The housing market seems to be getting worse. In the second quarter, new foreclosures almost quadrupled in Los Angeles and doubled in Miami. Even in healthier real estate markets, like New York City and Seattle, foreclosures are up about 50% in the past year. The percentage of homes in foreclosure nationally is up to 2.5%, while homes that are delinquent in payments has reached 7%.

One reason why the foreclosure rate is rising is that the labor market in the U.S. is in trouble. On Wednesday, the ADP employment index reported that private sector firms slashed 79,000 jobs in June, the biggest monthly job decline in six years. On Thursday, the Labor Department reported that the U.S. economy lost 62,000 jobs in June and 438,000 jobs in the first six months of 2008. Although the June payroll decline was not as bad as some economists had feared, payrolls losses in April and May were revised down by 52,000 jobs. Additionally, the Labor Department also reported that initial jobless claims rose by 16,000 in the latest week to 404,000, which is just the second time that jobless claims have exceeded 400,000. More job cuts are in the pipeline as the unemployment rate is expected to hit 6% this year. Due to the weak labor market as well as the upcoming Presidential election, the Fed will not likely raise interest rates this summer or fall.

There were some other troubling economic reports last week, such as on Thursday, when the June ISM non-manufacturing index fell to 48.2 from 51.7, the lowest since January and a sign that the U.S. economy is suffering from higher food and energy prices. The only good news was released on Tuesday, when the May ISM manufacturing index rose for the second straight month to 50.2 from 49.6, above economists' consensus estimate of a fall to 48.5. However, the manufacturing index has not yet reflected the big production cuts in the pipeline from Ford, General Motors and other vehicle manufacturers. Overall, a U.S. recession is brewing for the second half of 2008.