Debt Ceiling Decision Imminent
Tuesday August 2nd is the deadline by which the Republicans and the Democrats must come to an agreement which will allow Congress to vote on a measure to raise the debt ceiling. Things are looking more positive than they were yesterday and there is now some optimism that a compromise may be reached. The legally mandated debt ceiling must be raised so that the federal government can literally continue to pay its bills.
As well as the financial aspects of the agreement, one of the sticking points has been the date at which a second financial re-organisation will take place. The Republicans wanted another in six months, just as Obama would be approaching the end of his first term. Obviously Obama and the Democrats were not keen on this, preferring a second round of negotiations at the beginning of the next administration, whichever colour it turned out to be. Whatever compromise is (or is not) reached, the economic fallout will effect the global markets so the next couple of days will be interesting to say the least.
House Building To Remain Below Average Until 2014
Recent data released by the San Francisco Federal Reserve Bank suggests that average,
Slow going....
long-term house building rates will not return to normal until at least 2014. This also assumes a gradual recovery in house prices and obviously an increased demand in house buyers. It also assumes a reduction in the levels of foreclosed homes which will put pressure on the prices of regular housing. All of which of course relies on continued economic growth in the economy, pending debt restructuring as discussed in the article above.
At the present rate, around 629,000 new homes will be built in 2011, stronger than the previous couple of years but still well below the levels of pre-2008. It’a a chicken & egg dilemma in some ways. Expanded house building will add massively to the economy in terms of job creation but until those jobs are created and consumer confidence grows, house purchasing will remain low.
