Economist's Commentary: October 14, 2008
Quick Take on the Economy: October 14, 2008
By Lawrence Yun, NAR Chief Economist 
$700 billion in Action
- Using its newly granted authority, the Treasury is recapitalizing financial institutions by taking part ownership in many banks. The goal is for more money to be provided to banks, which can then lend to people and businesses and get the economy going.
- As the economy gets going, any upswings in stock prices of those purchased by the Treasury go to the taxpayers.
- Other measures are also being implemented to unclog the financial system and get the capital back into capitalism.
- People are now betting on the stock market, partly by taking money out of the ultra-safe U.S. Treasury. As a result, the rates on long-term bonds are rising.
What does today's data mean for REALTORS® and consumers?
- The economy will avert a deep recession. The short-term momentum still suggests weak consumer spending which will hold back the economy.
- Residential mortgage rates will move up off their rock-bottom rates. Lock-in those still favorable rates before they move higher. Meanwhile commercial real estate mortgages, which had dried up, will now become more available.
Daily Forecast Update
- NAR's monthly official forecast as of October 8th (15K PDF)
- GDP Q3: 0.0%
- GDP Q4: - 0.6%
- Unemployment rate at year end: 6.5%
- Average 30-year fixed mortgage rate in December: 6.2%
- Average 30-year fixed mortgage rate by mid-2009: 6.5%
- The next Fed policy change: a rate cut at the end of October.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
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