, the Federal Reserve projected that the unemployment rate will go down to 9 percent from 9.6 percent by the end of next year, although the article took on a more pessimistic tone due to the fact that a greater decline was expected earlier in June. Irwin writes that other statistics show that companies are making 28 percent more profit than last year, an all-time high, while GDP rose to 2.5 percent annual rate since September. He additionally writes that economic recovery “is now increasingly fueled by demand from consumers and businesses,” and
reports that consumer sentiment has rose to its highest since June.
At the same time, the Federal Reserve were cited to believe that progress is “disappointingly slow” and “members generally thought that progress was likely to remain slow.” Because of this outlook, they have decided to buy $600 billion in Treasury bonds.
reports that proponents expect the bonds to “help promote a somewhat stronger recovery in output and employment while also helping return inflation, over time, to levels consistent with [the Fed’s legislative mandate].”
Controversy is prominent for this action, with politicians, economics, and media personalities arguing that that the bonds could lower the dollar’s value, increase inflation, and simply have a “limited” effect on economic recovery.
This “limited” effect could especially be the case for the housing market.
reported that “single-family sales of new homes fell 8.1 percent in October, suggesting that recovery is still not helping the housing market.” The unit annual rate fell from 308,000 in September to 283,000 in October, showcasing a weak market especially at the end of the home-buyer tax credit. “Housing data is still coming in weak,” said Brain Battle, Vice President of Trading at Performance Trust Capital Partners. “It’ll take years until we get some life in that market.”
Dana Johnson, chief Economic of Commercia, agrees with Battle and additionally states, “[T]he only thing takes away from the incredible weakness is that there are hardly any homes for sales.”
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