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Americans
Feel Optimistic About Growth And Prosperity
by
Carl Hampton
01/17/2007
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.
Happy New Year!
Have an opinion or a question you would like
me to answer, then write me!
Http://www.CarlHampton.com
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