Housing Market
February 18th, 2007 by
Senior Editor: Jeff
I’ve held for a while now that the key to the present economy is the housing market. The near future will be determined by the housing market. If housing can keep its footing, ride the bull. If it falters, we’ll see a slow-down and perhaps a mild recession this year.
One of the greatest stimuli of growth has been mortgage equity withdrawals. That is, the majority of consumer spending has been from housing equity cash-outs. As rates rise, and prices stall, MEWs will decline (are declining). Consider the graph below that juxtaposes GDP as reported, and what it would have been without MEWs.
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Commentary, Finance |
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