Will the real estate meltdown drag down the economy for a long time?
*Bloomberg, by Craig Torres, June 5, 2007:
"Federal Reserve Chairman Ben S. Bernanke said "tighter" lending
standards for mortgages will "restrain"' housing demand for longer than
policy makers anticipated.
The Fed chairman said the housing slump hasn't spilled over into other
parts of the economy and he maintained a forecast for ``moderate''
growth. Government and industry reports this month showed acceleration
in job growth, manufacturing and personal spending and gains in
services industries.
"The slowdown in residential construction now appears likely to remain
a drag on economic growth for somewhat longer than previously
expected," Bernanke said in remarks via satellite to a conference in
Cape Town, South Africa. As subprime mortgage lenders make it tougher
to get loans, that will "restrain housing demand, although the
magnitude of these effects is difficult to quantify," he said.
Fed officials have repeatedly cited housing as a threat to their
forecast for faster growth this year. At the same time, they continue
to view inflation as the biggest risk, keeping interest rates unchanged
since last raising them a year ago.
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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