Americans Feel Optimistic About Growth And
Prosperity
By Carl Hampton
The effects of higher interest rates and energy prices,
combined with decreased home price availability have reflected
a cooling-off period of the housing market.
Housing construction is suffering as well. An increased
inventory of properties already saturating a depressed market
means an excess supply of housing. New construction of homes
and apartments, the purchase of building products and
employment in construction-related fields will all be on the
decline as the market softens.
Real estate is vital to the continued growth of consumer
spending, and to the economy’s growth.
Throughout 2006, the Federal Reserve has been tightening credit
in an effort to keep inflation under control by increasing
interest rates.
In order for there to be a positive growth of the economy an
effort to reduce inflation must be achieved without inviting
the risk of recession.
Crude-oil prices continue to escalate; the war in Iraq drags on
with no sign of abating; the market is imperiled by gas prices
that have anxious consumers wondering when there will be an end
to the global energy problem.
A higher household expenditure on gas adversely affects the
purchasing power of households, and their attitudes on
spending.
Why should rising energy costs directly depress property sales?
A surfacing trend seems to indicate that when gas prices rise
home sales decline. When the prices drop, sales increase.
With rising rates and mounting energy costs the fall-out on the
economy could be wide-ranging.
Despite the economic slowdown, the N.A.B.E. (National
Association for Business Economics) has predicted that
America’s economy (as measured by the Gross Domestic
Product/GDP) will expand in 2007. And, that although a 2.8%
increase in core inflation is forecast, food and energy will be
excluded from the rise.
The Federal Reserve will not feel inclined to raise interest
rates further if there is a fall in inflation pressures
(however, high gas prices, and other commodities have the
potential to sustain inflation pressures).
Therefore, 2007, according to Commerce Secretary, Carlos M.
Gutierrez, should be a year when Americans feel optimistic
about growth and prosperity.
About the Author From “Your” Money Matters by Carl Hampton, the author of “From Credit Despair To Credit Millionaire.”
Visit Carl at www.CarlHampton.com.
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