U.S. Economy: Factory Output, Housing Starts Plunge (Update1)

By Timothy R. Homan and Courtney Schlisserman

Feb. 18 (Bloomberg) -- Manufacturing and housing in the U.S. collapsed in January, government reports showed, as the Obama administration unveiled new proposals to stem what may become the worst recession in the postwar era.

The Federal Reserve’s industrial production index dropped 1.8 percent to 101.3, the lowest level in more than five years, the central bank reported today in Washington. Housing starts plunged 17 percent to an annual rate of 466,000, the fewest since records began in 1959, Commerce Department data showed.

General Motors Corp. has asked for new loans and said it plans to cut 47,000 more jobs worldwide as sales plunge, while builders struggle to trim the glut of homes propelled by the surge in foreclosures. President Barack Obama pledged $275 billion in a program that includes cutting mortgage payments and encourages loan modifications to keep Americans in their homes, and Fed policy makers lowered growth forecasts.

“The recession news could hardly have been worse,â€