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The dynamics of the US housing market is perhaps the most important signal about the global economic outlook. Data from this market indicate that raising interest rates by the Fed did not bring the desired result and a recession is coming in the US – writes the weekly “The Economist”.
The importance of the American real estate market is not only due to its absolute value, although it is about 45 trillion dollars. More importantly, its dynamics is a measure of the health of the economy when the Fed raises interest rates.
This is one of the sectors that reacts the earliest to changes introduced by the Fed, which allows us to assess the effects of the US central bank’s policy
explains the weekly.
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US recession? There are new data from the real estate market
Recent home sales figures, meanwhile, suggest that these effects are not desirable. The visible decline in investment in housing construction is a reason for pessimism, states The Economist.
This trend spells a recession. –
There has never been a fall in (real estate) prices and a significant fall in investment, followed by a recession
– said Robert Dietz, an expert of the American National Building Association, in an interview with the weekly.
The forecasts of the British weekly may be all the more accurate as the American consumer confidence index fell at the end of February and it was the second consecutive month of such declines, showing that fears of a recession and concerns about inflation are growing, the Associated Press reported.
American pessimism
The financial portal Market Watch reminds you that
the slowdown in the US economy is the result of the Fed’s policy aimed at curbing inflation.
However, because it makes credit more expensive, it leads to a reduction in the expenses of companies and households.
In October 2022, 91 percent. of surveyed CEOs of the 400 largest US companies estimated that the US economy will enter recession within 12 months, because the series of interest rate increases decided by the Fed will not end the so-called soft landing.
In November, The Economist editor-in-chief Zanny Minton Beddoes wrote in an editorial that the scale of the geopolitical, energy and economic shock caused by the war in Ukraine is so great that in 2023
“a global recession is inevitable.”
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Source: money.pl
