At the beginning of the entire year, I composed out my basic forecast for 2007. Given that we’re closing in on the All-Star break, it seems like a great time to examine what’s working and what’s not. Housing will weigh on the overall economy in 2007, in terms of lost careers from construction and reduced home loan equity extraction.
However home price declines will be humble generally in most areas and the housing marketplace will clearly be recovering by the finish of the year. Business investment will remain strong, and this will help keep any drop in consumer spending from causing a more severe slowdown in overall development. Housing has been bad, but hasn’t really leaked in to the general overall economy yet. I still think it will.
Home prices are declining, but countrywide, the price declines have been indeed modest. My thought that the market would be “clearly recovering” by year-end seems unlikely, however. Once it becomes clear inflation is slowing, the Fed shall make two cuts. In June and the second probably in August The first will likely be. At that point, the marketplace will price in no further Fed action for quite a while.
The economy is doing better than I thought, therefore these cuts haven’t happened, and will most likely not until Spring ’08, but I’m still thinking a cut is another move. Of the year For most, the 10-calendar year will hang around 4.50%, possibly rallying even further, but once it becomes clear the Fed … Read the rest




