Despite an increase of 4.9% in gross domestic product in the third quarter, the negatives confronting the US economy are many. While new-home sales increased 1.7% in October, the median home price fell 13% from a year ago, the largest decline since 1970. National Association of Home Builders expects home sales to begin a gradual recovery in the early part of 2008, but that is predicated on avoiding recession and an improvement in the mortgage finance system. The slowing of the US economy is now largely a given, and the very weak US dollar is being openly derided by the likes of rap star Jay-Z and supermodel Gisele Bundchen. While there is little dispute the Fed will continue to be accommodating to avoid more spillover from the housing and subprime problems, the reality is that cheap money is what got everyone here.
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"2008 ECONOMIC OUTLOOK: WICKED HOUSING MARKET SPINS ECONOMY"Please download to view full document