Domino effect of Bad Economic News
There are days like this when all the news is bad... the continuing domino effect of the sliding housing markets > global credit crunch > foreclosures > consumer credit hit > dissipating consumer confidence has elevated fears of recession.
Housing continues to get slammed
- September 5 - Housing recovery further away - National Association of Realtors reports that the number of homes going under contract for sale in July plunged by 12% to the lowest level in six years
- September 5 - Commercial real estate in US poised for 15% price drop
- September 5 - Commercial paper and structured finance downgraded by Moody's
- September 5 - Real estate funds fall may have plus side
- August 28 - Credit card defaults keep rising
- August 28 - Consumer Confidence in U.S. Falls the Most in Two Years; Home Prices Drop
Real estate professionals - how to explain today's market:
- Real estate professionals, throttled by the slow market over the past two years, may see a glimmer of hope with the expectation of lower interest rates to cater to pent up buyer demand.
- Note that a rate cut may help builders sell more existing properties, but it won't necessarily help their stock price or boost construction because there's an obvious glut. If you're an agent, you don't want to have your buyer waffle because more builder inventory is coming online.
- Bad news like this only supports the expectation of a Fed rate cut on September 18... here's a good article on how consumers can plan for the expected rate cut: Ahead of the yield curve - Savers and borrowers may need to act before Fed does
- A rate cut weakens the dollar and may exacerbate inflation, an after effect that the Fed is focused on preventing. However, the effects on the dollar may not be as drastic if all the Central Banks are acting in coordination to keep interest rates lower to protect against a global recession. That's what seems to be happening.
Related articles:
- The Fed and Puritanical Ethics
- Why the stock markets keep falling
- Explaining the Global Credit Crunch
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