Interest is interesting, isn’t it?
Today I read in the newspaper that analysts concluded on Friday the economic recovery has stalled. This conclusion was reached after the government’s report that economic growth “crawled at a 2.4 percent pace in the spring”; which turns out was the economy’s weakest showing in a year. My topic for the next few blogs is going to be on interest rates and how to understand what we are going through as a consumer.
Whenever something throws our nation’s economic recovery into doubt, interest rates fall. Consumers spend less, companies are slow to restock their shelves and with the USA’s trade deficit all can exert a strong drag on our economy. When the economy is fragile rates are used as a tool to help the economy grow.
The Commerce Department Report also showed the recession was deeper than previously estimated, according to revisions of the data. Its depth helps explain why the economy is now struggling so much with shoppers reluctant to spend and employers slow to hire. The deeper the recession the longer it takes to come out. Economists can calculate the depth of a recession after recovery has been achieved because it is difficult to really estimate the true depth until all the facts have been revealed.
Currently the Federal Reserve is exploring new steps to bolster the recovery in case the economy flashes danger signs of sliding back into a recession. Bernanke said in testimony on July 21 before the Senate Banking Committee that policy makers “remain prepared” to act as needed to aid growth even as they get ready to raise interest rates eventually and shrink a record balance sheet. This is a strong indication that rates are probably not going to be increased and are, most likely, going to remain low – we need to take advantage of them now.
Being a global economy we also need to check out the European economy. Europe has debt problems which has caused uncertainties about the future viability of the euro, (the currency used in common by most European countries). As a result of investor concern, the euro has fallen in comparison with the U.S dollar in recent months. This means it costs more for an European investor to purchase dollar-denominated investments which reduces our economic picture.
Looking at the world housing markets, in China they have posted a gain of 11.7% in March over last year and Canada has seen a 17.6% increase in home values in the last year. The housing markets are better in those countries which could be an indicator that we are going to see more value in properties in the USA coming soon.
Don’t miss out on the opportunity of a lifetime, interest rates are close to the lowest they have ever been – house pricing is competitive…… Let’s discuss your options and see if we can’t find a way to create a good solution for everyone! Check out our mortgage page for the latest rates and mortgage calculators. As always, Santoro and Sons Real Estate Group is here to help – give us a call!
Have a great week!