mortgages. If -- and it's still a big if -- the companies were forced into the government's arms, those trillions worth of liabilities would become obligations of the general public -- you, me, your Aunt Sally … everyone. What kind of effect would that have on national public debt? Well, the number currently stands at around $9.5 trillion, so tack on a few trillion more … I'll let you do the math. Of course, the liabilities would come with trillions of dollars worth of assets, but the fact that we're even having this discussion shouldn't make you feel good.

This ain't your father's car
Has the price of gasoline reached a tipping point, spurring drivers to scale back in grand fashion? It appears so. Gasoline consumption for the first week of July declined 3.3% year over year, coming in at 9.347 barrels a day. Meanwhile, Toyota (NYSE:TM) announced it would begin manufacturing its Prius Hybrid in Mississippi starting in late 2010, a move that should leave it better equipped to meet surging demand. In a bold move that highlights how drastically the auto industry is shifting, Toyota also announced it would suspend production of its largest trucks and SUVs, starting next month and continuing until November.

It's all a matter of perception
In a recent poll conducted by CNN/Opinion Research Corporation, 75% of Americans said that they believe we're in a recession. How consumers perceive the health of the economy is crucial in determining the outcome of whatever mess we're in; The U.S. economy relies on consumer spending for 70% of its output. If consumers feel there's pain on the horizon and rein in their spending, their worry becomes reality. On a brighter note, stimulus checks helped prop up sales of retailers like Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) in June.

Oil continues its climb
After briefly pulling back earlier in the week, oil rebounded with a vengeance Friday, inching closer to the psychologically important $150-a-barrel mark. Some members of Congress have proposed tapping into the nation's Strategic Petroleum Reserve in an effort to get more supply on the market. The U.S. has some 700 million barrels of oil in reserve to draw on in case of supply disruptions. Still, many still believe that speculation, not supply, is contributing to oil's never-ending rise. A group of airline executives, including those from less-battered carriers like Southwest Airlines (NYSE:LUV), JetBlue (NYSE:JBLU), signed a letter this week pleading with nation to stop oil speculation, which is threatening the airline industry as we know it.

Quick economy numbers:

  • The Labor Department reported net job losses of 62,000 in June, the sixth straight month of declines.
  • The U.S. trade deficit declined slightly in May, to $59.79 billion.
  • The nationwide average price for a gallon of gas fell slightly to $4.096.
  • Pending home sales fell 4.7% in May, now down 14% over last year.

That's the latest for this week. Check back in next Friday for the latest economic roundup.

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