Is It Time To Turn Negative on the US Economy?
22 September, 2007 (Singapore) - by Wong Siew Lu
Whether US economy is going into recession has been a debatable issue among economists for quite some times now. It is a major concern of all global investors, as there is a Chinese saying: "If America sneezes, the world will get a flu". Indeed, US - the world biggest economy still have a huge impact on global macro economy.
Federal Reserve Rate Easing Policy
Undeniably, US economy is indeed slowing down after a few good years. It can be confirmed by Fed'S decision - announced the surprised hefty fund rate cut of 50 basis point to 4.75% last Tues. Many analysts think that further rate cut might be possible depending if the situation has averted.
The question is whether this rate cut will successful help to minimize the economic weakness snowballs? Has Fed has done too much and too quickly that might imposed another inflationary reaction? Are they making the right decision to upturn the economy situation or just encouraging more risk taking behaviour in Wall Street?
Despite of US president, W. Bush latest comments on " US economy remain strong" on last Thursday, there are still several issues that draw our attention ? Housing woes, subprime crisis, inflation, weak dollars, US companies profit plunge and possible further outflow of foreign investment.
Housing Woes & Subprime Crisis
One major concern is still the housing market slump. Fed official has admitted that recent rate cut might probably has the modest impact on the main problems in the housing market, such as the inventory glut, falling home prices, a difficult mortgage market and rising foreclosures.
Housing market is in its worst recession since 1991. Home building rate sl ...